Annual Report (ESEF) • Feb 28, 2022
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Download Source FileUntitled Annual Report 2021 Unlocking insights from Geo-data, for a safe and liveable world ■ Fugro Annual Report 2021 Through integrated acquisition and analysis of Geo-data and related advice, we unlock insights to help our clients design, build and operate their assets in a safe, sustainable and e cient manner. Population growth and urbanisation combined with the need for decarbonisation are driving increased spending on renewable energy, electricity networks and infrastructure in general. In addition, even with a successful transition to green energy, climate change is expected to lead to sea level rise and extreme weather, necessitating a ention for coastal zone management and fl ood protection. As a result, our purpose to create a safe and liveable world is becoming ever more relevant: Geo-data is essential for the safe and sustainable development and operation of our client’s assets. With our leading market positions, global footprint, versatile asset base, specialist workforce, innovative digital solutions and resilient operating model, we are well positioned to benefi t from these opportunities, and thus further diversify across multiple markets. You can fi nd relevant examples of Fugro’s solutions in the areas of energy transition, climate change adaptation and sustainable infrastructure throughout this report. Cautionary statement This annual report may contain forward-looking statements. Forward-looking statements are statements that are not historical facts, including (but not limited to) statements expressing or implying Fugro’s beliefs, expectations, intentions, forecasts, estimates, targets, projections or predictions (and the assumptions underlying them). Forward- looking statements necessarily involve known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual future results and situations may therefore di er materially from those expressed or implied in any forward-looking statements. Such di erences may be caused by various factors including, but not limited to, developments in the oil and gas industry and related markets, currency risks and unexpected operational setbacks. Any forward-looking statements contained in this announcement are based on information currently available to Fugro’s management. Fugro assumes no obligation to make a public announcement in each case where there are changes in that information or if there are otherwise changes or developments in respect of the forward-looking statements in this report. In this annual report, Fugro N.V. is also referred to as ‘the company’ or ‘Fugro’. Fugro N.V. and its subsidiary companies are together referred to as ‘the Group’. Site investigation services for o shore wind developments Creating Digital Twins’ of clients’ assets Solutions for fl ood protection CO LOPHON Fugro N.V. Veurse Achterweg 10 2264 SG Leidschendam The Netherlands [email protected] Realisation Domani B.V., The Hague Photography and images Fugro (employees) Michel Campfens Karen Kaper Sophie Ruigrok Fugro has endeavoured to fulfil all legal requirements related to copyright. Anyone who, despite this, is of the opinion that other copyright regulations could be applicable should contact Fugro. FUGRO ANNUAL REPORT Report of the Supervisory Board Supervisory Board report Remuneration report Financial statements Other information Additional information At a glance CEO Message Profile Purpose Values Business lines Key markets Key strengths Organisation Strategy Global developments Key trends in our markets Path to Profitable Growth strategy Stakeholder engagement Long-term value creation Group performance Financial Social Environmental Compliance Sustainability reporting principles Governance Board of Management Executive Leadership Team Risk management Corporate governance Fugro on the capital markets Management statements Contents FUGRO ANNUAL REPORT At a glance Fugro is the world’s leading Geo-data specialist Through integrated acquisition, analysis and advice, we unlock insights from Geo-data to help our clients design, build and operate their assets in a safe, sustainable and ecient manner We deliver solutions in support of the energy transition, climate change adaptation and sustainable infrastructure developments employees worldwide countries > Research and development engineers years exploring the Earth Revenue by region (in %)2021 Revenue by market segment Revenue by business line (in %) Middle East and India Asia Pacic Americas Europe Africa 10 45 24 21 Middle East & India Asia Pacific Europe Africa Americas Land asset integrity Land site characterisation Marine asset integrity Marine site characterisation Land asset integrity Land site characterisation Marine asset integrity Marine site characterisation 42 22 7 29 Oil & gas Other Nautical Infrastructure Renewables InfrastructureRenewables Nautical Other Oil & gas 2017 2018 2019 2020 2021 24% 7% 4% 8% 57% 24% 11% 6% 5% 54% 23% 14% 7% 4% 52% 23% 21% 8% 3% 45% 23% 24% 8% 6% 39% FUGRO ANNUAL REPORT Results from continuing operations. Refer to glossary for definitions of financial terms and to reconciliation of non-IFRS performance measures in the additional information section. PERFORMANCE HIGHLIGHTS Women in senior management % : % Create a diverse and inclusive organisation EBIT margin .% : .% Ensure healthy financial performance Free cash flow aer lease payments as % of revenue .% : .% Ensure healthy financial performance Return on capital employed .% : .% Ensure healthy financial performance Renewables, infrastructure and water as % of revenue % : % Deliver innovative, digital & sustainable solutions Net promotor score : NA Deliver innovative, digital & sustainable solutions CO emission intensity vessels (tonnes per operational day) . : . Minimise environmental footprint Lost time injury frequency (per million hours) . : . Maintain the highest health & safety standards CDP rating B- : C Minimise environmental footprint FUGRO ANNUAL REPORT to lead to sea level rise, changing weather paerns and extreme weather conditions. This results in an increasing need for coastal zone management and flood protection measures. As a result, our purpose to create a safe and liveable world is becoming ever more relevant: Geo-data is essential for the safe and sustainable development and operation of our client’s assets. We are uniquely posi - tioned to assist our clients with solutions in support of the energy transition, sustainable infrastructure and climate change adaptation. With our leading market positions, global footprint, versatile asset base, specialist workforce and innovative digital solutions we are further diversifying towards structural growth areas. In , we already generated of our revenue in wind, infra and water, and we target a further growth to at least . COMPLEX ENERGY TRANSITION A transition towards low carbon energy generation is vital for the future of our planet. This year, our renewa - bles revenue grew by to of group total. Initially a mostly European market, oshore wind parks are now being developed all over the world. In , this was demonstrated by numerous projects, such as multiple site characterisations in the US, Vietnam, South Korea and Japan. We are also involved in the In a rapidly changing world with an increasing need for insightful Geo-data, our services are more relevant than ever. We support the energy transition with our market leading, innovative services for the development of oshore wind resources. Our flexibility to shi assets to strategic growth markets, digital solutions and strong reputation also enable us to contribute to climate change adaptation and sustainable infrastructure developments. With our increasingly balanced market exposure and resilient operating model, we are well positioned to deliver on our Path to Profitable Growth strategy. CEO Message In , the Covid- pandemic has proven to be more persistent than anticipated by all. Our business continued to be impacted, in particular through opera - tional complexities of cross border projects. Since the outbreak in , Fugro’s project teams have been pro-active, flexible and resourceful in meeting the quickly changing and locally varying circumstances, focusing on business continuity while maintaining health and safety as a key priority. All in all, we delivered a clear improvement in our results: the EBIT margin increased to ., and we generated a free cash flow of EUR . million and a positive net result. The resilient performance was a combination of strict cost management, operational delivery, and early signs of improved pricing, particularly driven by a tightening supply market and new digital Geo-data solutions. GEODATA MORE RELEVANT THAN EVER The pandemic has accelerated the aention for other disruptive global challenges, most notably climate change. Huge investments are needed to rewire and replace the Earth’s energy systems. Population growth and urbanisation combined with the need for decar - bonisation are driving increased spending on renewable energy, electricity networks and infrastruc - ture in general. In addition, even with a successful transition to green energy, climate change is expected FUGRO ANNUAL REPORT world’s first artificial energy island, for Energinet in the North Sea, which will act as a hub connecting hundreds of surrounding wind turbines. We expect the strong growth in this market to continue. At the same time, transmission and distribution networks are increasingly overburdened due to ongoing electrification. Fugro’s Roames digital asset management solutions drive future proof grids by supporting modernisation and resilience. In , we successfully completed projects for power utilities in the US, UK, Europe, New Zealand and Australia. In the lead-up to COP in Glasgow in November , many studies were published showing that world is not yet on track to meet the ambitions of the Paris agreement. Although new commitments were made and the transition is gathering pace, it is important to acknowledge that this is a very complex process that will take time. At this moment, only around of the worldwide primary energy use is generated from renewable sources. There is a large discrepancy between governments’ carbon reduction ambitions and current reality: fossil fuels, in particular natural gas, will remain an important part of the energy mix for years to come. The world’s energy system is complex and requires long term planning and huge investments for example in hydrogen technologies. An uncoordi - nated transition will cause imbalance in availability and accessibility of energy. In , the world was already confronted with unprecedented gas prices, due to strong demand coupled with delivery issues and very low investment levels, and an increasing usage of coal. Therefore, while our Geo-data plays a key role in this transition, we also contribute to responsible operations in the traditional energy markets. The existing maritime infrastructure is ageing and needs to be well main - tained to ensure that no harm is caused to the environ- ment. It is the world’s obligation to assure that our oceans are kept clean and coastlines free from exposure to pollution from any man-made structure or system. Regular and continuous inspection of infra - structure at sea is therefore essential. A large part of Fugro’s revenue in the traditional energy markets is related to keeping these assets safe and sound, and we are radically changing the way inspections at sea are done. New Geo-data acquisition platforms, remotely operated and complemented by underwater robots that require significantly less supervision and mainte - nance, allow us to drive CO emissions of inspections down by over . CLIMATE CHANGE ADAPTATION AND SUSTAINABLE INFRASTRUCTURE There also is a growing need to future proof existing infrastructure on land and in nearshore environments. Governments’ programmes support a positive market outlook, with growing repair and maintenance and refurbishment budgets, because a significant part of existing infrastructure is ageing. In addition to massive investments in electricity networks in light of the energy transition, there is an increasing need for more sophisticated cabled network infrastructure to support connectivity. During this year, we completed for example route surveys for Alcatel’s new fibre-optic cable system connecting North America to Asia, and site investigations for the installation of undersea power cables between the Italian peninsula and Sicily and Sardinia. Governments around the world are investing in coastal zone management and flood protection. Fugro provides coastline mapping and related data-interpre - tation and advice. In , we provided nautical and coastline mapping solutions for the Cayman Islands, Alaska and Ireland’s southern and western coastline. In addition, we were involved in dike reinforcement projects in the Netherlands and we completed an earthquake hazard and vulnerability assessment for the Port of San Francisco waterfront resilience programme. The world’s oceans cover of the Earth’s surface and support nearly every aspect of our lives. Fugro is leading the industry in support of several initiatives that aim to fill the sizeable data gaps that currently exist in our ocean knowledge. Fugro is commied to help build a digital ecosystem, encompassing all sources and types of ocean science data. In , we signed a strategic partnership with the Intergov - ernmental Oceanographic Commission of the UNESCO. Having been involved in UN’s Ocean Decade planning since , we were invited to join the Ocean Decade Alliance. These initiatives, focused on reversing the cycle of decline in ocean health, fit perfectly with our purpose. DIGITALISATION AND TRANSFORMATION We are commied to remain the most innovative Geo-data company across our markets. Our digitalisa - tion and innovation agenda is aimed at integrated Geo-data solutions to increase project eciency and reduced CO footprints. It revolves around four themes: robotics, remote, analytics and insights. Collection and interpretation of Geo-data is fundamental to designing, building and operating any structure on this planet FUGRO ANNUAL REPORT Through our remote operations centres and deploy- ment of lightly crewed or uncrewed vessels, we are im proving the safety and eciency of our operations and significantly reducing our CO footprint. In , we executed projects in Europe and Asia Pacific with our next generation uncrewed surface vessels, from which we can deploy remotely operated vehicles for asset inspections. We operate a global network of remote operations centres. By now, we have recorded over , remote project hours, puing us clearly ahead of competition. The pandemic has only height - ened the relevance of these solutions. I n our land business, clients are exposed to increasing volumes of data on which they base complex decisions. Fugro is providing clients with ‘digital twins’ of their assets: a digital, four-dimensional model combining all Geo-data acquired throughout the lifetime of the asset, artificial intelligence-driven analytics and related decision making. Fugro is connecting the commonly used surface based digital twins to sub-surface Geo-data models, resulting in unique insights in long-term planning and asset maintenance, with the ultimate goal of reducing overall costs of development and long-term operation of their assets. ENGAGED EMPLOYEES Ultimately it is not our technology or equipment that determines our long-term success, it is our people. Sixty years of valuable experience and expertise comes together in Fugro’s workforce and forms the collective know-how of the company. Fugro people are passionate and feel strongly connected to our purpose of creating a safe and liveable world, together. Fugro is a company with a strong identity and culture. We live by our company values: we build trust, we do what is right, we are determined to deliver and we prepare for tomorrow. Fugro aspires to be an inclusive company where people can be their best self, are allowed to speak-up, have impact and develop themselves professionally and personally. People from over nationalities work together seamlessly, creating a truly international working environment. We foster such a strongly diverse working environment with a particular strong focus on increasing gender diversity throughout the whole organisation. Like for most companies, the pandemic has led to higher arition. It is however great to see that we continue to aract talented people who want to contribute to our transformation agenda. We recently launched our new ‘S Together’ safety programme, focused on underpinning our safety culture. The challenging environment of some of our operations puts health and safety at the heart of every - thing we do, and continues to be a key area of a ention. In the year under review, three colleagues sadly lost their lives during two separate extreme weather incidents, while supporting client operations on third party vessels. One incident occurred in April in the USA Gulf of Mexico and the second in May oshore West-India. Our thoughts and support continue to be with family, friends and colleagues that have been aected by these tragic events. OUTLOOK AND MANAGEMENT PRIORITIES Even though there clearly still is a gap between current performance and these mid-term targets, I am confident that we are on track to reach our mid-term targets of an EBIT margin of - and free cash flow of - of revenue by -. This is underpinned by the following drivers: volume growth, in particular in renewables, infrastructure and water; value-based pricing; disciplined cost management; operational excellence and digital transformation to increase eciency. O n the trajectory towards our mid-term targets, our management agenda is focused on the following topics: further implementation of our digital transformation, innovation and sustainability agenda, excellence in commercial and operational delivery and another step-change in safety and employee engage - ment. To reach our net zero carbon emission target by , we have a roadmap in place, centred around decarbonisation of vessels and other equipment through uncrewed, modular and remote solutions, electrification and use of emission free fuels, and the procurement of green energy. Clearly has been another challenging year in which we have asked the utmost from everyone in Fugro. Considering the impact of the pandemic throughout the year, I am particularly thankful for the unwavering commitment and flexibility of Fugro’s employees to delivering high quality services to our clients. I want to thank all my colleagues for a job well done. Mark Heine Chief Executive Ocer We deliver solutions in support of the energy transition, climate change adaptation and sustainable infrastructure FUGRO ANNUAL REPORT uncertainty and client exposure to subsurface risk. We provide site characterisation solutions to facilitate the safe, sustainable and cost-eective design and construction of buildings, industrial facilities and infrastructure. In addition, to optimise reliability, utilisation and longevity, we provide asset integrity solutions during the construction and operational phases of the asset life cycle. Employing approximately talented people in countries, Fugro works both on land and in marine environments. With our team of dedicated experts, specialised assets and cuing-edge digital technologies, we oer our services to a broad spectrum of clients, predominantly in energy, infrastructure and water markets. In , of our revenue was generated in wind, infra and water. Our planet is a complex and dynamic system which is continuously moving and evolving. Understanding this complexity is essential for designing, building and maintaining assets in a responsible manner. It requires a comprehensive understanding of Geo-data: information related to the Earth’s surface, subsurface and the built environment. Civil engineers recognise that much of the risk associated with major infrastructure projects actually lies below ground. Therefore, accurate collection and interpretation of Geo-data is fundamental to designing, building and operating any structure on this planet. Fugro is the world’s leading Geo-data specialist. Fugro, an abbreviation of the Dutch words for foundation and ground mechanics, was founded in . Over the past sixty years, we have developed a deep understanding of Geo-data. With our ‘triple A’ approach, we add value throughout the complete asset life cycle by reducing Unlocking insights from Geo-data: the key to designing, building and operating any structure Profile Fugro is the world’s leading Geo-data specialist. We unlock insights from Geo-data. Through integrated data acquisition, analysis and advice, Fugro supports clients in mitigating risks during design, construction and operation of their assets, both on land and at sea. We contribute to a safe and liveable world by delivering solutions in support of the energy transition, sustainable infrastructure and climate change adaptation. FUGRO ANNUAL REPORT OUR PURPOSE The world is changing faster than ever before. Over the coming decades, population growth and urbanisation will lead to an increasing demand for energy, water, food, minerals, metals, buildings, industrial facilities and infrastructure. In particular, the potentially devastating impacts of climate change, such as rising sea-level, severe weather conditions and drought, have become increasingly pressing topics, underlining the necessity of a transition towards low carbon energy generation. The energy mix, infrastructure and built environments have to evolve if tomorrow’s problems are to be tackled successfully. As Fugro, we have an important role to play by supporting clients to realise and operate their construction projects and infrastructure in a safe, sustainable and ecient manner. We sometimes play a small role in a client’s project, but it is always essential in making our planet a beer place. Our purpose is to create a safe and liveable world together. It is our ambition to support our clients to achieve net zero carbon emissions, enable the development of sustainable infrastructure and strengthen climate resilience. This ambition is demonstrated by for example our site characterisation work for wind parks at sea, installation of permanent monitoring systems on vital infrastructure such as bridges and rail tracks, and our coastline mapping for flood defense programmes. For our own operations, we target carbon neutrality by , amongst others by investing in decarbonisation of our vessels and equipment. Together we create a safe and liveable world FUGRO ANNUAL REPORT OUR VALUES Our values guide us in fulfilling our purpose. Whilst each value has a distinct role to play, they are linked and equally important. Together we own our values, their sum is our collective strength as a company. We are determined to deliver We work together to understand what’s needed and deliver results. We have high expectations and set goals which enable us to reliably meet those high expectations. We’re proud of our track record and use communication and teamwork to consistently deliver the quality that defines our reputation. We’re united in our global drive to succeed, we take ownership and, above all, we celebrate achievements when the job is done. We prepare for tomorrow Our changing world is an opportunity for a beer world. We’re doing our best work today while investing in tomorrow through our passion for learning and constant curiosity. With our eyes on the future, we welcome change as a catalyst for innovation and for finding new and more sustainable solutions and ways of working. More than ever, on our shared planet, preparing for tomorrow means taking the lead, improving every day, anticipating changes and proactively evolving now. We do what’s right Doing what’s right isn’t always easy, but it’s the Fugro way. We create a safe and respectful environment where everyone feels able to speak up, be heard and make Fugro a safe place to work. We respect and value dierences and listen to alternative viewpoints, and we encourage a cross section of perspectives by taking active measures to realise a diverse, equal and inclusive workforce. Essential for growth and development, doing what’s right allows everyone the integrity and authenticity to be their best self and to go home safely at the end of every working day. We build trust Trust begins with open communication: we are trusted because we do what we say. We deliver on our promises and build relationships through honesty, transparency and respect. Trust is key to our success and gives us the confidence to work together to solve challenges with integrity and ingenuity. We follow up our words with actions that demonstrate our dependability and reliability; in this way, we can count on our colleagues and are trusted partners to whom clients keep coming back to achieve our mutual goal of a safe and liveable world. We are determined to deliver We do what’s rightWe prepare for tomorrow We build trust FUGRO ANNUAL REPORT Fugro is unique in its capabilities to provide clients with both site characterisation and asset integrity solutions in marine and land environments. Even though the land and marine environments are very dierent with regards to projects and clients, we fundamentally oer the same services, using the same expertise, technology, laboratory facilities and support organisation. BUSINESS LINES Site characterisation We carry out technical studies, surveys and investigations to establish the characteristics of sites and routes to be developed. With geophysical surveys we map the Earth’s surface and subsurface, and through geotechnical investigations we determine the composition, characteristics and properties of the soil. Using our expertise, technology, equipment and world-class laboratory facilities, we transform the acquired data into valuable information and related advice on the best way (eg, location, foundation advice) to use a site for safe, sustainable and ecient design and construction of the asset. This enables the client to make informed decisions, reducing construction costs and installation and operational risks on technically demanding projects. Asset integrity As assets are being built, we support construction projects with precise positioning, monitoring and visualisation services. Once the asset becomes operational, we support our clients’ asset management programmes in order to optimise reliability, utilisation and longevity. We use innovative and increasingly remote and (near) real-time scanning, monitoring, analytics and data management techniques to assess and report on structural behaviour and integrity and regulatory compliance, and to identify vulnerabilities before they pose a risk. MARINE SITE CHARACTERISATION LAND SITE CHARACTERISATIONMARINE ASSET INTEGRITY LAND ASSET INTEGRITY Land asset integrity Land site characterisation Marine asset integrity Marine site characterisation Marine site characterisation Marine asset integrity Land site characterisation Land asset integrity Revenue 2021 by business line (in %) 42 29 22 7 FUGRO ANNUAL REPORT We provide client solutions throughout the full lifecycle of oshore wind farms, platforms, high-rise buildings, industrial facilities, airports, roads, bridges, tunnels, power line grids, railways tracks or pipelines. We add value by reducing uncertainty and client exposure to subsurface risk. Assessing the condition of marine assets by acquiring and analysing inspection data, and executing light repair or maintenance tasks Geotechnical investigation determining soil composition via extraction of samples and laboratory/in-situ testing Geophysical survey mapping of seabed’s (sub)surface Hydrography sea-boom mapping/charting Geoconsulting including ground modelling and geohazard risk assessment Real-time monitoring & forecasting of weather, currents and environmental conditions impacting the structural health of assets Positioning providing subscription-based signals as well as positioning services Construction support providing survey systems and related expertise Construction support during decommissioning Acquisition of geospatial data to map, inspect, and advice on the integrity of ■ Rail infrastructure ■ Road infrastructure ■ Power transmission and distribution ■ Pipelines and industrial facilities FUGRO’S MARINE SITE CHARACTERISATION SERVICES FUGRO’S MARINE ASSET INTEGRITY SERVICES Geophysical surveys mapping of subterranean soil characteristics Monitoring of (sub)surface, new and existing assets during the construction phase and operational phase Geotechnical investigation determining soil composition via extraction of samples or cone penetration testing Testing of rock and soil samples, foundation and construction materials testing Geoconsulting including geohazard risk assessments, foundation advice, water resource management and flood control FUGRO’S LAND SITE CHARACTERISATION SERVICES FUGRO’S LAND ASSET INTEGRITY SERVICES Site appraisal “How do the ground conditions vary and what are the key risks?” “How will the ground and the asset respond to loads?” “How well is the asset being built?” “How well is the asset performing?” Design & contracting Construction Operation & maintenance Decommissioning Fugro’s four business lines address the full life cycle of clients’ assets FUGRO ANNUAL REPORT KEY MARKETS With our market agnostic asset base, expertise and client solutions we are able to serve clients across dierent end markets and geographies, oering the most up-to-date innovations and experience to our clients. It allows us to optimise utilisation, pricing and costs across multiple projects and further diversify towards structural growth markets. ENERGY OIL AND GASENERGY RENEWABLES As of : Figures from continuing operations (excl. Seabed) Revenue development by market segment (in %) Oil & gas Other Nautical Infrastructure Renewables InfrastructureRenewables Nautical Other Oil & gas 2017 2018 2019 2020 2021 24% 7% 4% 8% 57% 24% 11% 6% 5% 54% 23% 14% 7% 4% 52% 23% 21% 8% 3% 45% 23% 24% 8% 6% 39% Energy - renewables The market for renewable energy sources consists of wind, solar, hydrogen and geothermal. While at the moment only around of global primary energy use is generated from renewable sources, by , the share of renewables is expected to nearly double with the demand growth in global energy expected to be fully absorbed by various renewable sources (EIA World Energy Outlook). A major growth market is wind at sea, where we support both ‘pure play’ renewable energy and traditional energy companies. We oer a wide range of site characterisation and asset integrity services such as metocean surveys, soil investigations for wind turbine foundations, cable routing and various accurate positioning services. This market, in which Fugro has a prominent position, has become increasingly global. We are redirecting our market agnostic assets, expertise, products and solutions towards this structural growth market, leveraging our long-standing relationships with traditional energy clients as they grow their renewables business. FUGRO ANNUAL REPORT Energy - oil and gas The transition to sustainable energy is vital for the future of our planet. At the same time, this process will take time. While the world shis to more renewable energy, natural gas is expected to gain importance in the medium term as a vital resource during this process. Our asset integrity solutions enable clients to keep their existing infrastructure at sea safe and reliable by inspection and corrosion detection work, to protect our oceans and keep coastlines free from exposure to pollution. Infrastructure Infrastructure is the backbone of our society, and there is a growing need to future proof existing infrastructure, compounded by the necessity to massively invest in electricity networks to support the energy transition. Sustainability in infrastructure is about life-time extensions, repair and replacement of ageing assets. We support our clients with investigations of construction sites to facilitate the safe, cost eective and sustainable design and construction of buildings, industrial facilities and infrastructure such as bridges, airports, roads, rail, and electricity networks. We also provide condition monitoring during the lifetime of the asset to optimise maintenance, reliability, utilisation and longevity. Climate impact and ageing assets compound the challenges owners of these critical assets and networks face. Nautical This market relates to all maritime activities for national and local governments, port and harbour facilities, research, travel and shipping agencies. They use our integrated data collection, analysis, monitoring and consultancy services to enhance the safety and eciency of maritime activities globally. We perform site investigations through airborne mapping, hydrographic, metocean and environmental surveys; weather forecasting, mapping the oceans for scientific purposes and positioning services for these companies. In , the ‘nautical’ market will change to ‘water’ market. This will also encompass water infrastructure and water resource management services, which are currently included in the infrastructure market segment. Climate change adaptation and global water security necessitate significant investments in water infrastructure and water resource management. Fugro assists local and intergovernmental organisations in mitigating the risks of climate change through for example site investigation of coastal areas. NAUTICALINFRASTRUCTURE FUGRO ANNUAL REPORT KEY STRENGTHS World’s leading Geo-data specialist We are the world’s leading Geo-data specialist with the widest breadth of client solutions amongst companies oering Geo-data services. In the key services that we oer, we are oen the number or player, both in the marine and the land environment. The breadth of our services provides a key competitive advantage as we are able to provide our customers with integrated solutions. The marine market is a global market with large, internationally active clients. We are leading in site characterisation services that provide the Geo-data insights that are required for anything to be built at sea, which is increasingly related to renewable energy, natural gas and nearshore developments. In asset integrity, we are a worldwide top player in all of our services. In the fragmented onshore landscape, we are one of only a few companies to oer integrated Geo-data services globally. In markets with mostly local competition, our site characterisation services achieve solid market share on complex, high-profile projects such as high-rise buildings, airports, tunnels, bridges and pipeline routes. In asset integrity, we have leadership positions in specific market segments in selected countries. Fugro’s competitive position 1 MARINE LAND Hydrography Global Geotechnical investigation Global Geophysical survey Global Geotechnical investigation Global Rail inspection and advice Europe Metocean Global Satellite positioning Global Road inspection and advice USA Inspection services Global Positioning and construction support Global Power line inspection and advice Australia Company estimates. ADVICEANALYTICS ACQUISITION Fugro provides Geo-data solutions through the integration of data acquisition, analysis and advice FUGRO ANNUAL REPORT Diversified and commied client base We have a wide and diversified client base. In the energy markets, we provide our services to both energy companies and services providers, such as construction and installation contractors and design and engineering companies. For wind developments at sea, we support both ‘pure play’ renewable energy players and traditional energy companies that are helping to shape the energy transition. In the infrastructure market our main client groups are government agencies, construction project developers, railroad operators, design and engineering contractors, construction and installation contractors and industrial companies. In the water market, Fugro’s key clients are government agencies, port and harbour facilities, research institutes, technology and internet companies and shipping agencies. We have over employees from over nationalities. Fugro is the largest employer of Geo-specialists in the world, employing the best and the brightest in several specific expert disciplines including research and development engineers. Their skills, experience and specialist knowledge are key for our ability to oer the best quality of work and service delivery to clients today, while developing the best solutions for tomorrow. In order to engage our employees, it is key to support their professional and personal development. Fugro’s leadership teams and the human resources department(s) spend time and energy on an ongoing basis to develop talent management processes and practises. We are dedicated to further advance our people through our technical, project management, commercial excellence, health and safety and leadership training curriculum, amongst others via Fugro Academy. This is particularly important as Fugro aims to recruit the majority of its managers internally. Much of our operations take place in challenging environments, hence safety is a key priority. Over the last decade, we have further developed and improved our equipment, systems and procedures and made significant improvements to our safety culture and performance. Fugro continuously puts safety first by understanding the risks associated with the work and taking a proactive approach embedding appropriate standards and practices in its operations and workforce behaviour. We continuously review potential areas for improvement and ensure, by thoroughly evaluating and learning from every incident and promoting visible leadership, a sense of responsibility throughout the organisation. The combination of acquisition, analytics and advisory services is reflected in our integrated “triple-A” approach and, together with our presence in both site characterisation and asset integrity, it dierentiates us from the competition of global and local participants who are fragmented both across services and geographically. Highly skilled and engaged workforce People are at the heart of our business and they are the foundation of Fugro, while we remain commied to being the best Geo-data company to work for. Our success depends entirely on the strength of our people and our ability to identify, develop and retain key talent. Fugro’s set of company values is the foundation of our culture, guiding everyone to think and act with these values in mind. Through integrated acquisition, analysis and advice we unlock key insights from Geo-data, helping our clients develop and manage their assets safely, sustainably and eciently oil & gas other nautical infrastructure renewables Renewables Infrastructure Nautical Other Oil & gas Revenue by market segment (2021, in %) 24 23 8 6 39 FUGRO ANNUAL REPORT This wide and diversified client base results in the absence of significant client concentration, with only around clients representing or more of total revenues each and typically no client representing more than of total revenues in a single year. Our top clients vary from year-to-year, but typically include blue chip companies, such as Alcatel-Lucent, ENI, Equinor, Government of Hong Kong, Ørsted, Petrobras, Shell, TechnipFMC, TotalEnergies and Woodside. Fugro has long-standing relationships with many of its clients, some relationships going back decades. Our clients especially appreciate our know-how, experience, technology, quality of services, integrated service delivery (“triple-A” approach) around the globe and strong safety performance. Early engagement with clients enables us to beer understand their needs, resulting in an alignment between those needs and the services Fugro provides. Other (Public) services companies Non oil and gas industries Design & engineering rms Contractors Governments National oil companies International energy companies - Independents International energy companies - Majors Other (Public) services companies Non oil and gas industries Design & engineering rms Contractors Governments National oil companies International energy companies - Independents International energy companies - Majors International energy companies – majors International energy companies – Independents National energy companies Governments Contractors Design & engineering firms Non-oil and gas industries (Public) services companies Other Revenue by client type (2021, in %) 13 13 6 10 25 3 13 12 5 Innovation led by digitalisation One of our key dierentiating strengths is that we combine innovations in technology into integrated digital solutions for our clients. We are fully leveraging technology developments in the field of robotics, remote operations and analytics & cloud automation in order to oer safer, faster, more ecient and higher quality services; all in a more sustainable way. The combination of robotics and remote technology drives the evolution towards an agile and more sustainable operating model, supported by modular, lightly crewed and uncrewed vessels. As a result, we are supporting our customers on their own digitalisation evolution; a strategic priority for most of our clients. Fugro is at the forefront of the industry and a first mover in the field of uncrewed operations. This plays an important role in the future of the maritime sector by oering clients a low-carbon, safe and more ecient solution. Uncrewed operations remove personnel from a high-risk environment to an onshore remote operations centre and reduce carbon footprint by over compared to traditional survey methods. The safe, onshore environment, stimulated by flexible shis, results in improved work-life balance, beer career opportunities and increased diversity. Cloud-based data processing allows near real-time data delivery, leading to faster and more informed decision making. By now, Fugro has a global network of remote operations centres to deliver fast, safe and sustainable inspection, survey and positioning services. To give our clients faster insights we leverage advanced analytics, deep learning algorithms and artificial intelligence that will be embedded in all operating routines. To support the growth of our business beyond traditional data acquisition we focus on structural monitoring of our client’s assets during the operation phase, where we use analytics and cloud automation services for fast and reliable data delivery. We provide real-time insights via modular client portals and digital twins of assets, subsurface and environment, ensuring cost eective and safe operation of these assets. We are investing in innovations that have a proven potential for increased eciency and adapting our business to provide higher margins, for example, by combining data acquired in site characterisation projects with data from asset integrity projects. Such innovations can oen be deployed across multiple end markets. Finally, novel applications of core technical competencies may result in oering our existing services to potentially large new markets (for example, visual monitoring of bridges to assess the safety of the structure). We are leveraging technology developments in the field of robotics, remote operations and analytics & cloud automation in order to oer safer, more ecient and higher quality services; all in a more sustainable way FUGRO ANNUAL REPORT We have developed a customised go-to-market process focused on value-based contracts realising the full value of innovation and bringing to market innovations within two to three years. We are also safeguarding the products of our innovation with patents and trade secret protection, wherever possible. Market agnostic assets Fugro is the only company with purpose-built geophysical and geotechnical vessels, and our fleet is amongst the youngest in the industry. With our market agnostic asset base, expertise and client solutions we are able to serve clients across dierent end markets and geographies, providing flexibility to optimise utilisation, pricing and costs across multiple projects. In particular, it allows us to diversify towards structural growth markets, such as wind parks at sea. The same applies for our land-based assets. We have further improved the flexibility of our fleet by focusing on a more balanced mix of paid working days between fully owned plus long-term charters on the one hand and short-term charters on the other hand, enabling us to meet demand variations and quickly relocate assets to meet opportunities as required. In order to reduce carbon emissions and increase safety of our operations, we are increasingly deploying lightly, sometimes uncrewed, vessels and smaller, more modular and mobile solutions. Global player with local presence We have a global reach, with major hubs in each key region (Europe and Africa: Leidschendam, the Netherlands and Aberdeen and Wallingford, the United Kingdom; Americas: Houston, US and Macaé, Brazil; Asia Pacific: Hong Kong, Singapore and Perth, Australia; Middle East and India: Dubai and Abu Dhabi, UAE and a local presence in countries in total. Although Europe still makes up a substantial part of our total revenue, we have a well-balanced presence in each of our four regions. Moreover, as an organisation benefiing from a global reach, we are able to oer client solutions throughout the year across geographies and seasons, reducing earnings volatility due to our presence in diversified regional markets and economies, with standardisation of our solutions enabling us to deliver the same quality of integrated solutions to clients all over the world. Fugro combines its global reach with a local presence, with local oces being predominantly staed and managed by local employees. Oen, large integrated projects can be fully resourced within the relevant regions. This ensures that we understand local business procedures, culture and traditions and allows us to compete against local participants, while, at the same time, drawing on our global reach, resources and expertise and the strength of company-wide cooperation. Operational assets (per year-end ) 25 vessels (plus 5 long-term charters) 6 uncrewed surface vessels (USVs) 7 autonomous underwater vehicles (AUVs) 67 remotely operated vehicles (ROVs) 113 cone penetration testing systems (CPTs) 211 onshore and 12 oshore geotechnical drilling rigs 32 jack-up platforms 36 laboratories global network of remote operations centres With our market agnostic asset base, expertise and client solutions are able to serve clients across dierent end markets and geographies FUGRO ANNUAL REPORT Global player with local presence Employees Revenue Employees Employees Revenue Employees Revenue Revenue Americas Europe Africa Middle East & India Asia Pacific Major oce locations Oce locations * revenue in EUR million FUGRO ANNUAL REPORT ORGANISATION Fugro N.V. is a public limited liability company managed by a Board of Management under supervision of an independent Supervisory Board; a so-called two-tier board system. The company is organised in four regions, which all operate the same four business lines: marine site characterisation, marine asset integrity, land site characterisation and land asset integrity. The Executive Leadership Team (ELT) assists the Board of Management in managing the company, and is collectively responsible for the performance of the company and its business, the implementation of the strategy and group wide policies, systems and processes. Apart from the members of the Board of Management, this team consists of the four Regional Group Directors, a Group Director Development & Digital Transformation, the Group Director Human Resources and the General Counsel/Chief Compliance Ocer. CEO Mark Heine is chairman of both the Board of Management and the ELT. We have an eective organisation in place, supporting the implementation of groupwide agendas in key areas such as key account management and value based pricing, integrated digital solutions, disciplined cost management, operational excellence, human resources, IT and digital transformation. At group level, the company has corporate departments in place for quality, safety and sustainability; accounting and control; treasury; tax; insurance; procurement; internal audit; legal; human resources; IT and strategy and communication. Within the regions, support functions for human resources; finance; quality, safety and sustainability; strategic sales & marketing; operational excellence; communication and IT are increasingly organised as shared services. At Board of Management level, sustainability is part of the portfolio of the CEO. The Global Director Safety & Sustainability, who directly reports to the CEO, coordinates the groupwide development and implementation of the sustainability agenda. The relevant topics are managed and monitored by the appropriate corporate directors; primarily Global Director Human Resources, Global Director Safety & Sustainability, General Counsel/Chief Compliance Ocer, and Global Procurement Director. Fugro’s business entities are responsible for local implementation of relevant practices within the policy framework set by the Executive Leadership Team. Organisational structure Board of Management Executive leadership team Marine asset integrity Land site characterisation Land asset integrityMarine site characterisation Americas Europe Africa Middle East & India Asia Pacific Energinet has awarded Fugro various contracts for the Danish Energy Island project in the North Sea. The purpose-built artifi cial island will be situated km o shore in the North Sea and will act as a hub connecting hundreds of surrounding wind turbines. Fugro has been contracted to perform geophysical, geotechnical, unexploded ordnance and cable route surveys, which will be used to prepare an integrated soil model on which wind farm developers will base future tenders for this megaproject. In addition, Fugro will provide fl oating wind lidar measurements. These projects underline Fugro’s commitment to supporting the renewable o shore wind industry in the global energy transition and shows that quality and technical innovation wins contracts. Our innovative ultra high resolution sub-soil Geo-data solutions will help future wind farm owners de-risk the development and deliver cost-e ective renewable energy to up to million European households. Fugro’s involvement in construction of the world’s fi rst energy island FUGRO ANNUAL REPORT Fugro fulfi ls an important role in the ongoing energy transition, mostly through its wide range of site characterisation services from multiple vessels for the safe, e cient and sustainable development of o shore wind parks. Fugro’s Geo-data enhance the client’s understanding of the ground risks associated with the project, optimising and de-risking the decision-making and design process. Over the last couple of years, Fugro has been awarded numerous work scopes for the Atlantic Shores development o the coast of New Jersey in the US, a joint venture between Shell New Energies US and EDF Renewables North America. To achieve streamlined decision making and an accelerated project schedule, Fugro is building and managing a centralised, cloud hosted data repository to provide the client and other stakeholders with a single source of updated Geo-data and documentation. In addition, during the coming years Fugro will also provide real-time wind and metocean measurements to optimise wind turbine design, installation, operations and maintenance. High performance site investigation services for o shore wind parks FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT Strategy We have become a more diversified and resilient company, with increasing exposure to growth markets such as renewables, infrastructure and water. Our position as the leading Geo-data specialist oers great opportunities in a rapidly changing world. The positive market outlook reinforces our Path to Profitable Growth strategy, supported by our increasingly balanced market exposure, less capital-intensive asset base and resilient operating model. With our key strengths, we are well positioned to support our clients with the energy transition, development of sustainable infrastructure and climate change adaptation. Our Path to Profitable Growth strategy is based on three strategic objectives: capture the growth in energy and infrastructure, leverage core expertise in new growth markets and dierentiate by integrated digital solutions. We believe in sustainable development as a driver to create a safe and liveable world together. This requires balancing the short- and long-term interests of our stakeholders and integrating social and environmental factors into our decision making to ensure our long-term success. GLOBAL DEVELOPMENTS The world is in a period of intense and accelerating transformation, including population growth, urbanisation and climate change. By , the population will have grown by approximately . billion, or , in comparison with today, while around . billion people will have moved to urban areas. This will lead to further increasing demands for energy, fresh water, food, minerals, metals, buildings, industrial plants and infrastructure, leading to massive and potentially disruptive challenges for the world. The impact of climate change is becoming increasingly visible by the day, with rising sea levels puing coastal systems and low-lying areas at risk, increasing pressure on ecosystems and biodiversity and decreasing diversity in marine ecosystems. Over the coming decades these key global developments are expected to drive an increase in demand for energy, water, food, roads, rail, FUGRO ANNUAL REPORT buildings, airports and flood protection. The energy mix, infrastructure and built environments have to evolve if tomorrow’s problems are to be solved in a sustainable manner, rendering Fugro’s services more critical than ever. Moreover, technology is changing faster than ever before, impacting most industries including Fugro’s end-markets, opening up opportunities for dierent and more eective ways of working. Rapidly developing technologies with connected devices and robotics enable more remote solutions, which can deliver sustainable operations. In addition, active engagement by diverse stakeholder groups with an organisation’s environmental, social and governance performance, is clearly on the rise. As a result, companies are expected to demonstrate accountability and thus transparency over sustainability maers. Covid-19 pandemic In , the pandemic continued to have a far-reaching impact on almost all aspects of our lives. Fugro’s business operations were hampered by travel restrictions, quarantine requirements and lockdown measures, leading to operational complexities for cross border projects and stang, and project delays. In addition, subdued travel and economic activity levels resulted in low oil and gas activity levels. Throughout the year we continuously reviewed, updated and where needed strengthened our Covid- management protocols, aimed at business continuity while maintaining the health, safety and wellbeing of employees, with a specific focus on sta on remote projects and vessels. Our increased remote operations capabilities facilitated continued operations for our clients. The pandemic has had a tremendous eect on the energy markets. Aer low global economic activity, and consequently lower energy demand in , the year under review saw a recovery in demand of around (BP Statistical Review). The world has been adapting to living with the virus. While the pandemic clearly is yet not over, with recent surges in infections due to the omicron variant, economic agencies expect the global economy to continue to rebound despite multiple challenges, such as higher than expected inflation rate. According to the IMF, the global economy is expected to grow by . and . in and respectively. While the impact of the pandemic is significant on the dynamics in the oil and gas markets, it has been limited on the renewables, infrastructure and water markets, due to the continued growth in wind developments at sea and aggressive governmental incentive programmes. KEY TRENDS IN OUR MARKETS The pandemic has laid bare fundamental deficiencies in our global system, accelerating the aention for other disruptive global challenges. The global developments of population growth, urbanisation, and climate change are resulting in three key trends in our markets: the energy transition, sustainable infrastructure and climate change adaptation. Energy transition Despite an expected increase in the total global energy demand during the coming years, businesses are adapting to a transformation of the global energy sector from fossil-based systems to renewable energy sources. The switch from sources like coal oil and natural gas to renewable energy is enabled by technological advancements and a societal push toward sustainability, driven by the urgent need to limit the impact of climate change. This requires a fundamental shi in the global energy system. The demand growth in global energy in the upcoming decades is envisioned to be fully absorbed by a variety of renewable sources, such as wind, solar, hydrogen and geothermal. To date, Fugro in particular oers solutions for wind developments at sea, while hydrogen and carbon capture storage are rapidly developing markets that will oer commercial opportunities in the future. At the same time, the energy transition is a very complex process that will take time. Currently, only around of the worldwide primary energy use is generated from renewable sources. Therefore, there is a large discrepancy between governments’ carbon reduction ambitions and current reality. In , the world was already confronted with unprecedented gas prices, due to strong demand coupled with delivery issues and very low investment The world we live in is changing faster than ever before, driven by population growth, urbanisation, climate change, accelerating technological developments and an increasingly engaged society FUGRO ANNUAL REPORT levels. The transition will require a balanced approach, where fossil fuels will remain an important part of the energy mix for years to come, with oil and coal being consistently phased out and natural gas serving as a transition fuel. Renewables The transition to low carbon energy resources will result in a fundamental shi in the global energy system. The demand growth in global energy in the upcoming decades is envisioned to be fully absorbed by a variety of renewable sources. Wind developments at sea play a role of increasing important role in this market. According to the IEA World Energy Outlook, renewable energy, led by wind and solar power, will be the fastest growing source of energy over the next years. The majority of the turbines has been so far installed in north-west Europe, but this market is becoming increasingly global. C Oshore reports that over the next five years many new wind projects are scheduled to be completed around the world; installed capacity is expected to grow from GW to GW between and (excluding China). In line with global wind power capacity increases, oshore wind capital expenditure is projected to increase at a compounded annual growth rate of approximately over the next five years, with the majority of the investments in Europe, followed by Asia Pacific and Americas. As the global oshore wind market grows, countries will increase their reliance on power generated from this source to meet demand. Activities such as inspections of cables and foundation, as well as monitoring of oshore wind farms once fully operational will become increasingly important to prevent any issues that might cause an interruption in power supply. MEI E&A APAC Americas Americas APAC Europe & Africa MEI Oshore wind capex, USD billion 2020 2021 2022 2023 2024 2025 19 22 31 40 47 19 12 7 13 6 3 18 7 6 21 10 10 20 15 12 12 7 Source: 4C Oshore December 2021. (Note: data exclude China) +20% FUGRO ANNUAL REPORT Oil and gas Oil and natural gas are expected to be a key source of energy in the medium to long term. Gas investments are expected to continue to grow driven by increasing energy demand and switching from higher carbon emission sources (coal in particular) to gas. Natural gas has aracted a lot of aention both as a transition fuel to the greener future energy mix and due to the recent unrest on the energy spot markets, which set an all-time high gas prices in Europe and Asia. Current forecasts show a steady growth of demand and prices for natural gas, which may also shi the investment focus of the oshore E&P industry towards natural gas field development. In there was a strong imbalance in gas supply and demand which caused gas prices to increase strongly partly caused by geopolitical tensions and constraining supply by Russia. It is expected that gas will gain further interest in the near future as a transitional fuel. According to Rystad Energy, the deviation from the long-term due to the pandemic has resulted in a short-term decline in investments and budgets cuts for the industry, but investments are expected to return to growth from onwards. Looking ahead, mainly natural gas investments are expected to gradually increase across the full life cycle of oil and gas projects, albeit to lower levels compared to -. Sustainable infrastructure Utility and transportation infrastructure is the backbone of any economy. However, most infrastructure was built decades ago and has gone past its original lifespan, safety and design criteria. Climate impact and deferred maintenance compound the challenges owners of these critical assets and networks face. Sustainability in infrastructure is about life-time extension, repair and replacement of existing aging infrastructure, and building smarter, cleaner and safer new infrastructure. Data-driven decision making, on the basis of high-tech sensors, with risk based expert inspections and assessment will support beer prioritisation of spending due to the onset of predictive asset management. A good understanding of the MEI E&A APAC Americas Americas APAC Europe & Africa MEI Infrastructure spend, USD billion 2020 2021 2022 2023 2024 2025 617 676 728 782 839 547 147 202 140 128 162 219 154 175 233 167 188 248 180 203 254 192 141 153 166 180 124 174 127 122 Source: Global Data Construction Intelligence Centre (January 2022); Global infrastructure construction services spending estimates, excl. China +9% MEI E&A APAC Americas Americas APAC Europe & Africa MEI Number of oshore project final investment decisions 2020 2021 2022 2023 2024 2025 74 88 147 187 154 81 14 30 20 10 16 37 21 27 68 35 36 83 40 33 67 35 14 17 28 19 5 38 24 14 Source: Rystad Energy (January 2022) MEI E&A APAC Americas Americas APAC Europe & Africa MEI Oshore oil & gas market spend, USD billion 2020 2021 2022 2023 2024 2025 181 199 202 208 218 180 31 61 31 58 38 63 34 41 63 34 44 66 32 45 71 34 64 65 66 68 34 56 34 56 Source: Rystad Energy (January 2022) +4% FUGRO ANNUAL REPORT renewed ambitions to reduce emissions prove to be eective. Extreme weather and other climate change- related events, resulting in coastal and inland floods as well as droughts, will become more frequent and intense. This leads to adverse impacts on ecosystems, economic sectors, infrastructure and human health and well-being, especially as around of the world’s population lives within kilometres of the coast. A strong growth is expected in investments in climate change adaptation and related infrastructure. Coastal protection and land reclamation activities contribute to the sustainable growth of the water management sector. National governments and international organisations are taking measures to current status of infrastructure assets and the interaction with its surroundings and subsurface environment, is essential to increase safety and reduce operating risk and total cost of ownership. The level of investments in infrastructure is directly correlated to economic growth. Although in global GDP growth was negative due to the pandemic, according to the IMF, GDP increased by . in . IMF anticipates a . growth in . This will lead to additional investments in development and maintenance of infrastructure. According to the Global Data Construction Intelligence Centre, global infrastructure spend is expected to increase by approximately over the next five years. As investments in roads and electricity networks are expected to continue growing, there is an increasing need for competent site investigation, quality data collection and accurate interpretation and advice to assist construction management companies through condition monitoring and evaluation, contributing to the feasibility, design, engineering, construction, maintenance and decommissioning stages of buildings, highways, railways, bridges, tunnels, ports and airports. Climate change adaptation In the lead-up to COP in Glasgow in November , many studies were published showing that world is not yet on track to meet the ambitions of the Paris agreement. Climate change will lead to more challenges in the future, even if global eorts and counter and mitigate risks related to the sea-level rise by adequate coastal defence infrastructure and systems, levee reinforcements and acquiring detailed knowledge of the oceans to prevent flooding. Harsh weather paerns and natural disasters are increasingly impacting high density population areas in river deltas and low-lying areas At the same time, increasing cases of drought result in low ground water levels, subsidence risks and foundation issues. This leads to an increasing need for innovative water sourcing and water management solutions. Moreover, the protection of ocean’s health is an increasingly important topic, as the world’s oceans cover of the Earth’s surface and support nearly every aspect of our lives. FUGRO ANNUAL REPORT PATH TO PROFITABLE GROWTH STRATEGY With our key strengths, we are uniquely positioned to support our clients with the energy transition, sustainable infrastructure and climate change adaptation. While contributing to the UN Sustainable Development Goals, it is Fugro’s ambition to deliver solutions supporting our clients to overcome their challenges in achieving net-zero carbon emissions, to enable the development of safe infrastructure and to strengthen climate resilience. Our strategy is based on three objectives: capture the growth in energy and infrastructure, leverage our core expertise in new growth markets and dierentiate by integrated digital solutions. Capture the growth in energy and infrastructure The anticipated growth of the energy and infrastructure markets is leading to increased spending on renewable power and electricity networks, railways, roads, bridges, tunnels, buildings and industrial facilities. Fugro will increase its integrated oering of data acquisition, analysis and advice, and further strengthen its key account management and value-based bidding. We will continue to improve asset utilisation and operational excellence in order to drive client satisfaction and cost eciencies. The ongoing transformation of the global energy sector from fossil-based systems to renewable energy sources oers a lot of opportunities for Fugro. To date, Fugro in particular oers solutions for wind developments at sea, while hydrogen and carbon capture storage are rapidly developing markets that will oer commercial opportunities in the future. Initially a mostly European market, oshore wind parks are now being developed all over the world. We oer a wide range of site characterisation and asset integrity services. We are redirecting our market agnostic assets, expertise, products and solutions towards this structural growth market, leveraging our long-standing relationships with traditional energy clients as they grow their renewables business. At the same time, we are well equipped to continue to oer our site characterisation solutions to traditional energy clients. In addition, our asset integrity solutions enable clients to keep their existing infrastructure at sea safe and reliable by inspection and corrosion detection work, to protect our oceans and keep coastlines free from exposure to pollution. In the Land business lines, we will further grow our share of large complex infrastructure projects as Fugro is one of the few companies that can oer integrated Geo-data acquisition, analysis and advice. By strengthening our relationship with key clients in the engineering, procurement and construction segment, Fugro ensures that it is engaged from the very start of their projects. To further leverage our consultancy mindset, we have captured this approach in our Geo-risk management framework concept. This framework describes the subsurface risk environment that we share with our clients and is based upon Fugro’s ability to add value by reducing uncertainty at all stages of the asset lifecycle to avoid or solve engineering challenges and to help our clients manage their ground-related risk exposure and beer meet their ultimate business objectives. Strategy framework Purpose Together we create a safe and liveable world Support the transition towards net-zero carbon, safe infrastructure and climate resilience Be the world’s leading Geo-data specialist Unlocking valuable insights from Geo-data to help our clients design, build and operate their assets safely and sustainably Capture the growth in Energy & Infrastructure Leverage core expertise in new growth markets Values Vision Strategy Dierentiate by integrated digital solutions We are determined to deliver We do what’s right We prepare for tomorrow We build trust FUGRO ANNUAL REPORT Leverage core expertise in new growth markets While already strongly positioned in supporting clients in the energy and infrastructure markets, Fugro is leveraging its existing expertise to develop new activities in adjacent and new markets. In particular, we are expanding into the water market, to capitalise on the global need to increase climate resilience and global water security, and the resulting significant investments in flood protection, coastal defence and water management. We are oering integrated coastal resilience solutions for coastline mapping, dike monitoring and design, freshwater sourcing and transport, and ocean science. This helps communities and asset owners to beer analyse their climate related risks and design solutions. In addition, Fugro is commied to support the growing market of route surveys for fibre optic cables, and further diversify its oering of positioning services, for example for space assets. Dierentiate by integrated digital solutions We are commied to maintain our dierentiated position as the most innovative Geo-data company across the markets in which we operate. Supported by strong client involvement, our research and development eorts are focused on less capital- intensive solutions, such as the shi towards more lightly and uncrewed vessels, that aim to reduce the overall cost of development and operation of our clients’ assets. This provides us with a competitive advantage, compounded by the need to work remotely as a result of the pandemic. We will accelerate the implementation of robotics and analytics across all service lines. Our integrated solutions are built on four pillars: mobile autonomous robots and sensors, remote operation and support services, analytics and cloud automation and insights delivery through the Digital Foundation. Our clients are exposed to large volumes of data on which they base complex decisions. Fugro is increasingly providing its clients with the Fugro’s Digital Foundation: a digital, four-dimensional model combining all Geo-data acquired throughout the lifetime of the asset, artificial intelligence-driven analytics and related decision making. The resulting comprehensive web-based interface provides clients with (near) real- time insight into location and design optimisation, change detection and simulation. We aim for or our digital twins and (subscription based) portals to become the backbone of Geo-data based decisions throughout the life cycle of the asset. Geo-risk management framework Uncertainty reduced & value increased Feasibility planning Preliminary design Detailed design Construction Asset operation Initial site screening Integrated digital site characterisation Analytics design & advice Design calibration Geo monitoring Asset monitoring FUGRO ANNUAL REPORT Our strategy capitalises on the market trendsOur strategy capitalises on the market trends of energy transition, sustainable infrastructure and climate change adoptation Strategy Capturethe growth in Energy &Infrastructure Leverage core expertise in new growth markets Dierentiate by integrated digital solutions Support net carbon emissions Enable safe infrastructure Strengthen climate resilience Stakeholder engagement How we engaged in 2021 Exemplary topics discussed Impact on Fugro’s strategy and policies Customers Client facing personnel engages with clients at all levels: key account management with direct senior leadership involvement, business development, technical advice, proposal reviews, project management and contract negotiations. Over 3,550 meetings were logged during 2021. We also engage via client surveys. Future client strategies, project performance and client satisfaction, energy transition and other supply chain challenges, innovation, understanding and advising on work scopes, Covid-19 impacts, HSE, Fugro’s ESG rating and ESG performance. Client project feedback is continuously addressed to improve our policies and client relationships. Client strategies and innovation direction is highly valued in developing commercialisation strategies, as well as strategies with regard to emission reduction aecting clients’ scope 3 profile. Employees We conduct regular engagement surveys. Local management organises town hall meetings to share information and invite employees to ask questions and share their thoughts. Daily news items, regular CEO and other senior management videos on the corporate intranet. Our work environment, strategy and culture, the activation of company values, Covid-19 management and the impact of the pandemic on people’s work environment and wellbeing, with a particular focus on sta working on remote locations. Employee engagement enables management to prioritise the topics that impact employees’ well-being and professional development. We prioritise our actions based on issues that are most relevant to Fugro’s business and performance. Suppliers In addition to Fugro’s global procurement team which has regular meetings with global suppliers, local procurement teams maintain regular contact with other suppliers. Covid-19 impacts, innovation, sustainability, CO 2 footprint, potential supply chain risks, cost optimisation opportunities, terms and conditions, Fugro’s Code of Conduct, GDPR, legal compliance and compliance with Fugro’s procedures. To stimulate a responsible supply chain, we are in discussion with suppliers about adherence to Fugro’s Code of Conduct, Fugro’s supplier and partner code of business principles, and impact on our scope 3 emissions. Joint development of innovative solutions or assets. FUGRO ANNUAL REPORT STAKEHOLDER ENGAGEMENT Fugro values engagement with its stakeholders, supports them with relevant information on performance and progress, and actively seeks their opinions and ideas through regular discussions and consultation. A good understanding of their legitimate interests and expectations helps us to beer manage the opportunities that could impact our ability to create value in the long term. Stakeholders considered to be most relevant to our success are customers, employees, suppliers, investors, and society at large. FUGRO ANNUAL REPORT Stakeholder engagement How we engaged in 2021 Exemplary topics discussed Impact on Fugro’s strategy and policies Equity and debt investors CEO, CFO, Director Investor Relations and Director Safety & Sustainability regularly engage with investors and other financial market participants, via results meetings, webcasts and calls. Operational performance, Covid-19 impacts, balance sheet, mid-term targets, Fugro’s increasing diversification towards renewables and climate adaptation growth areas, ESG ratings and performance. Investor feedback is regularly discussed with the Executive Leadership Team and Supervisory Board. It is taken on board in the development of our strategy and policies. Society (eg, international organisations, governments and intergovernmental organisations, universities) Fugro undertakes joint research & development activities with universities and institutes, sponsors scholarships, supports ocean science initiatives such as UN Ocean Decade and Seabed 2030, engages with various industry organisations, NGOs, cities and municipalities. Ocean science and conservation, climate change mitigation and adaptation challenges and solutions, mobilisation of the private sector for societal challenges. Development of sustainability targets and inclusion of SDG related objectives in local planning and policies, further contribution to various ocean science initiatives. Partnerships to set and roll out industry standards. Sponsoring of local community events. Materiality assessment In , Fugro decided to update its materiality assessment. The aim of this assessment was to identify those topics that best align with Fugro’s strategy and the latest sustainability developments in a rapidly changing world. Aer identifying and updating the relevant topics considering Fugro’s strategy, international reporting standards such as SASB and GRI, a peer review, sector specific studies and media analysis, a short list of topics was established. Using an anonymised online survey tool, an internal and external consultation was organised to determine the priorities in this shortlist. For the internal survey Fugro’s top management was invited to participate, for the external survey almost people were selected amongst Fugro’s key stakeholders: clients, suppliers, investors, NGOs and randomly selected employees. The results of these surveys were validated in sessions with a sounding board, the Executive Leadership Team and the Supervisory Board. While no drastic changes resulted from this assessment compared to the previous exercise in , the outcome reflects the increased global aention for key topics such as climate change mitigation and adaptation, business resilience and biodiversity. The outcome of the assessment informs Fugro’s (sustainability) strategy and communication eorts. The table below shows the link between our material topics, key objectives, performance, and mid-term ambitions for our most important performance indicators. To achieve our ambitious objectives, we have to manage the relevant key risks. For more information on our risk management approach, refer to the Risk management chapter. For more information about performance, policies, and ambitions regarding the material topics, refer to the Group performance chapter. FUGRO ANNUAL REPORT Connectivity table Material topic Fugro’s objective Performance indicator Ambition / Target Performance 2021 Performance 2020 Related risks Page PEOPLE Health, safety, security and wellbeing Maintain the highest health & safety standards Lost time injury frequency <0.5/million sta hours in 2023-2024 0.70 0.67 Health, safety & security 44 Total recordable case frequency - 1.71 1.62 44 Total lost work days - 419 444 44 Talent araction, learning & development Aract and retain talented employees Voluntary employee turnover rate 14% 8% Employees & capacity 46 Invest in Fugro’s highly skilled and engaged workforce Number of completed courses at Fugro Academy - 80,873 101,193 46-47 Diversity & inclusion Provide equal opportunity & reward to all sta, regardless of gender, age, background, sexual orientation, religion or disability % female employees - 22% 21% Employees & capacity 47-48 % women in senior management > 25% in 2025 20% 20% 47-48 PLANET Climate change mitigation & adaptation solutions Deliver solutions to support the energy transition, sustainable infrastructure, and climate adaptation Renewables, infra and water as % of total revenue >65% in 2023-2024 61% 55% Market exposure Innovative capability 50 GHG emissions Minimise environmental footprint of Fugro’s operations Absolute CO 2 emissions vessels (kilotonnes) Net zero by 2035 (scope 1 and scope 2) 184 180 Climate change Project execution Innovative capability 51-52 CO 2 emission intensity vessels (tonnes CO 2 / operational day) 20% reduction by 2025 (baseline: 2020) 14.9 15.8 51-52 Share of energy consumption in Fugro oces from renewable sources 80% by 2025 43% 31% 51-52 CDP rating B rating in 2023 (reporting year 2022) B– C 86 Biodiversity Minimise impact of Fugro’s operations on biodiversity and actively contribute to protection of marine biodiversity Contribution to UN Decade of Ocean Science for Sustainable Development (2021-2030) Activate partnership agreement with IOC-UNESCO Climate change 53 PROFIT Business resilience Ensure healthy financial performance, resilience and relevance of Fugro’s business model EBIT margin 8-12% in 2023-2024 4.3% 3.5% Market exposure Innovative capability Project execution Health, safety & security Company financing 37 Free cash flow 4-7% of revenue in 2023-2024 0.9% 4.2% 37 ROCE 10-15% in 2023-2024 8.8% 4.6% 40 High quality solutions Deliver innovative, digital and sustainable solutions to clients Net promotor score >40 (based on 1,200+ responses) 55 NA Innovative capability 42 R&D spend as % of revenue _ 2.5% 2.6% 42 Protection of intellectual property Number of patents granted _ 29 35 43 Business ethics & compliance Conduct business in an ethical way and in compliance with global and local regulations Number of alleged violations of Code of Conduct _ 9 34 Legal & regulatory compliance risk 54 Data privacy & security Ensure the privacy and security of our employees’, contractors’, and clients’ data 55 FUGRO ANNUAL REPORT employer and a responsible company managing our impact on the society and world in which we operate (‘how we do it’). stakeholders. It also includes the United Nations Sustainable Development Goals (SDGs) on which we have an impact. The impact is related both to the services we provide (‘what we do’), and to being a good LONGTERM VALUE CREATION Fugro’s value creation model, based on the ‘six capitals’ model of the International Integrated Reporting Council, shows how we use the resources, capabilities and expertise at our disposal to create value for our Geophysical data Metocean data Geodynamic data Geotechnical data Geochemical data Geospatial data Geohazard data Global positioning data Output per capital Outcomes for stakeholders Impact on SDGs Value creation process Input Population growth Urbanisation Technology Climate change Engaged society GLOBAL DEVELOPMENTS FINANCIAL ■ Funding from shareholders, banks and bondholders HUMAN ■ Talented and diverse employees ■ Fugro Academy, training spend KNOWLEDGE ■ Advanced methods and technologies ■ R&D (spend and employees) ■ Knowledge partnerships STAKEHOLDER RELATIONSHIPS ■ Stakeholder engagement ■ Code of Conduct PROVISION OF SERVICES ■ Fixed asset resource base, capital expenditure and supplier spend ■ Project and risk management tools ENVIRONMENT ■ Energy use ■ Risk mitigation systems CUSTOMERS ■ Innovative customer solutions ■ Safely built and operated assets EMPLOYEES ■ Fair terms and conditions of employment and equal opportunity for all ■ Training and life-long learning opportunities ■ Living wage ■ A healthy and safe working environment SUPPLIERS ■ Reliable customer ■ Fair payment terms INVESTORS ■ Return on investment SOCIETY ■ Solutions contributing to the energy transition, sustainable infrastructure and climate change adaptation ■ Reduced carbon footprint ■ Protection of ecosystems through sustainable levee designs and water management consultancy ■ Participation in various ocean science programmes ■ Ethical business conduct ■ Knowledge development through academic partnerships FINANCIAL ■ Wages,interest, taxes and dividends ■ Share price performance HUMAN ■ Engaged employees with enhanced skills ■ Health and safety performance KNOWLEDGE ■ Innovative site characterisation and asset integrity solutions ■ Intellectual property (patents) STAKEHOLDER RELATIONSHIPS ■ Ethical business conduct ■ Solutions advancing a safe and liveable world PROVISION OF SERVICES ■ Total value of acquisition, analytics and advisory services ■ Safe and reliable delivery ENVIRONMENT ■ Reduced environmental impact ■ Solutions contributing to the energy transition, climate change adaptation and sustainable infrastructure We unlock insights from Geo-data: information related to the Earth’s surface, subsurface and structures built on it. With our unique ‘triple-A’ approach (data acquisition, analysis and advice) we help our clients design, build and operate their assets in a safe, sustainable and e cient manner Future Vessel Plan - Jan 20221 Achieving emission-free shipping is not a straight- forward ma er as most vessels still run on fossil fuels. Although there are several routes to achieve CO emission reductions in the maritime sector, there are only a few possible alternatives to marine diesel that can be deployed in the short to medium term. For large-scale introduction the most viable option is methanol. The Fugro-led consortium MENENS (Methanol as Energy Step Towards Emission-free Dutch Shipping) has been awarded a EUR million grant from the Netherlands Enterprise Agency for the development of methanol as a low-carbon shipping fuel. Methanol is an alcohol with a low carbon, high hydrogen content. Therefore it is also suitable as a hydrogen carrier and can be used as a ship fuel. The partners in the consortium represent the complete breadth of the Dutch maritime sector, from equipment suppliers, designers, shipbuilders to ship owners. This is a unique group of companies, looking to develop methanol in fundamental research as well as the practical live trials. Fugro’s leading role in the consortium is to safely convert the engine of the Fugro Pioneer survey vessel to run emission-free on methanol by the beginning of . Fugro will also contribute to the wider development of the engine technology and energy management, ship design, safety procedures and technology validation of this emission-free fuel. Development of low-carbon shipping fuel FUGRO ANNUAL REPORT The kilometres seawall was built more than years ago and forms the foundation of San Francisco’s Northeast Waterfront, which houses a critical mix of open spaces, tourist a ractions, businesses, utilities, disaster response facilities, transportation networks, and state and regional maritime assets. The seawall’s age and proximity to two major active seismic faults makes the waterfront especially vulnerable to e ects of earthquakes and fl ooding. The work was conducted over a period of years as part of a multi-hazard risk assessment to identify immediate and long-term hazards, such as those associated with earthquakes, fl ooding and sea-level rise. As the port’s lead geotechnical engineer for future programme phases, Fugro will use the MHRA inputs to develop and design optimal retrofi t solutions for the port’s ageing seawall. Fugro’s approach to the MHRA emphasised two key goals: reducing the uncertainty in the ground conditions for improved safety and minimising potential overengineering of seawall retrofi t solutions for maximum cost e ciencies. These goals were accomplished through a targeted, high-quality geotechnical fi eld campaign, development of a robust D ground model, and the use of innovative dynamic soil structure interaction analyses to confi dently evaluate the seawall’s seismic stability. The result was a reliable, rather than conservative, vulnerability assessment which will allow the port to make informed funding decisions on retrofi t design and construction. Fugro will be continuing its work with the port during the next programme phases, helping to secure the city’s coastal infrastructure for safe and sustainable operations over the long-term. Helping to secure San Francisco’s coastal infrastructure FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT In , Fugro delivered a clear improvement in its results. The margin was up, in particular in Europe-Africa and Americas, and the company generated a positive free cash flow and net result. The resilient performance, in a year that was still significantly impacted by the pandemic, was a combination of strict cost management, operational delivery, and early signs of improved pricing. Group performance Key figures from continuing operations unless otherwise indicated (x EUR million) 2021 2020 Revenue ,. ,. comparable growth 1 5.8% (12.4%) EBITDA 2 . . EBITDA margin 2 .% .% EBIT 2 . . EBIT margin 2 .% .% Net result 3 . (.) Net result incl. discontinued operations 3 . (.) Backlog next 12 months ,. . comparable growth 1 11.6% (8.0%) Cash flow operating activities aer investing (free cash flow) 4 . . Net leverage 5 . . Corrected for currency eect Adjusted for specific items: onerous contract provisions, restructuring cost, impairment losses, and certain advisor/ other costs of EUR . million in (: EUR . million) Aributable to the owners of the company Incl discontinued operations; free cash flow includes EUR . million proceeds from the sale of Global Marine Total debt (incl. subordinated debt) minus cash on balance sheet divided by last months adjusted consolidated EBITDA for covenant purposes, including IFRS- FINANCIAL FUGRO ANNUAL REPORT Full-year revenue increased by . on a currency comparable basis. Revenue from renewables sustained its growth trajectory with an increase of . Infrastructure and water were up by and respectively. In the fourth quarter, oil and gas related revenue increased in all regions, whereas for the full year, revenue declined versus . EBITDA increased to EUR . million, driven by improvements in Europe-Africa and Americas, resulting in an EBIT margin of . compared to . in . Results in the marine and land asset integrity business lines were higher in all regions. Throughout the year, operations were still impacted by the pandemic, in particular operational complexities of cross border projects in Asia Pacific in combination with lower government cost compensation, and low activity levels in Middle East & India. As a result, marine and specifically land site characterisation margins declined. Fugro generated a positive net result of EUR . million driven by improved EBIT, net finance expense and income tax. Fugro’s backlog grew by . to EUR ,. million, which represents the largest increase since the end of , supported by all business lines in all regions. Free cash flow was EUR . million compared to EUR . million in excluding EUR . million proceeds from the sale of Global Marine Group. An increase in cash flow from operating activities by EUR . million was oset by higher working capital related to the revenue growth in the second half of year. Working capital as a percentage of -months rolling revenue was . at the end of compared to a particularly low level of . a year ago. Days of revenue outstanding was days at the end of compared to at year-end . Free cash flow aer lease payments as a percentage of revenue was . compared to . in excluding the proceeds from Global Marine Group. Capex amounted to EUR . million, in line with EUR . million in the previous year.Net debt was EUR . million as at December . REVIEW BY BUSINESS Marine Key figures, adjusted 1 (x EUR million) Revenue ,. . comparable growth 3 5.8% (.%) EBITDA . . EBIT . . EBIT margin .% .% Backlog next 12 months . . comparable growth 3 11.0% (.%) Capital employed . . EBIT(DA) adjusted for specific items Adjusted for reclassification of nearshore infrastructure services in Europe- Africa from Land to Marine (EUR . million revenue in ) Corrected for currency eect ■ Throughout the year, buoyant oshore wind activity levels led to a growth in renewables, with projects executed in Europe-Africa, Americas and Asia Pacific. Oil and gas was down everywhere except in Europe-Africa. On balance, vessel utilisation was compared to in . ■ EBIT margin improved driven by asset integrity in all regions. Site characterisation margin was lower, mostly related to subdued activity levels in Middle East & India. Land Key figures, adjusted 1 (x EUR million) Revenue . . comparable growth 3 5.7% (.%) EBITDA . . EBIT . . EBIT margin .% .% Backlog next 12 months . . comparable growth 3 12.9% .% Capital employed . . EBIT(DA) adjusted for specific items Adjusted for reclassification of nearshore infrastructure services in Europe- Africa from Land to Marine (EUR . million revenue in ) Corrected for currency eect ■ Revenue increased by ., amongst others thanks to a growth in infrastructure revenue. Only in Middle East & India, revenues were lower. ■ Operational performance improved, in particular in asset integrity. However, this was oset by Covid related operational challenges in combination with lower cost compensation in Asia Pacific, and a transaction result on a property sale in China in . In Middle East & India, the margin declined as a result of lower activity levels. FUGRO ANNUAL REPORT Asia Pacific Key figures, adjusted 1 (x EUR million) Revenue . . comparable growth 2 5.9% (10.0%) EBIT . . EBIT margin .% .% Backlog next 12 months . . comparable growth 2 6.7% (22.3%) EBIT (margin) adjusted for specific items Corrected for currency eect ■ Revenues increased by .. The largest contributor was marine site characterisation which, aer a slow first quarter, reported a strong recovery, on the back of renewable energy projects in Japan, South Korea, Taiwan and Vietnam. ■ Asia Pacific was the region which sustained the largest impact from higher Covid- related mobilisation costs and delays, while the related government cost compensation was significantly below . This impacted in particular the site characterisation business lines. In addition, included a positive transaction result on a property sale in China. The marine and land asset integrity businesses reported an improved EBIT. ■ The backlog increased by . with land site characterisation showing the largest increase. Americas Key figures, adjusted 1 (x EUR million) Revenue . . comparable growth 2 7.8% (12.6%) EBIT . (.) EBIT margin .% (.%) Backlog next 12 months . . comparable growth 2 13.8% (9.8%) EBIT (margin) adjusted for specific items Corrected for currency eect ■ Revenue increased . over last year, as a result of strong utilisation of the geophysical vessel fleet, a higher number of ROV support contracts in Brazil, increased positioning work in the Gulf of Mexico in the aermath of hurricane Ida and more land asset integrity work. ■ The region’s margin improved thanks to higher marine asset integrity revenue and an improved margin in land site characterisation. ■ The backlog increased substantially and is reflected in all business lines. REVIEW BY REGION Europe-Africa Key figures, adjusted 1 (x EUR million) Revenue . . comparable growth 2 8.6% (11.1%) EBIT . . EBIT margin .% .% Backlog next 12 months . . comparable growth 2 12.0% 2.7% EBIT (margin) adjusted for specific items Corrected for currency eect ■ Europe-Africa reported . growth, backed by a significant increase in the second and fourth quarter, when the sustained expansion of the oshore wind business was combined with recovery in the oil and gas market. ■ The region’s EBIT improved, driven by marine asset integrity, due to higher utilisation of vessels, supported by an increased utilisation of remote operations centres. ■ The backlog shows an upward trend, both in marine and land. Growth was particularly strong in marine asset integrity. FUGRO ANNUAL REPORT Middle East & India Key figures, adjusted 1 (x EUR million) Revenue . . comparable growth 2 (9.5%) (20.4%) EBIT (.) . EBIT margin (.%) .% Backlog next 12 months . . comparable growth 2 13.4% (11.2%) EBIT (margin) adjusted for specific items Corrected for currency eect ■ Full year revenue declined owing to low activity levels during the first three quarters of the year impacting all business lines in the Gulf region, particularly marine and land site characterisation. Aer seven quarters of decline, revenue increased strongly in the fourth quarter, as several long-delayed contracts finally started and utilisation of the marine fleet increased significantly. ■ EBIT declined as a result of lower revenue, mainly in marine and land site characterisation. Land asset integrity showed a significant improvement due to increased activity and ecient operations for the NEOM mega city development in Saudi Arabia. ■ Backlog was up by . mainly due to growth in the fourth quarter, supported by all business lines. HIGHLIGHTS INCOME STATEMENT Result (x EUR million) Adjusted EBITDA 1 . . Depreciation (.) (.) Amortisation (.) (.) Adjusted EBIT 1 . . Specific items on EBIT (.) (.) EBIT . . Net finance income / (costs) (.) (.) Share of profit/ (loss) of equity accounted investees . . Income tax gain / (expense) . (.) (Gain)/ loss on non-controlling interests from continuing operations (.) (.) Net result from continuing operations . (.) Result from discontinued operations . (.) Net result including discontinued operations . (.) EBIT(DA) adjusted for specific items FUGRO ANNUAL REPORT Working capital as a percentage of -months rolling revenue was . at the end of compared to a historically low . a year ago, reflecting good collections despite a particularly busy fourth quarter. Days of revenue outstanding was days compared to at year-end . Capital expenditure (x EUR million) Maintenance capex . . Other capex (including fixed assets under construction) . . Capex from continuing operations . . Capital expenditure was in line with last year; around half was spent on maintenance of existing assets and the other half on expansion and transformation (investments in future technology & solutions, digitalisation, conversion of vessels, USVs and remote operations). In , a Fugro-led consortium secured a grant from the Netherlands Enterprise Agency for the development of methanol as a low-carbon shipping fuel, which will be used to fund vessel conversion capex. Return on capital employed (x EUR million) Capital employed 1 ,. . Return on capital employed, ROCE (%) 2 .% .% Total equity plus loans and borrowings and bank overdras, minus cash and cash equivalents. ROCE is calculated using NOPAT of the last months as a percentage of a three points average adjusted capital employed. Income tax gain/ (expense) There was an income tax gain of EUR . million compared to an expense of EUR . million in . The variance is the result of increased taxation due to beer results in various geographies oset by higher recognition of available deferred tax assets and the utilisation of carry forward tax losses. (Gain)/loss on non-controlling interests from continuing operations The EUR . million gain was aributable to non-controlling interests, mainly from a subsidiary in the Middle East. Result from discontinued operations Result from discontinued operations of EUR . million was a combination of Seabed Geosolutions’ good operational result on the project for Equinor in Brazil, partly oset by charges related to the divestment on June (mainly related to EUR . million restructuring costs and EUR . million impairment). HIGHLIGHTS BALANCE SHEET AND CASH FLOW Working capital (x EUR million) Working capital from continuing operations . . Working capital as % of last 12months revenue .% .% Inventories . . Trade and other receivables . . Trade and other payables . . Days revenue outstanding (DRO) Specific items Specific items in were composed of EUR . million restructuring costs, EUR . million net asset impairments and EUR . million other costs. Net finance costs Finance income / (costs) (x EUR million) Interest income . . Net foreign exchange gain . - Finance income . . Interest expenses (.) (.) Net foreign exchange loss - (.) Finance expenses (.) (.) Net finance costs (.) (.) Interest income decreased by EUR . million to EUR . million primarily as a result of lower interest income on outstanding bank balances, while interest expenses decreased by EUR . million as a result of lower loans and borrowings. Net finance expenses decreased by EUR . million to EUR . million mainly as a result of a net foreign exchange gain of EUR . million compared to a net foreign exchange loss of EUR . million in . The exchange gain in is primarily the result of the appreciation of the US dollar. Share of profit/ (loss) of equity accounted investees The share of profit of equity-accounted investees was EUR . million compared to EUR .million in . It mainly comprises the result of joint ventures, including the joint venture China Oshore Fugro Geosolutions and Fugro’s remaining interest in Global Marine Holdings. FUGRO ANNUAL REPORT Cash flow from discontinued operations Cash flow (x EUR million) Cash flow from operating activities aer investing . (.) Cash flow from financing activities (.) . Net cash movement . (.) Net cash movement from discontinued operations is at breakeven as a result of Seabed Geosolutions’ good operational performance and proceeds from the divestment in June oset by changes in working capital and debt repayment in the second half of the year. OUTLOOK For , Fugro expects an increase in revenue in oshore wind, infrastructure and water markets, plus modest growth in the oil and gas market, resulting in overall continued revenue growth. In addition, the company is focused on further margin expansion towards its - mid-term targets of an EBIT margin of - and a free cash flow of -, on the back of higher pricing, increasing asset utilisation, disciplined cost management, operational excellence and digital transformation. At the same time, the company will continue to focus on actively managing any impacts of the pandemic, inflationary pressures and a tight labour market. To support the anticipated growth and the company’s transformation agenda, capex is estimated at around EUR million. Capital employed increased by EUR . million to EUR ,. million, primarily due to an increase in equity resulting from the positive net result and contribution from other comprehensive income. Cash flow from continuing operations Cash flow (x EUR million) Cash flow from operating activities before changes in working capital . . Changes in working capital (.) . Cash flow from operating activities . . Cash flow from investing activities (.) (.) Cash flow from operating activities aer investing . . Cash flow from financing activities (.) (.) Net cash movement (.) . Cash flow from operating activities decreased as a result of higher working capital due to a higher activity level compared to a particularly low level at year-end . The increase in cash flow from investing activities was primarily related to the one-o proceeds from the sale of Global Marine (EUR . million) in . Cash flow from financing activities reflects amongst others, the redemption of the convertible bonds, of which EUR million was outstanding at the start of . FUGRO ANNUAL REPORT For oshore site investigations, also new robotic solutions have been introduced, such as an automated, portable system that is able to do cone penetration tests and vibro core samples (Blue Snake) and a portable shallow water unexploded ordnance identification and clearance tool with safe operations down to metres water depth (SeaAuk). In , Fugro will introduce a new version of its highly portable and ecient rapid airborne multibeam mapping system (RAMMS), that will work on unmanned aerial vehicles. Other innovations such as mobile laser mapping systems and electric cone penetration testing operations will further reduce Fugro’s carbon footprint. spent . (: .) of its revenue on R&D and technology innovation, ensuring that clients receive the most up to date available technologies and solutions. Fugro is a leader in the operation of advanced, multi- purpose uncrewed surface vehicles (USVs). Fugro’s USVs consume over less fuel than traditional vessels, supporting Fugro’s target of net zero emission operations by . Since , Fugro has been deploying its -metre Blue Shadow USV fleet for medium- to large-scale hydrographic survey applications. In Fugro, together with its partner SEA-KIT International, has delivered its first two -metre Blue Essence USVs including fully electric Blue Volta remotely operated vehicles (ROVs). These two USVs have completed their first commercial inspection jobs successfully. In , Fugro will continue to further expand its fleet of USVs in the range from to metres which will have longer endurance and will be able to deploy larger ROVs and towed equipment for site investigation purposes. High quality solutions The NPS or net promoter score is a globally recognised measurement of client loyalty and satisfaction, taken by asking clients how likely they are to recommend a company to someone else. Monitoring this metric is a demonstration of Fugro’s intent to be fully client focussed and relationship driven, where the extremely valuable feedback allows the company to improve in many areas. In recent years Fugro has established a global client satisfaction survey tool, replacing the various local tools. In , Fugro achieved an NPS of , although the number of responses in calculating this score is below a reliable sample size. In the mid-term (-), Fugro aims to achieve a NPS of at least , calculated reliably from a sample size of at least , responses. Fugro strives for representative response rates from each region, country and business line. This NPS score is a good indicator that Fugro is doing well in looking aer clients and able to generate and protect repeat business. Fugro targets operational excellence through first time right delivery of results that meet client requirements, by adopting a ‘lessons-learned’ philosophy, coupled with easy-to-use and high-quality event reporting. One of Fugro’s key strengths is the translation of technological innovations into integrated digital solutions with a reduced CO footprint. By leveraging technology developments in the fields of robotics, remote operations, cloud automation and machine learning, Fugro oers safer, faster, more ecient, and higher quality services and solutions, all in a more sustainable way. Fugro’s portfolio of innovation is managed through a global network of research and development centres, where over scientists, experts and technicians develop innovations. In , Fugro FUGRO ANNUAL REPORT Since , Fugro funds the Chair in Geotechnics at the Centre for Oshore Foundation Systems at the University of Western Australia, whose research team performs world leading research in oshore geotechnical engineering. The relationship places the research undertaken at the forefront of its field and accelerates the dissemination of the outcomes into industry practice to maximise impact. In , the academic partnership was renewed for a further five years. Recent collaborations have been focussed on oshore wind and have included a large research project to optimise wind turbine foundations under dynamic loadings. In addition, Fugro provides funding for PhD scholarships to support high-quality graduates in oshore geotechnics and engineering. Selected PhD students are oered the opportunity to work for Fugro where suitable opportunities exist. Fugro continues to contribute extensively to technical and scientific advancement through publications in technical and scientific journals, as well as through posters and presentations at events and seminars. In Fugro scientists, engineers and experts published close to papers. In , national and international patents/patent applications were filed or validated. Additionally, the amount of exclusive rights has also increased with new patents granted. In total, Fugro currently has pending and granted patents. Patent filings Priority patent filing National/regional patent filings Granted patents A significant part of Fugro’s technology is developed in close cooperation with its clients, and joint research and development activities are carried out with local universities and institutes throughout the countries in which Fugro operates. Fugro maintains relationships with over universities and other knowledge institutes across the globe. Examples include the University of California at Berkeley, Davis, Los Angeles and San Diego, Massachuses Institute of Technology, University of Texas Austin and Texas A&M University, Louisiana State University, Catholic University of Chile, University of Oxford, Cambridge University, Imperial College in London, University of Montpellier (France), Del University of Technology (Netherlands), Universite catholique de Louvain (Belgium), King Abdullah University of Science and Technology (Saudi Arabia), University of Western Australia, Queensland University of Technology, Grith University (Australia) the Hong Kong University of Science and Technology, the University of Hong Kong, Eidgenoessische Technische Hochschule Zurich (Switzerland), Politecnico di Torino (Italy), Heriot-Wa University Edinburgh/ OrcaHub (Scotland), University of Twente (Netherlands), TIAS Business School Tilburg and Universiteit Leiden. FUGRO ANNUAL REPORT organisation and across the industries in which Fugro operates. During this second pandemic year, health, safety and wellbeing of employees was again central in our Covid- management approach. While there were individual infections in parts of the business, serious vessel, project or oce outbreaks have been prevented. Directed by a global task force, reporting to the Executive Leadership Team, Fugro continued to manage their groupwide response to the outbreak by ensuring continued communication and engagement with Fugro’s regional operations, clients and other external stakeholders. Fugro’s management approach is guided by regular interaction and advice from the medical experts from international SOS. The approach includes the constant development and review of regional and local response plans, aligned with guidelines and measures provided by local medical authorities. Fugro has a risk-based approach and strict guidance for vessel crew changes and project rotations. Regular Covid- updates and guidance are shared with all sta via continuously updated dedicated pages on Fugro’s intranet. Mindful of the impact of the pandemic on people’s personal and professional lives, Fugro is actively promoting support for employees and their families through its independent and confidential global employee assistance programme, providing / support for mental-health-related issues. Fugro believes vaccination is the route out of this pandemic, and encourages all employees to get vaccinated through their local medical authorities’ vaccination plans or via other reputable vaccination standards of practice. Centrally developed policies, strategies, standards, performance indicators and targets help manage risk and achieve the highest levels of HSSE performance. In , three colleagues sadly lost their lives during two separate extreme weather events, while supporting client operations on third party vessels. One incident occurred in April in the USA Gulf of Mexico where two colleagues lost their lives when the third party vessel they were on capsized due to extremely bad weather that suddenly hit the area. In the same month, another colleague lost his life when an accommodation barge capsized during the cyclone Tauktae that hit the coastal area oshore West India. Our thoughts and support continue to be with family, friends and colleagues that have been aected by these tragic incidents. Fugro has re-assessed and strengthened its procedures around seconding Fugro employees to third party vessels. These tragic events demonstrate the critical importance of high levels of HSSE management and the continued emphasis on safety awareness, management and performance at all levels in the SOCIAL Fugro is as good as the people it employs, and an engaged and skilled workforce is crucial to its success. Learning and development is an area of strong focus, in order to aract, develop and retain skilled sta in a competitive labour market. Fugro is an equal opportunity employer that promotes diversity and treats everyone with integrity and respect. Health, safety, security and wellbeing Safety is key to all of Fugro’s operations and is an integral part of its operational management and innovation eorts. Fugro is commied to providing a safe working place to its employees, contractors and clients, and firmly believes that incidents can be prevented. Fugro recognises the importance of implementing standards and practices that eliminate risk exposure or control it to an acceptable level across all its activities. To address these risks, Fugro has a common approach to managing the health, safety, security and environmental (HSSE) aspects of its operations that requires all entities to meet the same Safety performance Lagging indicators Lost time injury frequency (x million hours) . . . . Total recordable case frequency (x million hours) . . . . Total lost work days Leading indicators Senior management project and site visits , Completed ‘Managing Safely in Fugro’ courses * , Completed mandatory annual Life-saving rules’ e-learning % NA NA NA * The course had to be delayed to due to the pandemic; in the format was changed to online. FUGRO ANNUAL REPORT Fugro’s employees continue to cope professionally with the significant operational challenges in relation to the pandemic and the loss of expertise as a result of related high sta turnover. The company demonstrated the strength of its operational and project management systems and was able to maintain its high levels of HSSE performance. In , with a lost time injury frequency of . per million sta hours, Fugro’s incident rates were comparable to previous years. Fugro’s awareness on safety awareness could sadly not prevent the loss of three lives during two separate extreme weather events in while supporting client operations on third party vessels, Fugro has re-assessed and strengthened its procedures around seconding Fugro employees to third party vessels. Taking into account amongst others its ongoing diversification away from oil and gas projects to, from a safety perspective less mature industry sectors, Fugro has adjusted its mid-term target to a lost time injury frequency of below . per million sta hours. The S Together campaign will provide a significant push to raise awareness and focus from managers and employees to work safely and drive further maturity of the groupwide safety culture. To continuously improve safety performance, also leading metrics with regards to senior management site visits and training are monitored. Where possible because of the pandemic, these visits have continued and alternatively have taken place online. To ensure continuation during the pandemic of the IOSH accredited Managing Safely training for line managers and supervisors, a virtual course with an external consultant was developed, which combines online content with instructor-led interactive webinars. Virtual delivery allows for a wider geographic programmes. Fugro has based its oshore Covid- management plans on fully vaccinated crews. Fugro strongly contributed to operational continuity during the pandemic with its remote operations centres, enabling operations when key personnel could not travel to the vessel, allowing projects to continue and to be delivered on time. Fugro’s operations are performed in accordance with ISO (Quality Management), ISO /OHSAS (Occupational Health and Safety), ISO (Environmental Management) and ISM codes (International Management Code for the Safe Operation of Ships), or equivalent certifications. Fugro expects its business partners to adhere to comparable HSSE management standards and be aware of Fugro’s principles, policies and standards. Fugro works with its partners, such as suppliers and clients, to support the adoption of practices that are aligned with Fugro’s standards. Active and reactive monitoring are critical elements of the HSSE management control loop. Fugro continuously reviews potential areas of improvement and ensures thorough root cause analysis of every incident. All lost time incidents and high potential incidents undergo a review process with a member of the Executive Leadership Team participating. Fugro promotes visible leadership and a sense of responsibility throughout the organisation. Senior managers set and implement the required relevant policies and procedures, decide on organisational objectives and priorities, and lead by example. Furthermore, every employee is personally responsible for his or her own and co-workers’ safety and is authorised and encouraged to speak up and stop the job if they feel a situation is unsafe. participation, removing the need to travel to aend. In , colleagues successfully completed the training within this new format. In , Fugro also started with a mandatory IOSH Managing Safely -year online refresher course, which was completed by of the eligible employees. In , Fugro launched its new global safety programme ‘S Together’ centred around the conduct that everyone in Fugro must follow in order to work safely, every day. The underlying ‘Think Safe, Work Safe, Stay Safe’ principles stimulate a working environment in which safety is actively managed by all, and where potentially hazardous situations are openly discussed and reported. This multi-lingual programme is also available to clients and suppliers. FUGRO ANNUAL REPORT Talent araction, learning and development Learning and development is an area of strong focus for Fugro in order to aract, develop and retain skilled sta in a competitive labour market. Throughout the year, Fugro continued to provide a broad oering of training courses and programmes that have been established over the years, covering the range of technical, safety, professional and interpersonal skills to support employees in their work and professional development. Fugro aspires to be an employer of choice and is commied to employing and retaining talented people. In , we continued with embedding the Fugro’s Personal Leadership Expectations into the performance appraisal cycle: a set of corporate behaviours that encourages and inspires everyone to bring their best self to the organisation, drive performance and personal development. Covid- has changed the world and Fugro is adapting to this change. In line with guidelines of local governments, Fugro teams are preparing for their return to the oce and it is expected that a lot of people will continue to work in a hybrid manner, where Fugro employees partially work from home where possible. At the same time, Fugro believes that in-oce collaboration is just as important to Fugro’s future as it has been in the past. In-oce time will be focused on connecting with colleagues, collaboration, and innovation. Fugro will support managers and employees with training opportunities as needed to adapt to this new post-pandemic normal. Fugro’s company values guide employees in fulfilling Fugro’s purpose and thus in everybody’s behaviour; therefore they also play an important role in our internal communications, training and development programmes. In , the new values were ocially launched: We are determined to deliver, We do what’s right, We prepare for tomorrow, We build trust. This set of values is based on hundreds of conversations and workshops with colleagues throughout the organisation. The global launch is supported by extensive communication tools, including an online values game. Fugro’s management values engagement with its employees, as it enables prioritisation of the topics that impact employees’ well-being, professional development and commitment to the company. To collect company-wide feedback, Fugro conducted four employee engagement surveys in , each centred around a dierent theme. The results show that employees are well aware of how their teams contribute to the strategy and have confidence in their colleagues. Employees mostly feel safe to discuss mistakes and speak up if they see or experience something that they feel isn’t right. Employees sense a relatively good atmosphere of inclusion. On a more critical note, employees see opportunities for Fugro to beer organise work processes and communicate changes. During the year, in line with the global trend, Fugro faced challenges with retention, resulting in of employees leaving to pursue other opportunities. The pandemic in particular is impacting the choices that people make regarding their career paths and work-life balance. Retaining Fugro’s employees is a key management priority. Voluntary sta turnover % % % % The Fugro Academy is instrumental in the ongoing development of commercial, technical and management skills of employees at all levels throughout the company. Fugro Academy combines classroom, FUGRO ANNUAL REPORT include business skills courses on commercial and sales, project management, health and safety. Specific trainings supported managers to help them lead their teams during these extraordinary circumstances. Fugro’s cloud-based human resources system Workday and LinkedIn Learning are instrumental to making these training and development opportunities available to all sta. religion, disability, national origin, genetic information, age, sexual orientation, gender (including gender identity and expression), marital status, union aliation, citizenship status or any other characteristic protected by applicable law. Fugro’s approach of non- discrimination in employment relations applies amongst others to recruitment, compensation and benefits, training, promotions, and redundancies. Fugro expects similar standards from third parties that work for or on behalf of Fugro, in line with its supplier and partner code of business principles. Together with leading industry partners, Fugro is commied to the ‘Building Responsibly Worker Welfare’ principles. In addition, Fugro endorses the ILO international labour conventions and the OECD Guidelines for Multinational Enterprises and is a signatory of the UN Global Compact. Collective or individual labour relations are ruled by local applicable law, collective agreements, Fugro’s Code of Conduct and underlying policies. Various collective bargaining agreements are in force within several of Fugro’s entities. The agreements cover topics such as remuneration, working conditions, health and safety, equal opportunity and training. As per local labour laws, Fugro’s entities in the Netherlands, Belgium, France, Germany, Norway, Brazil, and Australia have works councils, union or employee representatives and/or formal health and safety commiees. Fugro is an international company that employs around people from over nationalities from dierent backgrounds. The company has operations in countries throughout the world where operations are staed with and managed by local people, whilst also oering opportunities for international careers and development opportunities. on site, online and virtual training, and operates certified live marine training facilities. During , the use of virtual and online training was expanded further to substitute in-person training programmes, which had to be suspended due to the pandemic. In , the focus was mainly on internal technical training, but during , the range was expanded to Fugro Academy statistics Number of enrolments , , , , Number of completed courses , , , , Fugro believes in the value of young people who bring new ideas on Fugro’s role in the world, now and in the future. The ‘U.Gro’ programme was started in to support the onboarding of all new employees with a bachelor’s degree or higher and less than two years work experience. In , more than young colleagues worldwide participated in this programme and this group grows every month. The International Leadership Track is a separate track of U.Gro which aims to aract and accelerate the development of highly talented university graduates. During a . year learning journey they are challenged with dierent (international) assignments, supported by training opportunities, a senior mentor and a coach. They develop a broad understanding of the organisation, establish a network and build cross- functional relationships, all of which prepare them for taking up key positions in the company. Diversity and inclusion Fugro is commied to creating a healthy work environment in which everyone uses their full capabilities and achieves their personal and professional aspirations. To this end, Fugro provides fair terms and conditions of employment and equal opportunity for all, in an environment where everybody feels valued. Recruitment, evaluation, promotion, development, and compensation decisions are based on qualifications, merit, and performance or business considerations. Fugro strongly believes that when people feel accepted, included and valued, they are more engaged in their roles, work more collaboratively with colleagues, and deliver beer outcomes for Fugro and its clients. Fugro’s human rights policy formalises its responsibility under the Universal Declaration of Human Rights to respect the rights of those aected by its activities. The policy addresses principles such as diversity and non-discrimination, freedom of association, fair working hours, fair wages, protection of health and safety, no child labour and adequate grievance procedures. Fugro does not discriminate in employment opportunities or practices on the basis of race, colour, FUGRO ANNUAL REPORT Fugro targets diversity in its broadest sense at all levels of the organisation. Fugro believes in the importance of gender diversity and that it is a significant challenge to increase the representation of women at all levels. Therefore Fugro’s diversity roadmap is currently focussed on gender diversity and inclusive behaviour in the widest sense. Fugro aims to aract, retain and promote women throughout the organisation. Fugro ensures job descriptions are gender neutral and the recruitment process promotes equal opportunity. In , the company was successful in aracting women for several key senior management positions, both at corporate and regional level. At year-end, the Board of Management was female, and the Executive Leadership Team . Overall, in , (: ) of senior management positions were held by women. Fugro targets an increase to by . In , a female leadership programme called U.WiL (Women in Leadership) was launched for around women worldwide. Women in roles with the potential to make a positive impact on Fugro’s future leadership needs were invited to join, mostly middle managers and subject maer experts. The program focuses on participants developing their leadership compass aligning to their values and principles, by encouraging leadership traits and behaviours through coaching, influencing, trust, conversations, growth and impact. In addition, Fugro’s senior executives regularly discuss female leadership, both internally and externally. In October , at a conference of the European Association of Geoscientists and Engineers, Fugro hosted a discussion on diversity, inclusion, and leadership styles with an actively involved audience. Promoting diversity and inclusion within Fugro’s workforce is a responsibility of all management throughout the company; the executive responsibility lies with the Chief Human Resources ocer. Gender diversity Overall Female % % % % Male % % % % Total number of employees in full-time equivalents In senior management Female % % % % Male % % % % Equal pay Fugro promotes fair and equal pay for equal jobs. In , a gender pay gap analysis was performed on two levels, by making use of the newly established global career framework: ■ Gender pay gap: dierence between overall average pay across all levels of the organisation. ■ Equal pay gap: dierence between the average pay within comparable jobs. For the gender and equal pay gap analysis, countries with more than employees were taken into consideration, in total covering of employees, to ensure the analysis is statistically meaningful. The gender pay gap analysis showed some disparities that can mainly be explained by the relative under- representation of women in middle management and subject maer expert roles. The outcomes of the equal pay gap analysis are used to instigate further evaluation at local level. The discussions around gender and equal pay gap increase awareness and aention at local levels for this topic. Recruitment, hiring and salary procedures remain focused at equal pay for equal jobs. Living wage In addition to equal pay for men and women, Fugro is commied to living wages for all its employees and subcontractors. Fugro respects national statutory minimum wages, and the minimum living wage in case this is higher. Living wage is a wage that provides employees with the necessary income to maintain a decent standard of living for themselves and their dependants, based on the cost of living in the local context. Since , Fugro performs an annual living wage assessment, and has increased wages in a few individual situations that surfaced in these assessments as being below the living wage standard. The assessment compared the data in Fugro’s global human resource system with benchmark data provided by ‘WageIndicator’, a well known labour market data base. In conclusion, overall fair remuneration was applied and living wage minimums were respected. A small number of exceptions was found. Local management has been instructed to address these cases. Initially mostly European, the o shore wind industry has become an increasingly global market in which Fugro has a prominent position. As one of the fi rst major o shore wind developments in Vietnam, Enterprize Energy Group plans to develop the , MW Thang Long O shore Wind Farm o Binh Thaun Province. In an area covering approximately , square kilometres between and kilometres from the coast, Fugro and a local provider of technical services PTSC G&S are supporting the project with a fl oating lidar system measuring oceanographic and meteorological data. The project will be a signifi cant step forward in the development of the Vietnamese renewable energy industry, securing a move away from a dependence on coal or gas fueled power plants to an energy mix that includes wind (onshore/o shore), solar, biomass and hydroelectric energy. Supporting the nascent o shore wind industry in Asia FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT Fugro has set a target for revenues in its renewables, sustainable infrastructure and water markets of at least in . In , these market segments contributed for to revenue (including ‘other’). Fugro is leveraging its knowledge and assets towards contributing to the blue economy: the sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem: an emerging concept which encourages beer stewardship of the world’s oceans. The sustainable management of ocean resources will require collaboration across borders and sectors through a variety of partnerships, and on a scale that has not been previously achieved. Fugro supports several initiatives that aim to fill the sizeable data gaps that currently exist in ocean knowledge. In , Fugro signed a strategic partnership with the Intergovernmental Oceanographic Commission of the UNESCO. By the end of the year, the company was invited to join the Ocean Decade Alliance. In , Fugro also continued its support of The Nippon Foundation- GEBCO Seabed project, with approximately , km of Fugro in-transit bathymetry data contributed over the course of the year, bringing our total contribution over million km mapped ocean floor of data. Fugro further detailed its roadmap to achieve its net zero emission target (scope and scope ) for . Guided by this target, the main focus is on reduction of emissions from vessel operations, for which detailed development and capex plans have been established. Refer to Group performance, greenhouse gas emissions, for more information on this roadmap. While managing climate related risks (refer to the Risk management chapter for more details), Fugro is uniquely positioned to leverage its Geo-data services in order to contribute to the transition to a lower carbon economy and climate change adaptation. Growth markets such as oshore wind and other renewable energy sources, coastal protection, ocean science and hydrography, flood control and urbanisation related infrastructure development provide significant opportunities for further diversification and expansion of Fugro’s related solutions. As the world’s leading Geo-data specialist, Fugro is increasingly involved in projects that map and mitigate the impact of climate change. In light of challenges such as erosion and rising sea levels, coastal resilience is an increasingly relevant theme that requires Fugro’s Geo-data expertise. ENVIRONMENTAL Driven by the company’s objectives to reduce its impact on the environment and meet global climate change related CO reduction objectives, Fugro’s focus relates to both its solutions for the energy transition and climate change mitigation and adaptation (‘what we do’), and the way in which the company operates (‘how we do it’). It is Fugro’s ambition to support its clients to achieve net zero carbon emissions, enable the development of sustainable infrastructure and strengthen climate resilience. New Geo-data acquisition platforms, remotely operated and complemented by underwater robots that require significantly less supervision and maintenance, allows Fugro to drive CO emissions of inspections down by over . For its own operations. Fugro is commied to become net-zero by (scope and scope emissions), amongst others by investing in decarbonisation of its vessels and equipment. Climate change mitigation and adaptation solutions Fugro actively manages the opportunities and risks resulting from climate change for its business operations, taking both aspects of mitigation and adaptation into account. In , Fugro started with the implementation of the Task Force on Climate-related Financial Disclosures (TCFD) framework to increase its insight into the potential impacts on the organisation, by conducting a qualitative assessment. From the potential risk and opportunity categories as identified by TCFD, Fugro assessed in detail those categories it considers relevant given its business characteristics (e.g., sectors, clients, suppliers, and location of operations). At this stage, Fugro has not performed a detailed analysis for dierent climate change scenarios, as these are not anticipated to result in a material change to its strategic approach to climate change. % revenue from renewables, infrastructure and nautical markets Renewables % % % % Infrastructure % % % % Nautical % % % % Other % % % % FUGRO ANNUAL REPORT CO emissions from vessels, both owned and chartered, account for approximately of Fugro’s combined scope and emissions. Fugro’s target to reduce the vessel emission intensity by by compared to , is more ambitious than the International Maritime Organisation (IMO) target of reducing GHG emissions from international shipping by at least in compared to . Reducing vessel emissions requires significant multi-year investments. Fugro’s net-zero fleet in will consist of low or zero-emission fueled vessels and uncrewed surface vessels (USVs). To that end, Fugro’s long-term investments entail the conversion of vessels to run on the low carbon emission fuel methanol, replacement of older vessels, and the further development and utilisation of uncrewed Greenhouse gas emissions The need for greenhouse gas (GHG) and specifically carbon dioxide (CO ) emission reductions to avoid further global warming is a pressing, worldwide topic. In the lead-up to COP in Glasgow in November , many studies were published showing that the world is not yet on track to meet the ambitions of the Paris agreement. Moreover, many people around the globe were aected by climate change related events in than ever before. Companies play an important role in the required reduction of GHG emissions. Fugro targets to become net-zero by covering all direct and indirect emissions from its operations (scope and scope emissions). To support this goal, Fugro has formally commied to seing science-based targets on its absolute CO emission reduction in line with the Science Based Targets initiative (SBTi). The process of seing science-based targets takes approximately one to two years (-). Fugro’s current intermediate targets are to lower vessel emission intensity by in compared to , and to source of electricity consumption from renewable energy by . Fugro follows the Greenhouse Gas Protocol reporting standard, specifying scope , and emissions. Since , Fugro discloses its CO emissions scope and through CDP. By doing so, Fugro demonstrates the transparency and accountability vital to tracking progress toward a sustainable future. Since Fugro works as a service provider and consultant, the carbon footprint of its own operations is limited to the assets used for data acquisition, laboratories, transport and oce environments. The majority of Fugro’s scope emissions comes from its vessels, either owned or chartered, followed by road and air transport. Scope emissions come from electricity consumption of Fugro’s oces, laboratories and other facilities. surface vessels and remote operations centres. In , Fugro has recorded over , remote operations project hours (: , hours), seing new standards for safety and sustainability in land and marine environments. Fugro increasingly uses electrified and hybrid assets in its land site characterisation business. Fugro plans to have the first methanol conversion for its survey vessel Fugro Pioneer to be completed early . In the medium term, Fugro also invests in hybrid propulsion systems for its vessels to improve fuel eciency. In the short term, Fugro continues to improve its vessels’ energy eciency through optimisation tools for fuel-ecient operations ranging from relatively Future Vessel Plan - Jan 20221 Fugro’s roadmap towards net zero 2035 FUGRO ANNUAL REPORT simple solutions such as less heat absorbent deck paints and LED-lighting, to using route optimisation tools and the economic speed model. In addition, Fugro oers its clients biofuel as a short-term solution. Supported by these measures, in , Fugro further reduced the emission intensity of its own vessels by to . tonnes. Besides owned vessels, Fugro uses chartered vessels for its operations. Since , Fugro monitors CO emissions from chartered vessels. In , Fugro’s vessel selection veing procedure has been strengthened with a CO index. For , Fugro targets at least renewable energy consumption for its oces and other facilities worldwide. This will be achieved though transition to renewable energy suppliers and by seeking alternatives in those countries where green energy is not yet readily available. During , many Fugro oces were able to switch to renewable energy. These oces, such as the UK oces, had their first full year of renewable electricity in . As a result, in about of Fugro’s electricity consumption was from renewable sources. In the region Europe-Africa of all electricity consumed was renewable, in the Americas this was . Asia Pacific and Middle East & India prove to be more challenging due to absence of local renewable options on the grid. Fugro is looking for solutions in these regions. In , Fugro has conducted a spend-based analysis of its scope emissions. Based on procurement data, and using widely accepted databases and conversion factors, Fugro’s scope emissions were estimated at the equivalent of kilotonnes CO . The majority of scope emissions relates to purchased goods and services. This analysis will be used to develop plans and Vessel CO 2 emission intensity (tonnes CO 2 per operational day) Owned vessels 2 . . . . Chartered vessels . . . . Owned and chartered vessels . . . . Total vessel CO 2 emissions (kilotonnes) Owned vessels 2 Chartered vessels Owned and chartered vessels CO emission intensity for , and , and absolute emissions have been restated. Refer to Sustainability reporting principles for more information. Emission (intensity) data of owned vessels include two leased vessels under Fugro management. FUGRO ANNUAL REPORT emissions contributing to global climate change, and underwater sound generated through some of Fugro’s data-acquisition activities, such as via the use of multibeam echosounders, sub-boom profilers or side-scan sonar equipment. These learnings are now used to develop further mitigating measures. In addition, the company is actively engaging with its stakeholders by raising awareness among employees, clients, contractors and suppliers on this topic. Fugro contributed to the International Marine Contractor Association (IMCA) Recommended Code of Practice on Environmental Sustainability, which addresses marine biodiversity. Biodiversity Biodiversity decline is increasingly becoming a key topic with high priority and urgency for governments, investors, clients and other stakeholders. Similar to climate change, Fugro’s data collection capabilities and know how play an important role in understanding biodiversity and related changes, fully in line with its purpose of creating a safe and liveable world. In , Fugro has undertaken an impact assessment of its activities and resulting potential eects on biodiversity. By listing its activities and mapping the potential impact and resulting eects of each activity, further insights were developed. This resulted in an overview of potential eects on biodiversity, mitigating measures already in place, areas for improvement and best practices. Two types of impact from Fugro’s operations stand out: the generation of greenhouse gas targets to drive Fugro’s eorts on lowering its scope emission reductions. Environmental management Fugro has strict group-wide guidelines for risk management, and incident prevention, investigation and reporting. Fugro operates according to environmental standards; the requirements of ISO or similar have been integrated into Fugro’s operational activities, providing objectives and practical tools to manage the company’s environmental responsibilities. Compliance audits are carried out, both internally and by external certification bodies and clients. The risks that Fugro’s activities pose to the environment are largely related to potential small spills during data collection activities, on land or at sea. Land data collection equipment, such as geotechnical drill rigs and cone penetration trucks, are hydraulically powered and could pose a risk of spillage. Fugro’s equipment is managed under appropriate proactive maintenance programmes and is subject to periodic inspections, including daily pre-start checks. Operational teams are provided with spill kits and have been trained to capture, contain and clean any potential spillage during operations. Sulphur emissions In its ‘IMO ’ regulation, the IMO has lowered the sulphur limits for the fuel oil used by ships, Fugro’s vessels were already using ‘clean fuel’ technology long before these regulations came into force, and all fuel consumed during the year was within the reduced emission requirements. FUGRO ANNUAL REPORT anonymous reporting is also possible. Webinars and guidance material on the procedure are available to support managers and other sta in promoting Fugro’s values and a culture of transparency and respect. To ensure that the Code of Conduct, its underlying policies and the speak-up procedure are easily accessible to all employees, the documents are available in the company’s most relevant working languages and accessible via intranet and the website. Fugro’s Corporate Integrity Commiee investigates any allegations regarding a breach of the Code of Conduct and/or its underlying policies. This commiee consists of the Group Director Human Resources, Director Internal Audit, General Counsel/Chief Compliance Ocer and senior compliance ocer, and reports to the CEO and CFO. If a violation is determined, the commiee advises on the appropriate remedial action. In , Fugro received reports of a suspected violation of Fugro’s Code of Conduct or its underlying policies compared to in . Reports pertain to instances of (perceived) harassment, bullying or unfair treatment, (perceived) accounting misrepresentation, (perceived) conflict of interest or safety concerns. All reports received were thoroughly investigated by the Corporate Integrity Commiee and, where necessary, appropriate organisational and/or disciplinary measures were taken. Supplier and partner code of business principles Fugro’s supplier and partner code of business principles governs the obligations and relationship between Fugro operating companies and the third parties they work with. It explicitly refers to for example Fugro’s human rights policy, which includes fair working hours and wages. Fugro emphasises the use of the supplier and partner code as means to actively engage with Fugro’s suppliers and partners to ensure they work with similar values as Fugro. Human rights Fugro recognises its responsibility under the Universal Declaration of Human Rights to protect human rights, and to ensure that its business operations do not contribute to human rights abuses. The company is commied to the Core Conventions of the International Labour Organization, outlining, among others, freedom of association and collective bargaining, fair working hours and fair wages. The company has strengthened these commitments in its policy on human rights and the supplier and partner code of business principles. Fugro endorses the OECD Guidelines for Multinational Enterprises and in , joined United Nations Global Compact, the world’s largest corporate sustainability initiative. Executive responsibility for the implementation of the human rights policy lies with the General Counsel/Chief Compliance Ocer and with the Chief Human Resources ocer. Speak-up procedure Fugro’s speak-up (‘whistleblower’) procedure forms an essential part of the company’s compliance programme and is available not only to employees and contract sta, but also to third parties with whom Fugro has a business relationship, such as customers, suppliers and agents. The procedure oers multiple channels for reporting a suspected violation of the Code of Conduct and/or of its underlying policies and outlines the subsequent internal investigation process which is supervised by Fugro’s Corporate Integrity Commiee. One of the channels for reporting a suspected violation is the Convercent reporting line: a web-based application which oers users the opportunity to report violations in their local language. The procedure clearly stipulates that any party reporting in good faith is protected from any kind of retaliation. Nonetheless, COMPLIANCE Business ethics & compliance Fugro’s global presence exposes the company to regional and local laws, regulations, customs and practices, in at times, challenging political and economic environments. We are commied to adhering to applicable laws and regulations, and to conducting business in a responsible manner. The Code of Conduct, together with its underlying policies, helps employees and Fugro companies to put Fugro’s values into practice. Together they provide practical guidance on how to conduct Fugro’s business ethically, comply with legal requirements, and maintain Fugro’s good reputation. Code of Conduct and related policies The Code of Conduct addresses topics including non-discrimination, health and safety, drugs and alcohol, anti-corruption, conflict of interest, political involvement, and fair competition. It applies to all Fugro employees, contractors and third parties Fugro works with such as suppliers and partners. Underlying policies provide further guidance on several topics, such as human rights, sponsoring and charity, gis and entertainment, anti-corruption and fair competition. In , an updated version of the Code of Conduct was published. Sections on data protection and responsible taxation were added to further highlight Fugro’s commitment to these topics. Continuous eorts are made to convey the importance of the Code of Conduct and adherence with its contents and the underlying policies. Dilemma workshops have proven to be an eective way to discuss how Fugro’s Code of Conduct should be brought into practice in dicult situations. Due to pandemic related restrictions, new workshops have been postponed to . FUGRO ANNUAL REPORT have submied the signed form. Adherence to the Code of Conduct and its related policies and procedures, as well as the supplier and partner code of business principles, is also monitored by Fugro’s internal audit department. The head internal audit also plays an integral part in any investigation led by Fugro’s Corporate Integrity Commiee. Data privacy and security Building on its commitment to maintaining a high level of privacy standards around the globe, Fugro has a global privacy compliance programme in place, including global privacy and data protection principles. These set the global standard for Fugro with respect to the processing of personal data. These principles apply in all countries in which Fugro conducts its business and to all use of personal data. The programme has been implemented in Europe, the Americas and Asia Pacific, while preparations have been made for implementation in Middle East & India and Africa in . In , one personal data breach was reported to the Dutch Data Protection Authorities. This breach pertained to a cyber-aack at one of Fugro’s suppliers through which hackers gained access to a limited amount of Fugro personal data. Fugro at the time informed those individuals whose data was breached. There was no access to any data on Fugro’s systems. Fugro is ISO certified in multiple of its key markets. Fugro has a dedicated global information security team expertise consisting of a governance and operations team. Due to increasing dependence on information technologies, for instance due to growing usage of remote operations, Fugro has invested in resources and technology in order to respond timely and eectively to incidents, such as phishing aempts and malware outbreaks, and has set up a dedicated Screening of business partners Over the years Fugro has entered into various joint ventures and other partnership agreements. To reduce possible compliance and operational risks, due diligence and monitoring procedures include screening of the parties involved in an appropriate database; this can be expanded to include background investigation by an independent expert agency. Partnership agreements include compliance provisions relating to anti-corruption laws and audit rights. In certain limited instances Fugro works with commercial agents. All commercial agents are screened by an independent expert agency at least every two years, or more oen as appropriate. The standard Fugro agency agreement includes clear compliance obligations, guidelines regarding fee arrangements, regular reporting requirements as well as audit rights. Any agent relationship is closely monitored, and each agent has to sign a compliance declaration once a year. At year-end , Fugro had reduced the number of commercial agents to (: ). International sanctions To ensure compliance with internationally imposed sanction programmes, the company has a strict procedure in place in relation to working in sanctioned territories. This entails that prior to confirming any tender, submiing proposals, entering into contracts or deploying resources in any sanctioned territory, Board of Management and General Counsel/Chief Compliance Ocer’s approval must be obtained. Compliance monitoring Annually, an extended group of senior management worldwide must fill out a declaration regarding compliance with the Code of Conduct and related policies. For the year , of these managers architecture team on IT and technology for remote operations and solutions. In , a new cyber security campaign started. with tailored content for specific audiences, such as sta on vessels. As a result, an increased number of Fugro sta reported phishing aempts to the security operations team. The campaign will continue in . Information security management is on the agenda of the Board of Management at least on a quarterly basis. Taxation Fugro believes a responsible approach to tax is an integral part of sustainable business and that it is both a cost of doing business and a contribution to the countries in which it operates. Tax eects are one of the components in the commercial process but ultimately only legitimate business considerations drive decisions. Fugro does not undertake artificial tax planning, including the use of tax havens, contrary to legislative intentions. Fugro’s global presence exposes the company to various complex tax jurisdictions and tax systems. These systems are constantly under development following initiatives from individual countries and organisations such as the OECD and the EU. Other developments arise from the economic environment; as tax is a crucial component of the financial budget of national jurisdictions, economic developments have a direct impact on the way fiscal regulations are designed and upheld. In particular, the severe impact of the pandemic on all economies and local budgets is expected to be addressed by changes in tax collections across the world. FUGRO ANNUAL REPORT by the Board of Management is based on the eectiveness of Fugro’s internal controls, including those relating to tax. In line with the principle that taxation is an integral part of the business, no separate tax in-control statement is provided by the Board of Management. The auditor does not provide separate assurance on tax; compliance with relevant tax laws and related tax accounting is nevertheless a material item as part of the financial statement for which assurance is provided by the external auditors. EU Taxonomy reporting The EU Taxonomy-Regulation became eective mid- as part of the EU Action Plan on Sustainable Finance, aimed at directing investments towards sustainable projects and activities. This regulation is intended to serve as a standardised and mandatory classification system to determine which economic activities are considered as ‘environmentally sustainable’ in the EU. in an open and transparent maer on material tax topics. This cooperation is not formalised under an agreement. Another example is the United Kingdom, where Fugro cooperates with the tax oce under the UK applicable Business Risk Review process, with a variety of information exchanges between tax authorities and taxpayer. Fugro’s approach to tax is guided by its values and is embedded in the Code of Conduct. Issues related to elements of the Code of Conduct can be addressed through Fugro's speak-up (‘whistleblower’) procedure, including taxation related issues. Fugro has outlined its key risks in the Risk management chapter. Although Fugro has not listed specific key tax risks, tax is an integral part of the overall risk management process. Within the Fugro internal control framework, internal controls addressing risks related to tax and compliance with local and international tax laws and regulations are outlined. The in-control statement Fugro’s tax strategy and underlying tax principles, which illustrate good corporate practice in the areas of tax management and transparency, are both available on the company’s website. They support the company’s business strategy by providing value to the group through delivery of high-quality tax services within boundaries of legal and tax frameworks. The strategy has been approved by Fugro’s Board of Management and the audit commiee of the Supervisory Board. The global tax department is equipped to support Fugro’s global activities in an eective and compliant manner. It is complemented by an extended tax function, represented by professionals across finance, business, procurement and human resources. This alignment is part of the integrated control framework. External support is provided by a reputable global network of external tax advisers that strictly follow their professional standards. Fugro’s audit commiee reviews, at least once a year, the tax strategy including financial impact, management of tax risks, valuation of deferred tax assets, status of compliance and tax implications of any acquisition or divestment. Based on its risk-based audit plan, the internal audit department monitors tax compliance and controls. Fugro’s global tax position and tax processes are also included in the audit process of the external auditors, on a local and consolidated level. External support is provided by a reputable network of external tax advisers that strictly follow their professional standards. Fugro has good working relationships with tax authorities in various jurisdictions, mitigating future disputes and uncertainty with potential financial, business and reputational eects. In The Netherlands for example, Fugro cooperates with the Dutch tax oce FUGRO ANNUAL REPORT Based on 2021 numbers Revenue Taxonomy eligible % Non-eligible % Unassessed * % Total (X EUR million) , * Refers to activities for which the company was not yet able to conclude on eligibility, for example because data was not available or considered not suciently reliable. Eligible activities primarily relate to the renewables market, where Fugro’s services and solutions enable the development of oshore wind farms which are a key contributor to the energy transition by generating electricity from renewable sources supporting climate change mitigation. The company expects that more of its activities may classify as eligible per Annex II (substantial contribution to climate change adaptation) and possibly per the other four objectives. These include activities such as those related to flood protection, water infrastructure, water resource management and hydrography. As a result, the proportion of reported eligible turnover is expected to increase over compared to . The portion of revenue which is currently non-eligible and that includes these activities is reported as unassessed. In , of Fugro’s revenue was generated from the oil and gas market segment. Activities supporting the development and production of fossil fuels do not qualify as eligible under the Taxonomy. This revenue is therefore included in the of revenue of which non-eligibility has been established. At the same time, meeting the short-term energy demand requires an energy mix which includes fossil fuels, in particular natural gas. Furthermore, our solutions enable clients to Application Revenue The turnover KPI is calculated by the proportion of revenue derived from products or services that are Taxonomy-eligible. The total revenue of EUR , million for provides the denominator for the turnover KPI and corresponds to the total revenue in the consolidated statement of comprehensive income for the year ended December . Fugro’s market segmentation has been used as a basis to determine whether revenue was generated with Taxonomy-eligible activities in accordance with Annex I (substantial contribution to climate change mitigation) or Annex II (substantial contribution to climate change adaptation) of the Delegated Regulations. Based on detailed analysis of the items included in its revenue, the company has allocated the related revenue to the Taxonomy-eligible economic activities to the extent possible. The new Taxonomy regulation is complex, still under development and the interpretation and application is evolving. Compounded by the short implementation window, for the mapping exercise the company has focused on the larger activities and those with a clear link (or lack thereof) to the Taxonomy in relation to the objectives of climate change mitigation and adaptation. This results in of Fugro’s revenue generating activities classifying as eligible. The EU Taxonomy-Regulation identifies the following six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and the protection and restauration of biodiversity and ecosystems. A distinction is made between Taxonomy-eligibility and Taxonomy-alignment. An activity can be considered eligible when it is described in the Delegated Regulations of (EU) /. To assess whether the activity can also be considered Taxonomy-aligned or ‘environmentally sustainable’, an additional evaluation has to be executed to identify if the specified technical screening criteria in the Delegated Regulations are met. For the financial year , the reporting requirement only covers eligibility of the company’s economic activities in turnover, capital expenditure and operating expenditure. Furthermore, currently the catalogue of sustainable activities per the EU Taxonomy (‘EU Catalog’) only covers two of the six environmental objectives: climate change mitigation and climate change adaptation. The regulation is complex and still under development. This is also illustrated by the approval (in principle) by the European Commission on February of the Complementary Climate Delegated Act including, under strict conditions, specific nuclear and gas energy activities in the list of economic activities covered by the Taxonomy. Fugro will assess the impact of these and other changes. These disclosures are prepared based on our current interpretation and taking into account data availability, as further explained below. FUGRO ANNUAL REPORT expenditures have been le out of scope of our initial assessment, considering data availability limitations and expected low materiality. Next steps During , Fugro will proceed with this assessment and implementation of the related Taxonomy reporting requirements. This includes a further review to cover all of the company’s activities and implementing internal data-collection and reporting processes in line with the requirements of the EU Taxonomy. In addition to the evaluation regarding the alignment criteria, this also includes the assessment of whether the eligible activities make a significant contribution to an environmental objective defined by the Taxonomy- Regulation while no other environmental objective is significantly negatively aected. In addition, compliance with minimum social safeguards in accordance with the OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, ILO Core Labour Standards and the International Bill of Human Rights must be ensured. It is expected that alignment will be below the percentage of eligibility, as for example regular maintenance capex will probably not meet the specified technical screening criteria. To reach net zero carbon emissions from its own operations in , Fugro is investing in decarbonisation of its vessels and equipment, and the procurement of green energy. A significant part of these investments is expected to classify as Taxonomy-aligned. Opex Operating expenditures to be considered for Taxonomy purposes include direct, non-capitalised costs for research and development expenses, building renovation measures, short-term leasing, maintenance and repair expenses and any other direct expenditure relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party outsources that are necessary to ensure the continued and eective functioning of such assets were considered for the denominator calculation. Operating keep their existing oil and gas assets operating in a safe, sustainable and reliable way by ecient inspection and corrosion detection work. Fugro is commied to executing its activities in the most sustainable way, using state of the art technologies with a strong focus on significant reduction of our own carbon emissions. Fugro supports the ambition to work towards a net-zero Europe by and targets ‘net zero’ carbon emissions from its own operations by (scope and scope ). Capex Capital expenditures considered for Taxonomy purposes (Taxonomy-Capex) comprise additions to property, plant and equipment, additions to intangible assets and additions to right-of-use assets (see notes , and of the financial statements. Additions to goodwill, if any, are not considered. Capital expenditures can be reported as eligible when an activity is either already Taxonomy-eligible or is part of a credible plan to extend or reach environmental sustainability. Focusing again on the larger activities and those with a clear link (or lack thereof) to the Taxonomy in relation to the objectives of climate change mitigation and adaptation, this results in an eligibility of out of total Taxonomy-Capex of EUR . million (non-IFRS performance measure; reference is made to the reconciliation of non-IFRS performance measures and glossary). Capital expenditures are derived directly from accounting records, avoiding double counting. Capital expenditures that are classified as eligible include investments in vessels including dry-docking and investments in uncrewed vessels (USVs). USV operations increase safety by removing personnel from high-risk oshore environments and reduce carbon footprint by over compared to traditional survey methods. FUGRO ANNUAL REPORT divestment in June . HR and HSSE data have always excluded Seabed Geosolutions. Reporting process and controls The Board of Management is responsible for the contents of the integrated annual report. Director Investor Relations coordinates the board report and collects information from departments, group strategy & communication, safety & sustainability, human resources, and compliance. The Board of Management thoroughly reviews the contents before signing o. Health and safety data are extracted from the global HSSE system, HR data from the global HR system Workday. Fugro’s subsidiaries report their fuel and renewable/ non-renewable electricity consumption and related scope & emissions in the group’s consolidation system. CO emission data from vessels is collected via the digital operational management environment. Each of these systems is operated with checks and balances to safeguard data quality. The group safety & sustainability team safeguards that the non-financial data from dierent source systems is consistent with the indicator definitions. CO 2 emissions Fugro follows the GHG Protocol and applies the operational control approach to set organisational boundaries for GHG accounting purposes. CO emissions from vessels account for approximately of Fugro’s combined scope & emissions. Both owned and chartered (long-term and short-term) vessels are included, because Fugro has operational control of the chartered vessels. Other scope emissions are caused by fuel consumption of cone penetration trucks, vehicles and the operation of rigs and other assets. Scope emissions come from SUSTAINABILITY REPORTING PRINCIPLES Reporting framework This board report has been prepared according to the legal requirements of section : of the Dutch civil code, including the Dutch Corporate Governance Code and the Decree on disclosure of non-financial and diversity information. The information in this report on Fugro’s approach to managing climate risk follows the recommendations provided by the Task Force on Climate-Related Financial Disclosures (TCFD). Fugro’s reporting has been guided by the reporting principles from GRI standard : Foundation as issued by the Global Reporting Initiative. Fugro has applied the principles for defining report content (stakeholder inclusiveness, sustainability context, materiality, and completeness) and the principles for defining report quality (accuracy, balance, clarity, comparability, reliability, and timeliness) in the preparation of the sustainability information. Moreover, the report has been informed by the value creation concept and the content elements of the Integrated Reporting Framework. Scope & consolidation This report covers the activities of Fugro N.V. and its subsidiaries for the period from January to December . The scope for human resources (HR) data and health, safety, security and environmental (HSSE) data including CO emissions, is based on the principle of operational control. For entities under operational control, of HR, HSSE and CO emission data is included irrespective of percentage ownership. In the Fugro annual report , the scope of operational control coincides with the financial consolidation scope. The vessel CO emissions of Seabed Geosolutions have been included up to the electricity consumption of Fugro’s oces, laboratories and other facilities. Fugro discloses its CO emissions scope & through CDP. Fugro reports only on CO , because this constitutes around of Fugro’s total greenhouse gas emissions. Fugro uses marine gas oil to fuel the vessels; it does not use LNG-powered vessels. The vessel emissions in have been restated to exclude one vessel that was incorrectly included. The vessel was divested in November , but Fugro continued vessel management. By mistake, the vessel’s emissions were included in the Fugro vessel emissions. In addition, the CO emission intensity for , and has been restated for the inclusion of Seabed Geosolutions’ vessel operational days, which were previously omied. KPI definitions Vessel CO 2 emission intensity CO emissions from fuel combustion of the vessels, both owned and chartered, in tonnes of CO per operational day. An operational day is when the vessel is being used for actual business-related project work, including project related transit, preparation and testing. The notion of operational is irrespective of project contractual or client definitions or interpretations and is not linked to actual agreed contractually paid days. For each vessel, the fuel consumption (on both operational and non-operational days) is multiplied with the density factor (source: Bunker Delivery Note) and the CO emission factor (source: latest edition of the International Maritime Organisation (IMO) GHG studies). The outcome is total CO emissions in the period per vessel. The sum of total CO emissions for all vessels is divided by the sum of operational days for all vessels. FUGRO ANNUAL REPORT Remote operations centre (ROC) project hours Number of oshore project hours managed from a remote operations centre. The number of oshore project hours is based on the number of working hours that would have been required if the project was managed from a vessel instead of remotely. The remote project hours allow Fugro to track the amount of traditional project hours that are replaced with safer and more ecient remote operations. Renewables, infra and water as percentage of total revenue Revenue in the market segments renewable energy, infrastructure, and water (nautical), as a percentage of total revenue. framework. Per December , this includes senior management positions. Voluntary employee turnover rate Total resignations divided by average headcount in the reporting year, covering all sta on an employment contract and excluding contingent workers. Number of completed courses at Fugro Academy Total number of courses completed by employees at Fugro Academy during the reporting year, including classroom, on site, online and virtual training. Net promotor score Net promoter score is a globally recognised measurement of client loyalty and satisfaction, taken by asking clients how likely they are to recommend Fugro to someone else, on a scale from – (lowest to highest score). Net promotor score is a representation of the percentage of promoters minus the percentage of detractors, and is expressed as a figure from - to +. Those customers answering the above question with a or lower are known as detractors and those with a score of or are promoters. Scorers of or are passives and not included in the calculation. Number of alleged violations of Code of Conduct All suspected violations of the Code of Conduct reported through one of the channels of the Speak-Up procedure during the reporting year. The Speak-Up procedure is available to employees, contract sta, and business relationships. Share of energy consumption in Fugro oces from renewable sources Part of the electricity consumption in Fugro oces from renewable sources such as solar, wind, hydro, thermal and tidal energy. Lost time injury frequency (LTIF) Sum of injuries resulting in fatalities, permanent total disabilities and lost workday cases per one million exposure hours. A lost workday case is a work-related injury or illness which results in a person being unable to perform their normal work or restricted work on any day aer the day on which the injury /illness occurred. LTIF covers both employees and contractors in all Fugro’s activities. Total recordable case frequency (TRCF) Sum of injuries resulting in fatalities, permanent total disabilities and lost workday cases, restricted work cases and medical treatment cases per one million exposure hours. TRCF covers both employees and contractors in all Fugro’s activities. Number of employees Number of employees in full-time equivalents per December, excluding contingent workers. Percentage of female employees Number of female employees as share of total number of employees, based on headcount per December. Percentage of women in senior management Number of women in defined senior management positions as share of total number of defined senior management positions, based on headcount. Senior management positions are defined as all functions in global grade and higher in Fugro’s global career Fugro creates Digital Twin of Scotland’s railway network Infrastructure is the backbone of our society, and the need for innovative surveying techniques and accurate data analysis becomes critical. In , Fugro was contracted to survey Scotland’s rail network and provide Network Rail with a range of outputs to support operations, maintenance, and infrastructure upgrades including vital structure gauging information. The network was surveyed using Fugro’s train-mounted RILA monitoring system to simultaneously acquire lidar point cloud data, track position and imagery of the track and surrounding environment. Where possible the system was deployed on in-service trains, eliminating the need for dedicated survey trains or surveyors to be on or near the track. This cost e cient approach provides a clear health and safety benefi t and reduces network disruptions. Once recorded, the digital datasets are merged, and a D real-world digital twin of the track corridor is created that can be used to support the continued safe passage of trains operating on the network, facilitate the introduction of more energy e cient rolling stock, and support the design of new electrifi cation projects; assisting Network Rail in their commitment to meet their science based, zero emission targets. FUGRO ANNUAL REPORT Mark Heine Barbara Geelen FUGRO ANNUAL REPORT Barbara P.E. Geelen () Chief Financial Ocer Nationality Dutch Employed by Fugro Since . Appointed to Board of Management as Chief Financial Ocer per May Current term Until AGM Background From until Barbara was CFO at HES International, one of Europe’s largest independent bulk handling companies. Prior to that, she held various leading roles at ABN AMRO and has extensive experience in equity and high yield capital markets transactions, restructuring of companies and managing client teams, among others in the energy sector. She has extensive international experience. She holds a masters degree in Business from the University of Nijmegen. Company secretary Paul Theunissen () Mark R.F. Heine () Chief Executive Ocer Nationality Dutch Employed by Fugro Since . Joined Fugro’s former Executive Commiee in and appointed to the Board of Management in April . Appointed CEO in October Current term Until AGM Background Mark Heine joined Fugro in and served in various positions, including amongst others, geodesist on various onshore and oshore survey projects, managing director Africa, regional manager Europe-Africa, Director of the Survey division, Executive Commiee member and division director. He holds a MSc in Geodetic Engineering from Del University of Technology. Mark is member of the board of directors and vice-chair of marine contractor association IRO. BOARD OF MANAGEMENT Governance FUGRO ANNUAL REPORT EXECUTIVE LEADERSHIP TEAM The Executive Leadership Team includes the CEO and CFO. Erik-Jan Bijvank () Group Director Europe-Africa Dutch nationality Employed by Fugro: since Erik-Jan has spent over years with Stork, a Fluor Corporation company in several senior management roles both in the Netherlands and the UK. He holds an MSc from Universiteit Twente and a Master of Project Management from Western Carolina University. Céline Gerson () Group Director Americas French/American nationality Employed by Fugro: since Before joining Fugro, Céline served as Vice President Global Account Director for Schlumberger and President of Schlumberger Canada. Along with being a Harvard Business School Alumna, Céline holds a Bachelor’s degree from the European University of Brussels and a Juris Doctorate from the University of Houston. Amar Umap () Group Director Asia Pacific Indian nationality Employed by Fugro: since Amar has worked for several multinationals, including Technip, Global Industries, McDermo International Inc. in Asia Pacific, India, Middle East and USA. He graduated from the Indian Institute of Technology, Kharagpur with a Bachelor of Technology in Civil Engineering and holds a Global Executive MBA from INSEAD. Tim Lyle () Group Director Middle East & India British nationality Employed by Fugro: since Tim joined Fugro as an engineering geologist and project manager. He has since served in several management positions including country manager for Oman and the UAE and Regional Director of Europe. He holds a bachelor engineering degree from Camborne School of Mines, University of Exeter. Erwin Hoogeveen () Group Director Human Resources Dutch nationality Employed by Fugro: since Previously, Erwin worked in various HR leadership roles with Seafox, CEVA Logistics, Dockwise, BMC Soware and Getronics. He holds a BA in Human Resources Management from Avans Hogeschool in Breda. Annabelle Vos () General Counsel/Chief Compliance Ocer Dutch nationality Employed by Fugro: since Annabelle worked in private practice for years at De Brauw Blackstone Westbroek, a Dutch law firm, in their M&A and corporate litigation practice groups. She holds a Master of Law degree from Leiden University and a Master of International Relations and International Economics from Johns Hopkins University. Wim Herijgers () Group Director Development & Digital Transformation Dutch nationality Employed by Fugro: since Before joining Fugro, Wim was Principal at the Boston Consulting Group for over years. He holds an MBA from INSEAD and an MSc in Electrical Engineering from Del University of Technology. Increasing ocean knowledge The world’s oceans cover of the Earth’s surface and support nearly every aspect of our lives. Fugro is leading the industry in support of two complementary initiatives that aim to fi ll the sizeable data gaps that currently exist in our ocean knowledge. The United Nations Decade of Ocean Science for Sustainable Development (-) was launched in January to reverse the cycle of decline in ocean health and ensure ocean science supports countries in creating improved conditions for sustainable development of the ocean. Fugro signifi cantly expanded its engagement over the course of the year, starting with CEO Mark Heine joining world leaders and experts at the fi rst International Ocean Decade Conference in June. In September, Fugro signed a partnership agreement with the Intergovernmental Oceanographic Commission of the United Nations Educational, Scientifi c and Cultural Organisation to improve the coordination of and access to global ocean science data. By the end of the year, Fugro was invited to join the Ocean Decade Alliance, an exclusive network of eminent partners of the Ocean Decade. In addition, Fugro continued its support of Nippon Foundation- GEBCO Seabed project, with approximately , km of Fugro in-transit bathymetry data contributed over the course of the year. This initiative aims to deliver a wholly mapped ocean within the next decade. Fugro has been involved since the start in and has to date contributed over million km of data. FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT Doing business inherently involves taking risk and therefore risk management is an essential element of Fugro’s culture, corporate governance, strategy development, and operational and financial management. On a daily basis, risks are managed by employees as part of their roles and responsibilities. Fugro is willing to take certain risks associated with the execution of its core business, as it is suciently equipped to successfully manage them within the boundaries of its expertise as set by the Board of Management in consultation with the Executive Leadership Team and under supervision of the Supervisory Board. These boundaries ensure that the actions of a single individual will not result in disproportionate risk or missed opportunities for the entire company resulting in not achieving Fugro’s strategic goals. Fugro’s risk management is aimed at supporting long-term and short-term sustainable value creation. It is designed to provide reasonable assurance that objectives are met by integrating management control into daily operations, ensuring compliance with legal requirements and safeguarding the integrity of the company’s financial reporting and its related disclosures. Fugro’s risk management framework is in line with the Dutch Corporate Governance Code. RISK MANAGEMENT Key risks Risk category Key risks Risk appetite Page Fugro’s approach Strategic ■ Market exposure ■ Climate change ■ Innovative capability ■ Employees and capacity ■ High ■ Low ■ High ■ Low 68 68 69 69 For strategic risks, acceptable risk levels vary depending on the subject at hand, where expected rewards have to justify the risk. In any case, all risks related to climate change and employees and capacity are subject to a low-risk appetite Operational ■ Health, safety and security ■ Project execution ■ Information security and technology ■ Low ■ Moderate ■ Low 70 71 71 Operational risks are managed with a moderate risk appetite. However, all risks related to health, safety and security, and information security and technology are subject to a low-risk appetite as Fugro strives for the highest level of performance. Financial ■ Company financing ■ Liquidity and working capital ■ Currency risk ■ Low ■ Low ■ Low 72 72 73 Financial risk appetite is low, with the intent to limit financial risks and maintain long-term solvency and a sustainable capital structure. Compliance ■ Legal & regulatory compliance ■ Low 73 Compliance is subject to a low-risk appetite as Fugro strives for the highest level of compliance with legal and regulatory requirements. FUGRO ANNUAL REPORT as the current inflation and the price increases of raw materials. These risks influence Fugro’s work environment and could impact the realisation of Fugro’s strategy Path to Profitable Growth, and its related mid-term targets. RISK MANAGEMENT FRAMEWORK Fugro has a risk management framework in place to identify and manage risks and internal controls. Control environment The first level of the control environment consists of Fugro’s employees who perform the day-to-day activities in the business operations, and their management guided by ISO certified management systems: ISO (Quality Management), ISO / OHSAS (Occupational Health and Safety), ISO (Environmental Management) and ISM codes (International Management Code for the Safe Operation of Ships), or equivalent certifications. This also includes people who work in shared service centres, for among others finance, human resources and IT. They undertake these activities in accordance with the applicable authorisation matrix, which is updated regularly by the Board of Management in consultation with the Executive Leadership Team. They have the obligation to obtain an appropriate level of understanding and training regarding their roles and responsibilities and carry them out correctly and completely. Every employee is expected to comply with internal policies, procedures and guidance, and applicable laws and regulations. The second level consists of the company’s regional and business line management and support functions such as QHSSE, sustainability, financial and management control, procurement, IT, tax, human resources, insurance, communication, strategic sales and marketing, innovation, treasury, operational excellence, compliance and legal. People within these functions carry out various risk management and compliance activities to issue guidance, support and/or monitor the first level controls. The third level consists of the independent internal audit department which reports primarily to the Board of Management and the audit commiee on the structure, existence and eectiveness of risk management and internal control systems. In the second place, the internal audit department provides services to facilitate risk management activities. Internal control and risk management procedures have been further embedded and structured within the organisation. Risks have been detailed, aligned between the regions and linked to specific internal control procedures. In , a risk management maturity scan was performed by an external specialist, assessing the risk management process and related procedures. No material shortcomings regarding the risk management framework have been reported. By taking the outcomes of the maturity scan into account, processes will be further enhanced in . Responsibilities Fugro’s risk management governance is based on a delegated accountability across the regions, business lines, global support functions and shared service centres. Accordingly, risks and opportunities are the responsibility of those best placed to manage them. Risks are managed within the boundaries set by the Board of Management in consultation with the Executive Leadership Team. Management with delegated authority (ie regional, business line, global RISK APPETITE AND SENSITIVITY Risk appetite refers to the level of risk, that Fugro is prepared to accept or be exposed to in pursuit of long-term value creation. Risk boundaries are driven by the company’s culture, corporate governance and management systems, its expertise and strategic risk assessments. This is detailed in Fugro’s values, Code of Conduct, policies and procedures and authorisation schedules. The company’s risk management aims to identify, assess and manage risks in accordance with its risk appetite in the dierent categories. In , Fugro has been impacted with the ongoing eect of the pandemic. The impact was observed through operational and logistic challenges, albeit with strong regional dierences. We have adapted our work processes, but also continuously reviewed, updated and where needed strengthened our robust Covid- management protocols to deal with the operational challenges and turbulent market conditions caused by the pandemic and constant new medical insights and developments, aimed at business continuity while focusing on the physical and mental health, safety and wellbeing of employees, with a specific focus on sta on remote projects and vessels. Our increased remote operations capabilities facilitated continued operations for our clients. Furthermore, country specific Covid- related regulations are continuously being monitored and employees are informed and guided according to the latest updates. In addition to the key risks mentioned above, other risks which can potentially impact Fugro’s market or financial position, as well as reputation, are closely monitored and managed. Considered risks include biodiversity, geopolitical developments, business ethics, human rights, and the global macro-economic situation such FUGRO ANNUAL REPORT support function and shared service centre management) is expected to perform annual risk assessments. The identified risks and (when applicable) mitigating measures are documented, assigned to an appropriate risk and action owner, and monitored. The risks are communicated with all relevant employees and significant risks are reported to the Board of Management and Executive Leadership Team. The internal audit department supports the Board of Management in reviewing the periodic risk assessments and identified mitigating measures. RISK GOVERNANCE The Board of Management holds ultimate responsibility for risk management within the company and determines the risk appetite. This risk management process also covers risks related to environmental, social and governance aspects of Fugro’s business. Internal audit supports the Board of Management in managing the implementation of the risk management framework. On an annual basis, the Executive Leadership Team, which includes the members of the Board of Management, performs a comprehensive assessment of Fugro’s strategic, operational, financial and compliance risks. The identified key risks are assigned to the appropriate owners to manage and follow-up. The identified key risks are continuously monitored and re-evaluated and potential new risks are assessed. This process is facilitated and monitored by the internal audit function, which reports periodically on the process to the audit commiee. The Board of Management reports to the audit commiee on the risk management processes (assessments, response and management). The audit commiee and the Board of Management receive independent information on risk management activities from the internal audit department. The audit commiee reports their observations and findings to the full Supervisory Board. This structured process allows Fugro to take risks in a controlled manner. Constant monitoring of the external environment and operating and financial results is intrinsic to its way of working. Clarity and transparency are essential for assessing and evaluating risks. These are fundamental characteristics of Fugro’s culture. Management throughout the company is bound by clear restrictions regarding representation and decision-making. Board of Management Supervisory Board Regions Business lines Support functions Audit commiee Internal audit Responsible for managing risks Reporting on risk Independent review of risk management activities Risk governance FUGRO ANNUAL REPORT Strategic risk Fugro’s Path to Profitable Growth strategy has associated risks, for which the company has management measures in place. Apart from the key strategic risks, Fugro recognises risks related to its digital transformation and innovation and utilisation of its asset base. All these risks are mitigated with appropriate measures and monitored on dierent levels within the company. Market exposure Risk of market developments negatively impacting Fugro. Risk description Risk mitigation Risk appetite Risk trend Fugro operates in competitive markets exposed to market volatility and economic cycles. A substantial part of Fugro’s activities is related to the oil and gas industry. ■ In , the company generated of its revenue in wind, infrastructure and water. These markets are expected to have a higher mid-term growth rate than the oil and gas market, further increasing Fugro’s relative exposure to these growth markets. ■ A large part of Fugro’s revenue in the oil and gas market is related to asset integrity services, focused on keeping existing infrastructure safe and sound. ■ Continuous scenario planning and monitoring helps Fugro to forecast and pro-actively react on specific market events. High Stable Climate change Climate change and the energy transition present both opportunities and risks for Fugro. Risk description Risk mitigation Risk appetite Risk trend The pandemic has accelerated the aention for other disruptive global challenges, most notably climate change and the energy transition. Although vital for the future of the planet, this results in particular challenges for the fossil fuel industry, which still constitutes, albeit much smaller than in the past, a relatively large share of Fugro’s revenue. The identified climate-related risks mainly concern the potential consequences of not acting upon transition to a lower carbon economy fast enough. Major investments are needed to rewire and replace the Earth’s energy systems. This is a process that will take time, presenting Fugro with opportunities to dierentiate with sustainable and digital solutions, including solutions that will lower the carbon footprint of Fugro and its clients. ■ With its flexibility to shi assets to strategic growth markets, Fugro supports the energy transition, climate change adaptation and sustainable infrastructure developments. In , of revenue was generated in wind, infra and water. ■ Fugro is implementing its roadmap to reach its net zero emissions target in , mainly through decarbonisation of the vessel fleet. ■ A large part of Fugro’s revenue in the traditional energy markets is related to asset integrity: keeping existing assets safe and sound. ■ Fugro aims to further increase the transparency regarding climate-related risks and opportunities, by applying Task Force on Climate-related Financial Disclosures (TCFD) framework. Refer to Group performance chapter, climate change mitigation and adaptation solutions, for more information. Low Increasing FUGRO ANNUAL REPORT Innovative capability Risk that Fugro is not delivering new sustainable innovations meeting market demand. Risk description Risk mitigation Risk appetite Risk trend Innovation is a key enabler of Fugro’s strategic priorities, especially in a rapidly changing world. There is a risk that investments relating to research and development will not deliver timely, new, sustainable technologies and solutions supporting Fugro’s and its clients‘ net-zero emission targets. In addition, irrespective of Fugro’s eorts to protect its intellectual property, competitors might develop similar or beer solutions. ■ The introduction of new dierentiating integrated solutions in sustainable growth markets has been streamlined through an innovation framework. Fugro’s innovation teams are supported by four global business line directors, who have a deep understanding of client needs, market trends and competition, and of how to translate these insights into a dierentiating innovation portfolio. ■ Working with universities, technology institutes and other high-tech companies gives Fugro the opportunity to leverage third party technology and research and development, resulting in increased eectiveness. In several countries Fugro receives government subsidies to support the development of innovative new solutions. ■ Fugro is fully leveraging technology developments in the field of visualisation, robotics, connectivity and advanced analytics in order to oer safer, faster and higher quality services with a significantly lower carbon footprint. High Increasing Employees and capacity Risk that within the organisation insucient talent is available to deliver Fugro services. Risk description Risk mitigation Risk appetite Risk trend Not being able to aract and retain qualified employees impacts eective delivery of Fugro services and leadership within the organisation. The pandemic in particular is impacting the choices that people make regarding their career paths. This has become a trend that many other organisations are also experiencing. Therefore, keeping employees engaged and looking aer their wellbeing is key for the future success of the organisation. ■ Fugro acknowledges the value of its employees as they determine the long-term success of the company. This is demonstrated by providing opportunities to its employees, through its diversity and inclusion agenda, training, leadership and expertise development, career opportunities, and by focusing on aracting young people and healthy retention levels through Fugro’s appeal as a purpose driven company. ■ Fugro regularly engages with employees through its regular employee engagement surveys, and acts on related feedback. ■ Fugro assists employees in their career development with its global career framework. ■ (Partly remote) trainings have been provided to employees whereby technical trainings will be continued on site in and there is a continuous focus on recruitment initiatives to aract talented and capable people. Low Increasing FUGRO ANNUAL REPORT Operational risk Being a project organisation, the main operational risks are related to projects. Apart from the regular key operational risks presented below, Fugro recognises operational risks related to the pandemic. All these risks are mitigated with proportionate measures and monitored on dierent levels within the company. Health, safety and security Risk of health and safety and security incidents or exposure adversely impacting Fugro’s people or business. Risk description Risk mitigation Risk appetite Risk trend Fugro is subject to a variety of health and safety, risks, given the operational diversity, technical complexity and geographic spread of its operations. The core activities of Fugro remain predominantly the same in 2021. At the same time, the ongoing pandemic continues to impact the exposure and pressure on the health and wellbeing of our employees. ■ Fugro has a groupwide approach to managing HSSE, which requires all activities to meet the same high standards. Centrally developed policies, strategies, standards, incident registration and management, performance indicators and targets help manage risk and achieve the highest levels of related performance. ■ All Fugro’s activities are executed under certified management systems, such as ISO , ISO / OHSAS, ISO , ISM codes or equivalent. ■ Employees receive regular safety training and Fugro is continuously reviewing areas of improvement, thoroughly evaluating all incidents and sharing resulting areas of improvement and best practices across the company and the industry where relevant. ■ Fugro informs its business partners of its principles, policies and standards, and expects them to work according to comparable HSSE management standards. ■ In order to reinforce awareness on health and safety, recently the ‘S Together’ safety programme was launched. ■ Mental health impacts aggravated by the pandemic are assessed through quarterly employee surveys. Fugro supports employees and their families through an independent and confidential global employee assistance programme. ■ Increasingly, Fugro makes use of uncrewed operations, removing personnel from a high-risk environment to an onshore remote operations centres. Low Increasing FUGRO ANNUAL REPORT Project execution Risk of projects not delivered timely, within budget or with the required quality. Risk description Risk mitigation Risk appetite Risk trend Fugro is faced with a variety of risks while delivering its services, which relate to quality delivery, project management and the impact of external events on operational performance. Downtime related to adverse weather, vessel or equipment breakdown, logistical complexities or availability of people or assets can significantly impact project performance. Lack of management or control, due to time, knowledge or resource constraints, can cause unnecessary delays and serious damage to projects. ■ All projects and contracts require approval in accordance with Fugro’s authorisation matrix; projects and contracts above a certain threshold, risk or complexity require Board of Management approval. ■ Fugro has a robust project delivery process in place, in which risk assessments regarding the impact of internal and external events are embedded. ■ There are contracting rules and guidelines in place to structure projects with mandatory controls. ■ Fugro uses a standardised project management approach across the whole project life cycle and by sharing lessons learned across the regions. ■ Increasingly, performance dashboards providing continuous insight into project performance are being implemented. ■ Utilisation of assets is constantly monitored, ao by the global business line directors, ensuring the availability or timely investment in additional assets and tools when required. Moderate Stable Information security and technology Risk that confidentiality, integrity and availability of data is compromised due to an information security incident and the unavailability or restricted availability of critical IT systems for Fugro operations. Risk description Risk mitigation Risk appetite Risk trend Fugro relies on a range of information technology (IT) systems to manage its business, support operations and deliver its advanced technological solutions. Information security incidents and the unavailability or restricted availability of critical IT systems present a risk for Fugro, related to a cyber-aack (e.g. phishing, malware), non-delivery by suppliers or an internal system failure. This could lead to loss of operational functionality and business disruptions. ■ Fugro has a solid security IT infrastructure in place which consists of advanced spam and internet filters, firewalls, policy-based access to the internet and tooling to monitor network and cloud usage. Fugro’s IT systems are continuously being monitored for contamination by viruses, malware or malicious content or behaviour. Fugro invests in resources and technology to respond timely and eectively to incidents (e.g. phishing aempts and malware outbreaks). In , Fugro will further strengthen its incident detection and response process by implementing a more robust / monitoring and response set up. ■ Fugro has strengthened the set-up of its global information security team with a governance and operations team. ■ Information security and technology activities within the regions are being monitored by the global information security team. ■ Expertise on IT and technology for remote operations and solutions has been further strengthened with a dedicated architecture team. ■ Fugro is ISO certified in multiple of its key markets. ■ In , Fugro launched a new cyber security campaign to further contribute to the information security resilience and awareness. Low Increasing FUGRO ANNUAL REPORT Financial risk Fugro has to fund its operations, which is done with a mix of equity and external capital (bank facilities and convertible bonds) and manages bank balances and receivables on dierent locations and in dierent currencies. Apart from the key financial risks presented below, Fugro also recognises risks related to development of interest rates. All these risks are mitigated with proportionate measures and monitored on dierent levels within the company. Company financing The risk of having inadequate access to capital markets. Risk description Risk mitigation Risk appetite Risk trend Inadequate access to capital to fund the company could negatively aect Fugro with potential refinancing issues and delays which can in turn result in breach of covenants and/or not meeting debt maturities. Strongly increased focus on the capital markets for ESG investing is also a very relevant development. ■ Fugro continues to focus on the financial strength of the company to ensure that sucient positive free cash flow is generated to service debt. ■ As part of stakeholder engagement the company regularly engages with shareholders and other capital providers, in order to understand what is important to them. Low Stable Liquidity and working capital The risk of having insucient liquidity to fund its operations. Risk description Risk mitigation Risk appetite Risk trend Insucient free cash flow could negatively aect Fugro from being able to fund its operations. Customers or counterparties to a financial instrument failing to meet it contractual obligation expose Fugro to liquidity risks. Aging debtors have a negative impact on the available working capital, exposing Fugro to the risk of increased cost of capital. ■ Fugro continues to focus on timely collection of outstanding trade receivables and performing regular customer creditworthiness checks. ■ Liquidity assessments are made during project tendering to monitor the liquidity risks, within the boundaries set by the Board of Management. ■ Financial scenario analyses are performed to monitor liquidity. ■ Recently, a new groupwide programme was initiated to increase focus across all regions on working capital. Within this programme, all relevant sta is trained and continuously informed about the importance and impact of this topic based on lessons learned on cost and cash management Low Stable FUGRO ANNUAL REPORT Currency risk Risk of exchange rate fluctuations and devaluation of foreign currencies. Risk description Risk mitigation Risk appetite Risk trend Fugro’s global business operations lead to risks arising from fluctuations in exchange rates. Additionally, Fugro holds cash balances in local currencies in certain countries from where it is dicult to transfer cash abroad or to convert it to USD or EUR at short notice. These local trapped cash balances expose Fugro to risk of devaluations. This relates in particular to the Angolan Kwanza, of which per year-end 2021 an equivalent amount of EUR 8.8 million was outstanding, and the Nigerian Naira, of which per year-end 2021 an equivalent amount of EUR 6.8 million was outstanding. ■ As most of the company’s revenue in local currencies is used for local payments, the eect of exchange rate fluctuations is limited (natural hedge). To further mitigate the impact of exchange rate fluctuations, Fugro’s treasury department continually assesses the exposure. ■ For high complexity projects, the treasury department is involved during project tendering to highlight and monitor specific currency risks, within the boundaries set by the Board of Management. Low Stable Compliance risk Fugro is a multinational company, operating with multiple subsidiaries and branches in various countries. Apart from the key compliance risks presented below, Fugro also recognises compliance risks related to taxation, insurance, and intellectual property. All these risks are mitigated with proportionate measures and monitored on dierent levels within the company. Legal & regulatory compliance Risk of non-compliance with international and statutory laws and regulations in the jurisdictions in which Fugro operates; and/or risk of behaviour not in line with Fugro’s values. Risk description Risk mitigation Risk appetite Risk trend Fugro’s global presence exposes the company to regional and local laws, regulation and business cultures, and related changes or new laws and regulations, for example in relation to GDPR and international sanctions. Fugro is also exposed to changing and challenging political and economic environments and environmental laws and regulations. This can impact the realisation of business opportunities. Other risks may include non-compliance with Fugro’s Code of Conduct. ■ The Code of Conduct directs Fugro’s employees, subcontractors and business partners to conduct business ethically and to comply with the law and regulations. Continuous eorts are made to inform employees, suppliers and other business partners about the Code of Conduct and related policies. ■ Agents and joint venture partners are actively monitored by the business with supervision from the legal and compliance department. ■ To increase the level of awareness with regard to ethical behaviour in line with Fugro’s Code of Conduct, (remote) trainings and workshops have been provided to all Fugro employees, amongst others in relation to diversity and inclusion. ■ Fugro is acutely aware of and firmly responsive to the topic of climate change, and the related challenging political and economic business environment. Low Increasing FUGRO ANNUAL REPORT External audit The financial statements of Fugro are audited annually by external auditors. The audit is performed in accordance with Dutch law. As a maer of independence principles, the firm of the external auditor does not provide advisory services. The performance of the external auditor is evaluated annually by the audit commiee, assisted by the Board of Management. The audit commiee advises the Supervisory Board on their proposal to the annual general meeting regarding (re)appointment of the external auditor. For specific information regarding the external audit, refer to the independent auditor’s report on pages -. Audit commiee The audit commiee, one of the commiees within the Supervisory Board ensures an independent monitoring of the risk management process from the perspective of its supervisory role, based on the risk appetite of the company. The commiee focuses on the quality of the internal and external reporting, the eectiveness of the internal audits and the functioning of the external auditor. See ‘Supervisory Board report – Supervisory Board commiees’ for further information on the audit commiee. Internal audit The internal audit department assists the company with accomplishing its objectives by bringing a systematic, disciplined approach to evaluate and improve the eectiveness of risk management, control, and governance processes. In the year under review, the department obtained its recertification for the coming five years from the Institute of Internal Auditors. In , the internal audit department performed a broad range of services, including (financial) project, organisational and process reviews. In total, reviews took place during the year. Due to the pandemic, a significant part of these had to be done remotely, as a substitute for the regular onsite audits. The internal audit department is independently accountable to the audit commiee of the Supervisory Board and participates and reports in each audit commiee meeting ( times per year). Additionally, the Director Internal Audit has direct access to the chair of the audit commiee and CEO. The Director Internal Audit meets one on one with both the chair of the audit commiee and the CEO at least quarterly. Close cooperation and alignment between the external auditor and internal audit department takes place on approach, scoping and outcome. The performance of the internal audit department is annually evaluated by the audit commiee, assisted by the Board of Management. FINANCIAL REPORTING Fugro operates in many dierent parts of the world, sometimes diering in accounting policies and local reporting requirements. This exposes Fugro to the risk of reporting figures that are not in line with the group’s IFRS framework, which may lead to a (material) impact on the reported figures. To mitigate this risk a financial handbook and an accounting manual, containing detailed guidelines for the financial reporting, are available for all employees. Continuous guidance and support is delivered to senior management and controllers of all reporting entities. Every six months all managers and controllers of reporting entities sign a detailed statement regarding the design and operating eectiveness of financial reporting and internal controls. The business plans of every reporting entity are translated into forecasts. Deviations from the forecast are reviewed on a monthly basis. Any unforeseen circumstances that arise, or any substantial deviation from the forecasts, must be reported immediately to the responsible management. The monthly reports submied by the operational management include an analysis of the achievements versus the approved plans and a forecast for the coming periods including actions to address any shortfall. Fugro continues to implement a groupwide integrated system to monitor and manage the business, including redesign and standardisation of applicable processes in order to optimise the way Fugro operates. The key business processes are validated by business and support functions. The aim for this global implementation is to contribute to and improve Fugro’s business management and internal control environment. Fugro fulfi lls an important role in the ongoing energy transition. This includes solutions for fl oating wind, opening up previously inaccessible deepsea areas where the wind is more powerful than in shallow coastal waters. As these fl oating turbines require solid anchoring to the seabed, Fugro’s services are crucial for these developments. MunmuBaram is a joint venture established by Shell and CoensHexicon with the aim of developing and operating a . gigawa fl oating wind development o the south-east coast of South Korea near the city of Ulsan. This represents a signifi cant development towards South Korea’s Renewable Energy Plan, which aims to increase domestic renewable energy generation to of the energy mix by the year and will assist in meeting its ambition to become carbon neutral by . MunmuBaram has contracted Fugro to provide geophysical and geotechnical investigations within the development site and the connecting export cable route. In partnership with UST of South Korea, Fugro has since successfully completed the site investigation. The fi eld work was complemented with advanced laboratory testing and geo-consultancy’s interpretative reporting scope. Supporting the construction of a fl oating wind park FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT ORGANISATIONAL STRUCTURE Fugro N.V. is a public limited liability company under Dutch law. Fugro is also an international holding company. It has a two-tier board structure, consisting of a Board of Management and an independent Supervisory Board. As of May , the company also has an Executive Leadership Team, which consists of the Board of Management members and seven senior executives/functional directors. The Board of Management and the Supervisory Board have their specific role and tasks regulated by laws, the articles of association, the Dutch corporate governance code and the rules of these boards. The tasks of the Executive Leadership Team are regulated by the Board of Management and Execute Leadership Team rules. Board of Management The Board of Management is responsible for the day-to-day management, the continuity, the goals and objectives, the policies and the results of the company. These responsibilities include long-term value creation for all of the company’s stakeholders and integrating environmental and social factors into its strategy, policies and reporting. The members of the Board of Management are appointed by the general meeting for a maximum period of four years. The Supervisory Board determines the number of members of the Board of Management aer consultation with the Board of Management. Board of Management members may be reappointed. The Supervisory Board appoints one of the members of the Board of Management as chair (CEO). The Board of Management shall divide its tasks among its members subject to the Supervisory Board's approval. On January , the Supervisory Board announced that Chief Financial Ocer Paul Verhagen had decided to leave the company aer the annual meeting of shareholders on April . On May , and upon a binding nomination of the Supervisory Board, the general meeting appointed Barbara Geelen as member of the Board of Management of Fugro. N.V. Barbara Geelen serves as Chief Financial Ocer as per that date. In accordance with the articles of association the Supervisory Board is entitled to make a (binding) nomination for every appointment to the Board of Management. The general meeting can overrule a binding nomination by a resolution adopted by an absolute majority of the votes cast, provided such majority represents more than one-third of the issued share capital. If this part of the share capital is not represented at the meeting, but an absolute majority of the votes cast is in favour of the resolution to cancel the binding nature of the nomination, a new meeting may be convened at which the resolution may be passed by an absolute majority of votes, irrespective of the part of the capital represented at such meeting. On a non-binding nomination, the general meeting decides on the appointment with an absolute majority of votes. The general meeting can dismiss or suspend members of the Board of Management. Such a decision, other than proposed by the Supervisory Board, requires at least two-third of the votes, representing at least half of the issued share capital. With regard to the overruling of the binding nature of decisions to suspend or dismiss members of the Board of Management or Supervisory Board, convening a second meeting pursuant to section :, subsection , Dutch Civil Code is not permied. The Supervisory Board may at any time suspend a member of the Board of Management. During , the members of the Board of Management have not been involved in transactions involving conflicts of interest for Board of Management which were of material significance to Fugro and/or to members of the Board of Management. The Board of Management regularly, and at least annually, evaluates its own and individual members’ performance. Executive Leadership Team The Executive Leadership Team (ELT) consists of the two members of the Board of Management (CEO and CFO) and seven senior managers with clear accountability to deliver on all elements of the strategic plan. The four Regional Group Directors each focus on their own region. Key functional focus areas are covered by three other members: development and digital transformation, human resources, and legal and compliance. CEO Mark Heine is chairman of both the Board of Management and the ELT. CORPORATE GOVERNANCE FUGRO ANNUAL REPORT Members of the Supervisory Board are appointed (and, if necessary, dismissed) by the general meeting for a maximum period of four years. The Supervisory Board consists of such number of members as shall be set by the Supervisory Board (currently six). In case of an appointment or reappointment of Supervisory Board members, the Supervisory Board profile will be observed. A Supervisory Board member may be reappointed once for a second period of four years, and subsequently reappointed again for a period of two years, which appointment may be extended by at most two years. In the event of a reappointment aer an eight-year period, reasons should be given in the report of the Supervisory Board. For every appointment to the Supervisory Board and the Board of Management, the Supervisory Board is entitled to make a (binding) nomination. The general meeting can overrule a binding nomination by a resolution adopted by an absolute majority of the votes cast, provided such majority represents more than At least annually, the ELT evaluates its own performance. The Board of Management regularly, and at least annually, evaluates the performance of each ELT member, other than the members of the Board of Management. The CEO informs the Supervisory Board on the outcome of the evaluation. Supervisory Board The Supervisory Board supervises and advises the Board of Management and the ELT on the policies, management and the general aairs of Fugro, including the relations with shareholders. The Supervisory Board assists the Board of Management with advice on general policies related to Fugro and its business. In fulfilling its responsibilities, the Supervisory Board is guided by the interests of Fugro and its stakeholders. The environmental, social and governance aspects of Fugro’s policies, operations and performance are an integral part of its supervisory duties. The ELT members assist the Board of Management in managing the company. The ELT is collectively responsible for the performance of the company and its business, the implementation of the strategy and group wide policies, systems and processes. It focuses on review of business results, functional and regional strategies, budget-seing, people and organisation. The Board of Management is responsible for ensuring its expertise and responsibilities are safeguarded in the context of the operation of the ELT. Each ELT member is accountable to the Board of Management for the fulfilment of his/her duties and therefore reports to the Board of Management on a regular basis and in such manner as to give the Board of Management a proper insight in the performance of his/her tasks. The Board of Management remains fully accountable for the actions and decisions of the ELT and has ultimate responsibility for the general aairs of the company’s business and the general aairs of the Group. The size and composition of the ELT are subject to Supervisory Board approval. The ELT members, other than the members of the Board of Management, are appointed, suspended and dismissed as ELT members by the Board of Management, subject to approval by the Supervisory Board. The remuneration of ELT members, including short- and long-term incentives, other than for the members of the Board of Management is decided annually by the Board of Management, subject to approval by the Supervisory Board. During , the ELT held meetings, of which the vast majority were held via video-conference due to the Covid- restrictions. Information about the members of the ELT is provided on page of this report. FUGRO ANNUAL REPORT these diversity aspects are considered when filling vacancies. The Supervisory Board has set a gender diversity target for the boards of at least one-third female and at least one-third male members. For the beer part of , the Supervisory Board already comprised of four male () and two female members (). With this percentage, the gender diversity target for the Supervisory Board has been achieved according to the composition profile and pursuant to law. The Supervisory Board profile sets out: the size of the Supervisory Board, the desired expertise, experience, background, diversity and desired independence of the members. The Board of Management consists of two members. With the appointment of Barbara Geelen on May , the diversity target regarding gender has been met. During , the ELT, had two female members. In January , Celine Gerson was appointed as successor of Ed Saade who will retire aer a tenure of years. As a result, the current diversity ratio of the ELT is six male () and three female () members. In the longer run, gender diversity at the top should also come from a more balanced composition in terms of gender at the other layers in the organisation. Therefore, the company pays specific aention to women in its management development programmes to ensure the rise of women to senior management positions. In addition, external recruitment agencies are specifically instructed to identify and submit capable female candidates for senior management positions. Finally, the company will give preference to women in the case of equal suitability. Nonetheless, it will take The Supervisory Board regularly, and at least annually, evaluates the performance of the Board of Management and its members individually. The Supervisory Board discusses the conclusions of this evaluation, also in relation to the succession of members of the Board of Management. The evaluation takes place without the Board of Management being present. The Supervisory Board regularly, and at least annually, also evaluates its own and the individual members’ performance. The performance of the various commiees is evaluated as well. Further information on the internal proceedings governing the Board of Management, the ELT and the Supervisory Board, can be found on the website of Fugro. Diversity Board of Management, ELT and Supervisory Board Fugro values diversity and inclusion in all areas of its organisation. In , Fugro defined diversity policies for the composition of the Supervisory Board and Board of Management. Reference is made to the diversity policy for the Board of Management (which also applies to the ELT) and the Supervisory Board, and to the Supervisory Board rules (which contain the profile of the Supervisory Board), both of which are available on Fugro’s website. Increased diversity will lead to a wider range of skills for beer oversight and governance. It will also beer reflect the diversity of Fugro’s employees and client base. In these policies, and based on the nature and complexity of the business, the markets in which Fugro operates, and the diversity of its client base and employees, Fugro identified the diversity aspects of gender, nationality, location of residence, cultural background and qualifications (education and experience) as most relevant for Fugro. For the boards, one-third of the issued share capital. If this part of the share capital is not represented at the meeting, but an absolute majority of the votes cast is in favour of the resolution to cancel the binding nature of the nomination, a new meeting may be convened at which the resolution may be passed by an absolute majority of votes, irrespective of the part of the capital represented at such meeting. On a non-binding nomination, the general meeting decides on the appointment with an absolute majority of votes. The Supervisory Board appoints one of its members as chair and one as vice-chair. The chair is assisted in his role by the company secretary. The Supervisory Board has established three commiees from amongst its members: an audit & risk commiee, a nomination commiee and a remuneration commiee. The function of the commiees is to assist the Supervisory Board and to prepare the decision-making. The general meeting can dismiss or suspend members of the Supervisory Board. Such a decision, other than proposed by the Supervisory Board, requires at least two-third of the votes, representing at least half of the issued share capital. With regard to the overruling of the binding nature of decisions to suspend or dismiss members of the Supervisory Board, convening a second meeting pursuant to section :, subsection , Dutch Civil Code is not permied. During , the members of the Supervisory Board have not been involved in transactions involving conflicts of interest for Supervisory Board members, which were of material significance to Fugro and/or to members of the Supervisory Board. FUGRO ANNUAL REPORT ■ ,, cumulative convertible financing preference shares, with a nominal value of EUR . each, which can be sub-divided into two series of ,, cumulative convertible financing preference shares. On December , the issued capital amounted to EUR ,,. divided into ,, ordinary shares. No preference shares have been issued. On December , all ordinary shares have equal voting rights (one share, one vote). There are no restrictions on the voting rights of the company’s ordinary shares and preference shares (if issued). Restrictions to the transfer of shares The Board of Management’s approval is required for each transfer of preference shares. The approval has to be requested in writing stating the name of the intended acquirer of the shares in question. There are currently no limitations either under Dutch law or the articles of association of Fugro to the transfer of ordinary shares. Protective measures On October , in the context of the refinancing process, Fugro announced its intention to bring its protective measures in line with Dutch market practice, resulting in the termination of two of the company’s previous three protective measures. On December , the call option agreements with Stichting Continuiteit Fugro have been terminated. In addition, on May Fugro and the Foundation Trust Oce terminated the certification of the ordinary shares. Following the decertification, ordinary shares of Fugro are listed and traded on Euronext stock exchange; the Foundation Trust Oce has been dissolved and ceased to exist as per February . The annual general meeting (AGM) is held within six months of the end of the financial year (oen in April) in order to discuss the management report and the financial statements, any appointments of members of the Board of Management and of the Supervisory Board and any of the other topics mentioned above and as required by Dutch law. Extraordinary general meetings (EGM) are convened as oen as the Supervisory Board or the Board of Management deems necessary. General meetings are chaired by the chair of the Supervisory Board. The Supervisory Board and the Board of Management provide the shareholders’ meeting with all the information requested, unless there is a very good reason why providing the information would not be in the interests of Fugro. Shareholders who, individually or jointly, represent at least of the issued share capital may request to the Board of Management that items be placed on the agenda. Such requests need to be received in writing not later than days prior to the meeting date. CORPORATE INFORMATION Capital structure At December , the authorised capital of Fugro amounted to EUR ,, and was divided into: ■ ,, ordinary shares, with a nominal value of EUR . ■ ,, cumulative protective preference shares, with a nominal value of EUR . ■ ,, cumulative financing preference shares, with a nominal value of EUR . each, which can be sub-divided into two series of ,, cumulative financing preference shares time before these measures take eect to achieve the target on gender diversity at the executive level. See pages and for the personal details of the members of the Board of Management and the Supervisory Board. General meeting of shareholders General meetings of shareholders are convened by the Board of Management or the Supervisory Board. Meetings can also be convened by shareholders who, individually or jointly, represent at least of the issued share capital if authorised by the relevant Dutch court. The powers of the general meeting are stipulated in legislation and in the articles of association of Fugro and can be summarised as follows: approval of decisions that would entail a significant change to the identity or character of Fugro or its business; appointment and dismissal of members of the Board of Management and of the Supervisory Board; adoption of the remuneration policies of the Board of Management; approval of option and share plans for the Board of Management; approval of the remuneration of the Supervisory Board; adoption of the annual financial statements; discharge of members of the Board of Management and of the Supervisory Board; approval of the profit appropriation in accordance with article paragraph of the articles of association; authorisation to repurchase or cancellation of shares, to issue shares (or to grant rights to subscribe for shares) and to restrict or exclude pre-emptive rights in respect of shares; and approval of decisions to amend the articles of association or to dissolve Fugro. FUGRO ANNUAL REPORT to such shares. On May Fugro amended its articles of association among other things to arm its protective measure. In the articles of association of Fugro, the Foundation Protective Preference Shares has been granted the option to subscribe for up to the number of cumulative protective preference shares included in Fugro's authorised capital from time to time, provided that immediately following the issue, the number of protective preference shares issued may not exceed half (/) of the total number of shares issued and outstanding. The Foundation is in a position to achieve its objects – i.e. safeguarding Fugro and its businesses – autonomously, independently and eectively should the occasion occur. The Board of Foundation Protective Preference Shares operates completely independently from Fugro; for the composition of the Board see page . Amendment of articles of association A resolution to amend the articles of association of Fugro may be passed only on a proposal thereto of the Board of Management with the prior approval of the Supervisory Board. Insofar as a resolution to amend the articles of association brings about a change in the rights vested in the holders of protective preference shares or the holders of financing preference shares or the holders of convertible financing preference shares (currently no such preference shares are issued), such a resolution shall require the approval of the meeting of holders of protective preference shares or the meeting of holders of financing preference shares or the meeting of the holders of convertible financing preference shares, as the case may be. Fugro’s latest articles of association are posted on the website. When carrying out assignments, Fugro receives or can have access to clients’ extremely confidential information. For this reason it is essential the company can safeguard its position as independent service provider. The main point of Fugro’s protection against a hostile takeover depends on the possibility of Fugro to issue cumulative protective preference shares. This protective measure shall be put up, especially in a takeover situation, when this is in the interest of Fugro to protect its independent service delivery and also in defining Fugro’s position in relation to that of the raider and the raider’s plans. It creates the possibility, when necessary, to look for alternatives. It will not be put up to protect the Board of Management’s own position. Due to the uncertainty regarding the situations with which Fugro could be confronted, the use of protective measures in circumstances other than those described above cannot be discounted. Foundation Protective Preference Shares Fugro The objects of Stichting Beschermingspreferente aandelen Fugro (‘Foundation Protective Preference Shares’) are to aend to Fugro’s interests and of Fugro’s businesses as well as the businesses of the entities that form part of the group, in such way that Fugro’s interests and the interests of the relevant businesses as well as the interests of all parties involved, are safeguarded to the extent possible, and that Fugro and the relevant businesses are defended to the extent possible against factors that could negatively aect the independence and/or continuity and/or identity of Fugro and the relevant businesses, as well as all activities which are incidental to or which may be conducive to any of the foregoing. The Foundation aims to achieve its objects independently from Fugro, by acquiring protective preference shares and by exercising the rights aached Authorisation Board of Management regarding shares Fugro regularly proposes to its shareholders to authorise the Board of Management to grant or issue (rights to acquire) shares and to repurchase own shares. On April , the AGM authorised the Board of Management for a period of months as from April until October , subject to the approval of the Supervisory Board, to: ■ cause Fugro to repurchase (certificates of) its shares in its own capital, up to a maximum of of the issued capital at the date of acquisition, provided that Fugro will hold no more (certificates of) shares in stock than at maximum of the issued capital, either through purchase on a stock exchange or otherwise, at a price, excluding expenses, not lower than the nominal value of the shares and not higher than above the average of the closing price of (the certificates of) the shares on Euronext Amsterdam for the five business days preceding the date on which the repurchase is made ■ resolve on the issue of – and/or on the granting of rights to acquire up to of the issued capital on April of ordinary shares and/or all sorts of financing preference shares in which the authorised capital of Fugro is divided ■ limit or exclude pre-emption rights in relation to any issue or grant of (rights to acquire) ordinary shares and all sorts of financing preference shares in which the authorised capital of Fugro is divided as referred to under the second bullet. The Board of Management may resolve, with the approval of the Supervisory Board, to dispose of shares acquired by Fugro in its own capital. FUGRO ANNUAL REPORT Unconditional options and restricted share units are in principle not subject to any vesting conditions, except continuous employment of the holder by Fugro or one of its subsidiaries. The usual terms and conditions are applicable including exceptions in connection with retirement, long-term disability, death and change of control. On December , the unconditional options granted December expired. The vesting conditions of the performance options (last grant in ) and shares, which vested partially in March are not only subject to continuous employment of the holder by Fugro or one of its subsidiaries, but also to performance testing. Vested performance shares have a holding (lock-up) period of two years and may be partly sold only to meet tax requirements at vesting (‘sell to cover’). The usual terms and conditions are applicable including exceptions in connection with redundancy, termination of employment without cause, prorated vesting, retirement, long-term disability, death and change of control. Restricted share units and performance shares are granted in such a way that at any moment the maximum number of outstanding options and performance shares will not exceed the mandate of . of the issued ordinary share capital (including treasury shares but excluding the conversion rights under the outstanding convertible bonds). It is Fugro’s policy to repurchase own shares to cover the options and performance shares granted in order avoiding the issue of new shares when options are exercised and performance shares vest. See note of the financial statements for further information on option and share plans. plan granting restricted share units to a group of employees as from a certain level or designated as talent. With eect from , unconditional options and conditional performance shares are no longer granted at the end of the calendar year, but the grant date has been shied to the open period immediately following the publication of the annual results. The first grant under this revised timetable was on March . The vesting date has also been shied to match the new grant date. The vesting period of the options, restricted share units and performance shares is three years. The term of the options is six years and the term of the performance shares is five years (vesting period is followed by a lock-up of years). Long-term incentive plans Fugro has the following long-term incentive plans in place: . Unconditional options, approved by the AGM in . Conditional performance options and performance shares, approved by the AGM in . Conditional performance shares (adjustment of the plan under ii) above), approved by the AGM in . Restricted Shares Units, replacing the unconditional options under . With eect from , unconditional options were no longer granted to members of the Board of Management. Instead, conditional performance options and performance shares were granted to members of the Board of Management and senior management. From onwards, only conditional performance shares are granted to members of the Board of Management and senior management. In it was decided to replace the unconditional options with new FUGRO ANNUAL REPORT Key agreements containing change of control provisions Fugro dierentiates the following categories of agreements as referred to in the Decree on Article of the EU Takeover Directive: ■ Fugro, directly and indirectly, has entered into a syndicate revolving credit facility (RCF), as well as a term loan. See for further details nnote ./. of the financial statements. The RCF and term loan agreements stipulate that in the event of a change of control of Fugro, the loans/amounts outstanding under these arrangements may become immediately due ■ Fugro has entered into a sale and lease back agreement regarding the geotechnical vessels Fugro Scout and Fugro Voyager. The documentation contains change of control clauses which could result, depending on various circumstances, in damages to be paid by Fugro ■ In October Fugro N.V. issued EUR million in subordinated convertible bonds. For further details see note . of the financial statements. Both agreements contain a change of control clause which gives the holder of each bond the right to require Fugro to redeem that bond ■ Some joint venture agreements Fugro and Fugro subsidiaries have entered into contain change of control clauses, which agreements are in itself not considered key agreements within the meaning of the Decree on Article of the EU Takeover Directive, but jointly they are considered significant ■ Fugro and Fugro subsidiaries have entered into various important agreements that contain clauses that in the event of a change of control the other party has the right to terminate the agreement. These agreements are in itself not considered key agreements within the meaning of the Decree on Article of the Takeover Directive, but jointly they are considered significant The table below gives an overview of the series unconditional options, performance options and performance shares that are currently outstanding and of the vesting and the expiration dates. Unconditional options Exercise price (EUR) Vesting date Expiration date Series // . // // Series // . // // Series // . // // Series 26/02/2020 . // // Restricted share units Series // n/a // n/a Performance options Exercise price (EUR) Vesting date Expiration date Series // . partially vested // // Performance shares Exercise price (EUR) Vesting date End of lock-up Series // n/a partially vested // Series // n/a partially vested // // Series // n/a partially vested // // n/a / / Series // n/a // // Series // n/a / / * Based on anticipated publication dates of annual results onwards. FUGRO ANNUAL REPORT ■ Long-term incentive plans with respect to unconditional options and conditional performance options and shares. The terms and conditions of the unconditional options stipulate that in the event of a restructuring of the share capital of Fugro or a merger of Fugro with any other legal entity, the option holder is entitled for every option to such securities, cash or other property as to which a shareholder of Fugro is entitled per share immediately prior to the restructuring or merger, unless the option period is shortened by Fugro. In the event of a restructuring of its share capital or merger with another company, Fugro may shorten the option period so as to terminate immediately prior to the time at which the restructuring or merger is eectuated. In the event that a public oer is considered hostile and such oer is declared unconditional, all options become immediately exercisable. The terms and conditions of the conditional performance options and shares contain more or less similar change of control clauses. Termination of management service agreements resulting from public bid Fugro has not entered into any agreements with members of the Board of Management that provide for a specific severance payment on termination of the services agreement as a result of a public bid within the meaning of section : or : of the Dutch Act on Financial Supervision. The agreements with the members of the Board of Management do – in accordance with the Code – provide for a general severance payment amounting to a maximum of one year’s fixed base salary which in principle is applicable in the event of termination or annulment of the agreement unless this is for cause. This severance payment is also applicable when the termination is justified by such change of circumstances that the members of the Board of Management cannot reasonably be expected to continue the performance of their function/services as a statutory director of Fugro. This may be the case, for example, if Fugro is liquidated, is merged with or taken over by a third party, is subject to an important reorganisation or to a major change of policy. This severance payment is in addition to a three months’ notice period for both parties. COMPLIANCE WITH DUTCH CORPORATE GOVERNANCE CODE IN 2021 The Dutch corporate governance code contains principles and best practices on the governance of listed companies and their accountability to their shareholders on this topic. Fugro applies the principles and best practices of the Code. Since Fugro finalised the process of decertification on May , it is fully compliant with the Code. A full overview (‘comply or explain’-report) of Fugro’s compliance with the Code in is posted on Fugro’s website, as are the rules governing the internal proceedings of the Board of Management and Executive Leadership Team and of the Supervisory Board (including its three commiees). CORPORATE GOVERNANCE STATEMENT This is a statement concerning corporate governance as referred to in section a of the decree on additional requirements for board reports (Besluit inhoud bestuursverslag) eective as of January (the ‘Decree’). The information required to be included in this corporate governance statement as described in sections , a and b of the Decree and in best practice provision .. of the Code can be found in the following chapters, sections and pages of this annual report and are deemed to be included and repeated in this statement: ■ The information concerning compliance with the Code, as required by section of the Decree, can be found in ‘Corporate governance’ ■ The information regarding Fugro’s diversity policy for the Supervisory and Management Boards as required by section a sub d of the Decree and best practice provision .. of the Code, can be found in ‘Corporate governance’ ■ The information concerning Fugro’s main features of the internal risk management and control systems relating to the financial reporting process, as required by section a sub a of the Decree, can be found in the risk management chapter.’ ■ The information regarding the functioning of Fugro’s general meeting, and the authority and rights of Fugro’s shareholders, as required by section a sub b of the Decree, can be found in ‘Corporate governance’ ■ The information regarding the composition and functioning of Fugro’s Board of Management, the Supervisory Board and its commiees, as required by section a sub c of the Decree, can be found in the relevant sections of ‘Corporate governance’ and ‘Supervisory Board report’ ■ The information concerning the disclosure of the information required by the Decree on Article EU Takeover Directive, as required by section b of the Decree, can be found in ‘Corporate governance’ and ‘Fugro on the capital markets’. Fugro Maali, one of Fugro’s newest range of uncrewed surface vessels (USV) with an electric remotely operated vehicle on board, conducted an inspection of pipelines o the north-western coast of Australia. This was the culmination of a three-year programme conducted by the client, Woodside, and Fugro’s inspection, repair and maintenance team. The pipeline inspection included a multibeam survey, visual inspection, and cathodic protection assessments. Remote control of the USV was undertaken, via satellite connections, from a transportable control centre in King Bay Supply Base and Fugro’s remote operations centre in Perth, , km from the worksite. During the one-month project, the USV navigated around , nautical miles in the surroundings of one of the busiest ports in Australia. It consumed , litres of diesel, reducing CO emissions by compared to a traditional vessel. USV operations remove personnel from high-risk o shore environments and have signifi cantly reduced carbon footprint when compared to traditional survey methods. Cloud-based data processing allows near real-time data delivery, leading to faster and more informed decision making. All in all, remote operations fundamentally changes the way in which subsea operations are conducted. Improving safety and lowering carbon emissions through remote operations FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT Investor relations policy Fugro’s investor relations policy is aimed at providing timely, complete and consistent information to existing and potential shareholders, other capital providers and its intermediaries. Fugro wants to enable them to develop a clear understanding of the company’s strategy, activities, historical performance and outlook for the future. Fugro oers comprehensive information on its website and through presentations to and meetings with analysts, investors and media. Analyst presentations are accessible via webcast. Aer the publication of the full year and half-year results, Fugro hosts meetings with shareholders and other investors. These roadshows usually cover the UK, the Netherlands, other European and the North American markets. Due to the ongoing pandemic, in almost all meetings took place via calls and webinars. Fugro is currently covered by eight financial analysts. These activities are carried out in strict accordance with the requirements of Euronext and the Dutch Authority for the Financial Markets. Fugro has a policy on bilateral contacts in place, detailing how information is provided to investors, analysts, financial institutions, the press and other stakeholders. For this policy and all other relevant publications such as press releases and presentations, see www.fugro.com. Listing on the stock exchange Fugro is listed on Euronext Amsterdam since (symbol: FUR/ISIN code: NLA) and is included in the midcap index AMX. Options on Fugro shares are traded on the European Option Exchange in Amsterdam (Euronext Life). FUGRO ON THE CAPITAL MARKETS Trading information * * * Shares outstanding (at year-end) ,, ,, ,, ,, ,, Year-end closing share price on Euronext . . . . . Market capitalisation (x EUR 1 million, year-end) , Average daily trading on Euronext (shares) , ,, , , , * - numbers have not been adjusted for the rights issue and : share consolidation, which both took place in December . On December , Fugro had ,, shares outstanding. In May , Fugro terminated the certification of its shares. All shares have equal voting rights: one share gives one vote. No preference shares have been issued. AMX calibrated Fugro AMX calibrated Fugro Development share price 2021 (x EUR) January February March April May June July August September October November December 4.5 3.0 1.5 6.0 7.5 9.0 10.5 12.0 Fugro AMX calibrated AMX (Dutch large cap index) calibrated to Fugro share price on January . FUGRO ANNUAL REPORT Shareholders Under the Dutch Financial Supervision Act, holdings of or more must be disclosed to the Dutch Authority for the Financial Markets (AFM). Holdings of 3% or more per 31 December 2021 Position Date notification NN Group N.V. .% November ASR Nederland N.V. . % November H.M. van Heijst .% November On December , Fugro owned ,, ‘treasury shares’ which can be (partly) used to cover the employee option and share plans and (partial) conversion of the outstanding convertible bonds. Treasury shares are not entitled to dividend and there are no voting rights aached to these shares. During , Fugro has not been involved in any transaction with holders of at least of its shares; therefore best practice provision .. of the Code has been observed. actively engages with the benchmarks that are most relevant to our stakeholders, and uses the learnings to further enhance transparency and achieve continuous improvement in these scores going forward. Scorings in various ESG benchmarks Rating scale (from good to bad) Brief description CDP B - C D A - D CDP runs a global disclosure system for mainly investors and companies to manage and understand their environmental impacts. We target a further improvement to a B rating. Sustainalytics . . . - + Sustainalytics, a Morningstar company, has rated Fugro with an ESG Risk Rating of 23.3 as of August 2021. With this score, Fugro ranks 11th of 278 companies in the construction and engineering industry. MSCI AA AA AA AAA - CCC MSCI ESG Rating is designed to measure a company’s resilience to long-term, industry material ESG risks. Fugro has maintained its 'AA' rating for the last five years. V.E. NA - V.E.’s sustainability ratings combine a range of environmental, social and governance data points to assess how companies are responding to the various sustainability challenges they face. In 2021, Fugro scored 48 points, ranking 6th out of 23 oil field services companies in the EU. Transparancy Benchmark %, # out of companies NA %, # out of companies Bi-annually, the Dutch Ministry of Economic Aairs and Climate Policy ranks companies and other organisations according to their ESG related strategy and policies. In 2021, Fugro scored 64 out of 100 points, ranking 57 out of 235, an improvement from 56 points in 2019. ESG ratings Various organisations are including Fugro in their ESG rating systems and benchmarks. Investors and clients increasingly use these ratings as part of their investment or commercial decision making processes. Fugro * Including treasury shares. ** Primarily Dutch shareholders. Source: cmii shareholder identification report, June Unidentied Rest of the world United Kingdom United States Retail investors ** Netherlands Netherlands * Retail investors ** United States United Kingdom Rest of the world Unidentified Geographical distribution of shares (in %) 33 15 11 8 7 26 FUGRO ANNUAL REPORT Dividend Even though Fugro reported a positive net result in , the company will only resume dividend payments once leverage structurally allows. Through an ongoing focus on cash flow generation, a gradual improvement in profitability and disciplined asset management, Fugro targets an annual positive free cash flow resulting in a further reduction of net debt, deleveraging of the balance sheet, and consequently net leverage of . times. Fugro’s dividend policy is a pay-out ratio of to of net result. Shareholders have the choice between cash or shares. In case no choice is made, the dividend will be paid in shares. Fugro osets dilution resulting from the optional dividend (cash or shares). Fugro will repurchase the number of shares issued as stock dividend and these shares will be cancelled aer having obtained shareholder approval. This way, dilution is being oset while the tax advantage for a substantial part of the shareholders related to stock dividend is retained. Loans Fugro has EUR million in subordinated convertible bonds outstanding which mature in , with a put option in November . These bonds carry a coupon of . and a conversion price of EUR .. They are trading on the Open Market (Freiverkehr) segment of the Frankfurt Stock Exchange (symbol: ISIN: XS). EUR million proceeds from the divestment of Seabed Geosolutions were used to repay part of this loan, from the original EUR million to EUR million. The loan has an initial coupon of EURIBOR+. and will gradually increase in bi-annual steps in the second and third year towards EURIBOR+.. On both loans, covenants apply on Fugro’s solvency ratio (>=.), net leverage (equal to or less than .:) and interest coverage (at least .:). Financial calendar 22 April 2022 Publication trading update first quarter 2022 22 April 2022 Annual general meeting (14.00 CET) 28 July 2022 Publication half-year results 2022 28 October 2022 Publication trading update third quarter 2022 23 February 2023 Publication 2022 annual results 26 April 2023 Publication trading update first quarter 2023 26 April 2023 Annual general meeting Contact For further information contact: Catrien van Buingha Wichers Director Investor Relations +() c.vanbu[email protected] In addition, Fugro has a EUR million revolving credit facility and term loan in place with seven banks, of which EUR . million has been drawn at year-end . The revolving credit facility has a maturity of December , plus a one-year extension option. It had an initial margin coupon of EURIBOR+. and depending on leverage the margin can vary between EURIBOR+. and EURIBOR+.. The term loan has a maturity of December . In July , Debt maturity profile per 31 December 2021 (in millions, euro equivalents) 2022 Dec 2023 2024 2025 59 188 250 438 0 0 100 Revolving credit facility (of which EUR 187.5 million available) Term loan2024 convertible (with put option in 2022) Millions of kilometres of powerlines and their immediate operational environment throughout the world are in di erent states of repair and maintenance, and impacted by vegetation encroachment and weather events. Understanding the interplay between the network and the world around it in a -D virtual environment allows power utilities and infrastructure owners to be er manage both current and potential future defects. WEL Networks of New Zealand has contracted Fugro to provide them with asset modelling of their overhead network. Fugro combines pioneering geospatial mapping techniques with cu ing-edge data processing and cloud computing capabilities. Fugro’s award-winning technology is based on remote observation automated modeling economic simulation (ROAMES)—which creates a digital twin and detailed analytics for remote asset inspection, identifi cation, and condition assessment. This allows WEL Networks to identify and prioritise risk mitigation and maintenance actions. Fugro ROAMES is also used by to investigate deformities and non-conformances for distribution poles and equipment in remote areas using high-resolution digital pole imagery. Fugro’s ROAMES solution helps to improve asset management programmes, plan future spending, and increase the safety of the electricity network to minimise risk. Overall, this leads to more sustainable infrastructure management, improved targeted maintenance and future-proofi ng of the network. Creating Digital Twin of electricity network to support asset management FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT The Board of Management is responsible for the design and operation of the internal risk management and control systems. In discharging this responsibility, the Board of Management has made an assessment of the eectiveness of the design and operation of these systems. Fugro is aware of risks it can be confronted with and has an internal control framework in place to identify and manage risks. The Board of Management has reviewed the eectiveness of Fugro’s internal risk management and control systems, based upon the following information: ■ leers of representation signed by the management of Fugro’s reporting entities ■ reports of internal audit on reviews performed throughout the year ■ various risks assessments performed throughout the company, including risk assessment by the Board of Management. The Board of Management considered the external auditor’s reporting provided at half-year and full year . The reports gave an update on areas for further improvement, such as the risk and control framework (substantiation of internal controls and follow-up of internal audit findings) and information technology (IT landscape and cyber security risk management). The Board of Management monitored ongoing action plans. The establishment of the internal risk management and control systems is based on the identification of external and internal risk factors that could influence Fugro’s operational and financial objectives and contains a system of monitoring, reporting and operational reviews. All material risk management activities have been discussed with the audit commiee and Supervisory Board. For more information on Fugro’s risk management activities and internal control and risk management systems, see pages to . For a summary of risk factors, see page . The purpose of Fugro’s internal risk management and control systems is to adequately and eectively manage the significant risks to which it is exposed. Such systems can never provide absolute assurance as to the realisation of operational and strategic business objectives, nor can they prevent all misstatements, inaccuracies, errors, fraud and non-compliances with legislation, rules and regulations. These systems do not provide certainty that Fugro will achieve its objectives. Based on the annual evaluation and discussion of Fugro’s internal control and risk management systems and identified risk factors, the Board of Management confirms, in accordance with best practice provision .. of the Dutch corporate governance code of December , that, according to the current state of aairs to the best of its knowledge: ■ the internal risk management and control systems of Fugro provide reasonable assurance that the company’s financial reporting does not contain any material inaccuracies ■ there have been no material failings in the eectiveness of the internal risk management and control systems of Fugro ■ there are no material risks or uncertainties that could reasonably be expected to have a material adverse eect on the continuity of Fugro’s operations in the coming twelve months ■ it is appropriate that the financial reporting is prepared on a going concern basis, as supported by Fugro’s budget process and latest forecasts. Furthermore, in view of the above, the Board of Management confirms, in accordance with article :c of the Financial Supervision Act, that, to the best of its knowledge: ■ the financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of Fugro and of group companies included jointly in the consolidation ■ the board report (pages to ) provides a fair review of the position at the balance sheet date, the development and performance of the business during the financial year of Fugro and of the group companies for which the financial information is recognised in its financial statements ■ the board report describes the principal risks and uncertainties that Fugro faces. Leidschendam, February M.R.F. Heine, Chief Executive Ocer B.P.E. Geelen, Chief Financial Ocer MANAGEMENT STATEMENTS The Kingdom of Saudi Arabia is aiming to create a more diverse and sustainable economy. It’s Vision programme, targeting net zero emissions by , is driven by a series of ambitious projects which aim to open new areas of economic activity, create jobs and drive economic development. NEOM is the largest and most ambitious of these projects. It is an urban development covering an area of , square kilometres including a new smart city, The Line. This city is to be a new model for sustainable living and business, fully powered by renewable energy. Fugro is involved in the delivery of this strategic development through a number of activities, including the management of ground risk, which is vital to deliver complex, major infrastructure projects such as The Line on time and to budget. Through its Geo-risk management framework, Fugro is able to reduce uncertainty and add project value. By applying a consulting mindset to provide linked, scalable solutions (such as newly-developed passive seismic screening for engineering properties and digital delivery through ground models supported by machine learning) Fugro is delivering reliable advice, shortened design schedules and accelerated construction of The Line’s futuristic urban infrastructure. Geo-intelligence to support cities of the future FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT Report of the Supervisory Board SUPERVISORY BOARD Company secretary Paul Theunissen () Name Sjoerd S. Vollebregt () Function Chairman Supervisory Board Commiee Chairman nomination commiee, member remuneration commiee Nationality Dutch First appointed Current term Until AGM Previous positions CEO Stork NV, senior management roles at various companies in the field of logistics, member of the Supervisory Board of TNT Express BV and non-executive board director of Mylan NV Other functions Chairman of the Supervisory Board of Heijmans NV and chairman of the Supervisory Board of Joulz BV Name Petri H.M. Hofsté () Commiee Vice-chair Supervisory Board, chair audit commiee Nationality Dutch First appointed Current term Until AGM Previous positions Senior financial management positions at various organisations; partner at KPMG, group controller and deputy chief financial ocer of ABN AMRO Bank, division director of the Dutch Central Bank and chief financial and risk ocer of APG Group Other functions Member Supervisory Board of Rabobank, Achmea B.V. and Achmea Investment management, Pon Holdings BV and chair of the Board of Nyenrode Foundation Name Antonio J. Campo () Commiee Member remuneration commiee; member nomination commiee Nationality Colombian First appointed Current term Until AGM Previous positions Multitude of senior management positions at Schlumberger, President and CEO of the Integra group of companies Other functions Vice-chairman Board Basin Holdings, lead director of National Energy Services Reunited Corporation Name Marc J. C. de Jong () Commiee Member audit commiee Nationality Dutch First appointed Current term Until AGM Previous positions CEO LM Wind Power, various executive positions and part of Group Management Commiee at Royal Philips, executive position at NXP Semiconductors Other functions Owner and CEO of Innomarket Consultancy BV, member of the Supervisory Board of ASM International NV, member of the Supervisory Board of Sioux. Non-executive board member at three Danish based, private equity owned companies in the international wind energy market, called Nissens AS, Fiberline AS and PolyTech AS Name Ron Mobed () Commiee Member audit commiee Nationality British First appointed Current term Until AGM Previous positions CEO of Elsevier (part of RELX Group), president of the Energy division of HS Markit Ltd, various senior management positions at Schlumberger Other functions Non-executive director at AVEVA Plc, board member of Ordnance Survey Limited, non-executive director and chair of Robert Walters Plc Name Anja H. Montijn () Commiee Chair remuneration commiee; member nomination commiee Nationality Dutch First appointed Current term Until AGM Previous positions Various national and international leadership positions at Accenture, amongst others managing partner Resources practice in France and Benelux, Country Managing Director Accenture the Netherlands, Global Managing Director Management Consulting Resources, member Supervisory Board Royal VolkerWessels NV Other functions Non-executive director at OCI NV FUGRO ANNUAL REPORT For the second year in a row, the world experienced the consequences of the Covid- pandemic, both economically and socially. We have had to accept that the impact of the pandemic is lasting longer than we all expected at the beginning of the year. Also, in Fugro succeeded to adapt its work processes quickly to the circumstances to continue its operations eectively, despite the increased operational complexities caused by the measures to contain the virus. As Supervisory Board we can only conclude that the management’s measures aimed at business continuity during the pandemic paid o. Revenue increased by . on a currency comparable basis. Thanks to its technical capabilities and excellent reputation, revenues in the oshore wind market sustained its growth trajectory with a plus of for the full year. Infrastructure and water were also up, by and respectively. The company improved its EBIT margin and generated good cash flow. The company has executed numerous demanding projects for its clients successfully. Fugro is in the forefront leveraging technology developments in the field of robotics, remote operations and analytics & cloud automation in order to oer safer, faster, more ecient and higher quality services; all in a more sustainable way. 2021 FINANCIAL STATEMENTS AND DIVIDEND This annual report includes the financial statements, which are accompanied by an unqualified independent auditor’s report of Ernst & Young Accountants LLP (see the independent auditor’s report starting on page ). These financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and section of Book of the Dutch Civil Code. The audit commiee discussed the dra financial statements with the CEO, the CFO and the auditors. The commiee also discussed the long form auditor’s report, the quality of internal risk management and control systems and had a discussion with the auditor without Fugro’s management being present. Subsequently, the Supervisory Board discussed the annual report, including the financial statements with the Board of Management in the presence of the auditor. Furthermore, we took note of the reporting from the audit commiee and reviewed the independent auditor’s report and the quality of internal risk management and control systems. We recommend that the AGM, to be held on April , adopts the financial statements. In addition, we request that the AGM grants discharge to the members of the Board of Management in the financial year for their management of the company and its aairs during , and to the members of the Supervisory Board in oce in the financial year for their supervision over said management. We concur with the decision of the Board of Management that no dividend will be paid for . Even though Fugro reported a positive net result, the company will only resume dividend payments once leverage structurally allows. HEALTH, SAFETY AND SUSTAINABILITY Health and safety is of critical importance for Fugro and its people. In , sadly three Fugro employees lost their lives as a consequence of two separate extreme and sudden weather events, while supporting client operations on third party vessels. One incident occurred in April in the USA Gulf of Mexico and the second in May oshore West-India. Our thoughts and support continue to be with family, friends and colleagues that have been aected by these tragic events. We discussed the reviews performed on these incidents with management. We trust that the recently launched ‘S Together’ safety programme will further underpin Fugro’s safety culture. Each regular meeting with the Board of Management starts with a discussion on safety, based on an analysis of statistics, usually in the presence of Global Director Safety & Sustainability. SUPERVISORY BOARD REPORT FUGRO ANNUAL REPORT Risk awareness is increasing within the organisation and risk management processes are continuously enhanced. Risks have been detailed and compared between the regions. The identified key risks are continuously monitored and re-evaluated and potential new risks are assessed. This process is facilitated and monitored by the internal audit function, which reports periodically on the progress to the audit commiee. Risks have been identified as part of the risk management process and are linked to specific internal control procedures embedded in the internal control framework. The Fugro internal control framework describes the requirements on internal control and determines the set of internal controls to mitigate (key) risks for processes that contribute to, amongst others, the preparation and processing of accounting and financial information. By embedding the internal control framework linked to risk management in the organisation, formalising the documentation of control activities, self-assessments on control activities and standardised business processes, improvements to internal control will be achieved. The audit commiee reviewed the reporting of Fugro’s internal risk management and control systems. This was reported to and discussed in the full Supervisory Board. We also discussed the risk management maturity scan performed in , the roadmap to further enhance risk management, and the internal audit plan which is linked to the identified risks for Fugro. The internal audit plan reflects a risk-based approach. Based upon the advice of the audit commiee, the audit plan of the internal audit department and the external auditor was approved. We also took note of the reports from internal audit and discussed the reports of the external auditor provided on the (interim) financial statements at half year and full year. In September, during our three-day ‘o-site’ meeting, we joined the Board of Management in extensively discussing the group’s long-term vision and strategy. We agree with management that the key challenge of Fugro’s strategy is supporting its clients with the energy transition, development of sustainable infrastructure and climate change adaptation, both in the marine and land environment. This includes in our joint view: ■ Continued diversification through strong growth in oshore wind, major infrastructure projects and new growth markets such as flood protection and water supply ■ Maintaining and expanding market leading positions by digital solutions, more client focus and technical innovations ■ Improving profitability and cash flow generation towards achieving its mid-term targets, amongst others by further strengthening of commercial capabilities and operational excellence. RISK MANAGEMENT Risk management is an essential element of Fugro’s culture, corporate governance, strategy development, and operational and financial management. Fugro’s risk management is aimed at supporting long-term sustainable value creation. It is designed to provide reasonable assurance that objectives are met by integrating management control into daily operations, ensuring compliance with legal requirements and safeguarding the integrity of the company’s financial reporting and its related disclosures. The oversight of the company’s risk management is a critical part in our role. In the past years, risk management procedures have been firmly embedded and structured within the organisation. During the pandemic, the extra demands on health and safety measures continues to be a key focus area. Management explained how Fugro is continuing safe operations from home, in the field and especially on the vessels that Fugro operates. We were also informed on Fugro’s employee assistance programme which provides full (mental) health support for all employees. Sustainability is closely linked to Fugro’s purpose of creating a safe and liveable world. It is becoming increasingly important, also from a strategic perspective, as it is not only a corporate responsibility but also a driver for long-term value creation. We discussed the roadmap aimed at reducing the environmental impact of Fugro’s own operations (carbon footprint, energy consumption and waste and recycling). As Fugro’s carbon footprint is mostly related to its vessels, the ongoing roll-out of remote and autonomous solutions will support improved sustainability performance, not only of Fugro, but also of the clients that use these solutions. STRATEGY In November , Fugro launched its strategy ‘Path to Profitable Growth’, including related mid-term targets. We reviewed the strategy with management to consider whether there is a reason to amend this strategy in light of the pandemic. We agreed with management that the strategy is as relevant as before. In , already of revenues was generated in wind, infra and water. In general, we fully support management’s intent to further diversify, and its ongoing focus on its ESG (environmental, social and governance) related performance and reporting, which is considered increasingly important by investors and society in general. FUGRO ANNUAL REPORT Supervisory Board aendance record SB AC RC NC Harrie Noy Until 22 April 2021 6/6 – 4/4 1/1 Marc de Jong 1 As of 12 May 2021 7/7 3/3 – – Antonio Campo 12/13 – 6/6 3/3 Petri Hofsté 13/13 5/5 – – Anja Montijn 13/13 – 6/6 3/3 Douglas Wall Until 22 April 2021 3/6 1/2 – – Ron Mobed 13/13 5/5 – – Sjoerd Vollebregt 2 13/13 2/2 2/2 2/2 Mr. de Jong aended Supervisory Board and audit commiee meetings as a guest as of April . Mr. Vollebregt resigned from the audit commiee as per May to join the remuneration and nomination commiees. The chairman acts as the first point of contact within the Supervisory Board for the CEO. By way of preparation, many subjects are discussed in advance in one of the three permanent Supervisory Board commiees. All Supervisory Board members receive the meeting documents and the minutes of the three commiees. The Board of Management is an important source of information for the Supervisory Board. It is supplemented with information from the external auditor, internal audit and presentations and discussions with members of the ELT, senior management and other employees in meetings and during site visits. The Supervisory Board receives monthly flash reports on financial performance. Information is also provided outside meetings, in bilateral contacts or whenever a Supervisory Board member feels the need to be informed on a specific topic. OTHER ACTIVITIES AND MEETINGS In the year , we had meetings with the Board of Management, of which regular scheduled meetings. The extra meetings were predominantly related to the decertification process, strategy, the composition of the Board of Management and Supervisory Board and the divestment of Seabed Geosolutions. Except for one in September and one in October, all meetings in were held virtually. None of the Supervisory Board members was absent at the regular scheduled meetings. Including the extra meetings, the aendance of the Supervisory Board members to the Supervisory Board meetings in was .. When members are unable to aend meetings, they provide their input beforehand and receive an update aerwards. The chairman of the Supervisory Board and chair of the audit commiee has been in frequent contact with colleagues, the CEO, the CFO, the company secretary and external advisors. During most of our regular meetings, one of the ELT members (not being a Board of Management member) joined the meeting and was invited to participate in the discussions and give a presentation on his or her area of responsibility. Taking into account the reports and advice from the audit commiee, we concur with management that the internal risk management and control systems of Fugro are suciently adequate and robust. INVESTOR RELATIONS AND SHAREHOLDER MEETINGS We are of the opinion that an open and regular dialogue with shareholders and other investors is important to explain the company’s strategy and performance and to receive feedback. On a regular basis, we were informed on investor relations including feedback from roadshows and analyst contacts, share price developments and the composition of the shareholder base. We also took note of analyst reports. Together with the Board of Management, we prepared for the annual general meeting of shareholders (AGM). Due to the pandemic, the AGM was again organised in the form of a virtual meeting. It was accessible via a webcast and shareholders were given the opportunity to send in their questions in advance with a possibility for follow up questions during the meeting. All proposals on the agenda were adopted by the AGM. On May , an extraordinary general meeting was held for the appointments of Marc de Jong as member of the Supervisory Board and Barbara Geelen as member of the Board of Management. The set-up of the meeting was similar to that of the AGM. All proposals on the agenda were approved. FUGRO ANNUAL REPORT SUPERVISORY BOARD COMMITTEES The Supervisory Board has three permanent commiees: an audit commiee, a nomination commiee and a remuneration commiee. The function of these commiees is to assist the Supervisory Board and to prepare the decision-making. The chairman of each commiee reports the main considerations, findings and recommendations to the full Supervisory Board. Audit commiee The members of the audit commiee are Petri Hofsté (chair), Ron Mobed and Marc de Jong, who joined the commiee as of May . Sjoerd Vollebregt resigned from the commiee to join the nomination commiee and remuneration commiee. Collectively the members possess the required experience and financial expertise. Petri Hofsté has specific expertise in financial reporting, risk management and audit. In , the commiee met five times. All meetings were aended by the CFO, the Group Controller, the Director Internal Audit, the General Counsel and the external auditor. In the meeting in which the annual results were discussed, the CEO was also present. The chairman of the commiee had regular contact with the CFO to discuss financial performance, risks and other relevant maers, and with the internal and external auditors. Recurring items on the agenda were the quarterly results and the half-year report, risk management and internal control, the internal audit plan and internal audit reports, audit plan and reports of the external auditor and claims/disputes and compliance aspects. More specific items on the agenda were amongst others, project management and strategic projects, ■ In April, we discussed the first quarter results and received and compliance update and an overview of talent below the ELT level. ■ In May, a virtual meeting was dedicated to the process around the decertification of Fugro’s shares and in June we held a meeting to discuss the long-term strategy. ■ In July, the half-yearly report was discussed and approved. The external auditor aended the financial part of the meeting. We received an update from the Chief Financial Ocer on her first days at the company. ■ In September, we had a three-day ‘o-site’ meeting in The Netherlands in combination with visits to Fugro’s local oces. During our meeting we discussed the July and August results and the mid-term targets. We discussed Fugro’s long term strategy and received a presentation from the Global Director Strategic Sales and Marketing on growth through strategic sales and marketing. The ‘o-site’ visits and meetings with senior management and sta take place annually and we highly value them because it gives us a beer view on local operations, management and key employees. ■ In our regular October meeting, we discussed the third quarter results. The Chief Financial Ocer presented an update on the finance roadmap and an update on cyber security was presented by the Chief Information Ocer. ■ In a conference call in November, we discussed the preliminary budget for . We gave our feedback on the proposed targets for . ■ In December, we approved the annual budget/ operational plan for . The Director Investor Relations and the Head of Accounting and Reporting gave a presentation on ESG reporting. We approved the audit plan for , as recommended by the audit commiee. In the regular scheduled meetings, recurring items on the agenda were, among others, quarterly results, market developments, financial performance and forecasts, developments and performance per region and business line, the quarterly results press release, organisational developments, HSSE, ESG, strategy updates and updates on key projects including divestments. The CEO gave a presentation every meeting with an update on priorities of the Board of Management, new key hires and other highlights. The meeting reports of the audit commiee, the nomination commiee and the remuneration commiee were also discussed. Apart from the regular agenda items and insofar as not already mentioned before, we discussed, amongst others, the following items: ■ In our regular February meeting, we discussed the annual results and related items in the presence of the external auditor (EY). We agreed to propose the re-appointment of the external auditor at the AGM. The annual report including the remuneration report were approved. In addition, ESG reporting, the company’s net zero target for and the divestment of Seabed Geosolutions were discussed. ■ In March, four extra Supervisory Board meeting were held. The first meeting was scheduled to discuss the strategic roadmap and the decertification process. Also, the agenda for the AGM was approved. In the second, third and fourth meeting the divestment of Seabed Geosolutions and the composition of the Board of Management and Supervisory Board were discussed. The Supervisory Board also appointed Sjoerd Vollebregt as chairman aer the resignation of Harry Noy. FUGRO ANNUAL REPORT present. The topics that were discussed included, among others, organisation development, global human resources management, talent development and succession planning, initiatives to increase diversity at senior management level, annual assessment of the Board of Management and its individual members and the process for self-assessment of the Supervisory Board. The commiee also discussed the composition of the Management Board and the Supervisory Board, developed profiles for vacancies, involved a search agency to look for candidates, ran the selection process and prepared proposals for the succession in the Management Board and in the Supervisory Board. This resulted in the appointments of Barbara Geelen and Marc de Jong at the EGM on May . Remuneration commiee The members of the remuneration commiee are Anja Montijn (chair), Antonio Campo and Sjoerd Vollebregt. Both the remuneration and the nomination commiee prepare the Supervisory Board’s duties in its role as the employer of the Board of Management. In , the commiee met six times, mostly with the CEO, the Group Director Human Resources and the Global Head of Rewards being present. Discussed were, among others, the annual bonus for the members of the Board of Management and the ELT, the bonus targets for , the vesting of the performance shares that were granted in and the granting of performance shares to the members of the Board of Management and the ELT for the period – . The commiee also discussed and advised on the granting of RSU’s under the new long-term incentive programme for key employees and discussed and The commiee also had a closed meeting with the Director Internal Audit. Among others, the performance and independence of internal audit and its members were discussed. The commiee also evaluated the performance of the internal audit function, without the Director Internal Audit being present, on the basis of input provided by management and its own observations. Conclusions were positive. During the year, there were regular one on one contacts between the chair of the commiee and the Director Internal Audit. It is a regular practice that the audit commiee shares its main deliberations and findings in the Supervisory Board meeting following the audit commiee meeting. In the reporting to the Supervisory Board, the information as referred to in best practice provision .. of the Code is taken into account. At the AGM on April , Ernst & Young Accountants LLP (EY) was reappointed as auditor to audit the financial statements for . In its February meeting, the audit commiee evaluated the performance of EY. Input was an assessment based on a questionnaire and interviews with relevant management. Based on the evaluation, the audit commiee advised the Supervisory Board to propose at the upcoming AGM on April , to reappoint EY to audit the financial statements for . Nomination commiee The members of the nomination commiee are Sjoerd Vollebregt (chair), Antonio Campo and Anja Montijn. In , the commiee met three times, mostly with the CEO and the Group Director Human Resources being ESG reporting, tax, impairment testing, treasury, IT, cyber security and the follow upon the management leer. Many of these topics were presented by the responsible managers. In its February meeting, the audit commiee reviewed amongst others the financial statements and other parts of the annual report. The commiee discussed the use of the going concern assumption, and the compliance with covenants. The budget was discussed in the December meeting. The valuation of goodwill, vessels and right-of-use assets were discussed on the basis of impairment tests and sensitivity analysis performed. The quality of the financial closing and analysis process was reviewed as was the adequacy of the disclosures in general and specifically those with respect to segment reporting. Furthermore, during the year the compliance and due diligence processes regarding agents and the process of project reviews were discussed, as were ESG reporting and Fugro’s approach to the TCFD guidelines (Taskforce on Climate-related Financial Disclosures). Considerable time was spent on performance in relation to capital expenditure, economic circumstances (e.g., inflation), availability and utilisation of assets and third- party costs. The commiee was briefed by the external auditor on relevant developments in the audit profession. The commiee met with the external auditor without the Board of Management being present and reported to the Supervisory Board on the performance of and the relationship with the external auditor. The chair of the commiee also regularly communicated on a one-to-one basis with the external auditor. FUGRO ANNUAL REPORT Supervisory Board skills matrix Sjoerd Vollebregt Petri Hofste Antonio Campo Marc de Jong Ron Mobed Anja Montijn Executive board member of (listed) international company Finance/governance ESG Technology/innovation IT/digital/cyber security Risk management Human resources Project management Energy (transition) Business strategy planning Supervisory Board and chair of the nomination commiee. Aer the same AGM, Douglas Wall stepped down. We thank him for his large contribution as member of the Supervisory Board and audit commiee. To fill the vacancy, Marc de Jong was appointed for a four-year term, an experienced international business executive and board member, with an extensive experience in the wind energy market and a proven track record in technology and business development. Also aer these changes, the composition of the Supervisory Board is balanced and complies with the requirement of at least one-third of each gender in accordance with the Gender Diversity Bill for Company Boards that came into eect on January . The mix of knowledge, skills, experience and expertise of its members is such that it fits the profile and strategy of the company and its diversity policy (see for more information on composition and diversity, page of this annual report). agreed on the remuneration report to be included in the annual report . COMPOSITION AND FUNCTIONING OF THE SUPERVISORY BOARD The Supervisory Board has formulated a profile defining its size and composition, taking into account the nature of the company and its activities. This profile is published on Fugro’s website. The Supervisory Board has set the number of members that it aims for at six. Aer the AGM of April , Harry Noy, who had been on the board since , stepped down. We thank him for his valuable contribution as chairman of the Supervisory Board and chair of the nomination commiee. During his year tenure in our Board, of which years as chairman, he has enabled the company to navigate challenging market circumstances. Sjoerd Vollebregt succeeded him as chair of the The Supervisory Board aaches great importance to the independence of its members. All members qualify as independent in the meaning of best practice provisions .. – .. of the Code. None of the criteria as referred to in best practice provision .. is applicable to any one of the members and they do not carry out any other functions that could jeopardise their independence. The Supervisory Board members also comply with the requirement under section :a of the Dutch civil code that they do not hold more than five Supervisory Board positions (including non-executive directorships at one tier boards) at certain ‘large’ (listed) companies or entities. The Supervisory Board undertakes a self-evaluation on an annual basis, in principle, every three years with the help of an external consultant. Although this was last done in February , we decided that under the present circumstances and the changing composition of the Supervisory Board in , the evaluation over the year will be performed by an external FUGRO ANNUAL REPORT With input from all Supervisory Board members, the nomination commiee evaluated the performance of the Board of Management. Also, the personal targets for were evaluated and the functioning of the Board of Management as a team was discussed. The size and composition as well as the combined experience and expertise of the ELT and the Board of Management fit the profile and strategy of the company. The composition is balanced from an age, nationality, gender and background perspective. Conform the Gender Diversity Bill for Company Boards, the Supervisory Board will supervise the target seing for a balanced gender diversity in the Board of Management, the Supervisory Board and senior management levels to be reported on the in the annual report . For the current composition of the Board of Management and the ELT and information about its members, please refer to pages and of this report. consultant. The self-evaluation this year was conducted on the basis of a questionnaire, which was completed by each member and discussed with the full board in an internal meeting. Aention was paid to the composition and functioning of the board and its three commiees and the interaction with the Board of Management and the ELT. The overall conclusion from this process was that the Supervisory Board – despite the limitations caused by the pandemic – is operating well and that discussions are open and constructive. The face-to-face meetings were clearly missed, as were the informal meetings on the evenings prior to the regular board meetings. Although all members are used to meet via video calls, teambuilding and informal contacts are hampered when meeting in person is not possible. Key areas of supervision such as strategy, business performance and financial reporting are well covered. Several suggestions were made for items which need specific aention in the interaction between the Boards. COMPOSITION AND FUNCTIONING OF THE BOARD OF MANAGEMENT During the year , the Board of Management consisted of Mark Heine (CEO) and as of May , Barbara Geelen (CFO). Barbara Geelen succeeded Paul Verhagen who le the company aer the AGM of April . We thank him for his contribution for the company in the last seven years. Paul played a key role in the professionalisation of the finance function throughout the company and the transformation towards a more cohesive, agile and resilient organisation, providing Fugro with the financial flexibility to execute on its Path to Profitable Growth strategy. FINAL COMMENTS It has again been a challenging year for everybody in Fugro as the consequences of the pandemic are still being felt. The pressure has been high for everyone at Fugro. Therefore, we praise the resilience of all Fugro sta in this pandemic. We want to thank management and all Fugro sta for their professional behaviour, dedication and flexibility which has been key to achieving our goals. With the positive results of , we can look forward to the future of Fugro with confidence. Leidschendam, February Sjoerd Vollebregt, chairman Petri Hofsté, vice-chair Antonio Campo Marc de Jong Ron Mobed Anja Montijn In Sicily, Sardinia and Campania, there is a strong production from renewable energy sources, mostly solar and wind. The Tyrrhenian Link project is a nationally strategic project to install a double undersea electrical power cable connecting the Italian peninsula with the islands of Sicily and Sardinia. This interconnector power system will create a new electricity corridor kilometres long with a capacity of MW. The link will improve electricity exchange capacity, facilitate the development of renewable energy sources, and the reliability of the grid. Fugro was selected by Terna, owner of the Italian national transmission grid, to perform a large multidisciplinary marine survey for part of this link. In , Fugro successfully carried out several detailed surveys. From April to May, Fugro surveyed the East Link, covering a corridor of up to metres wide. This allowed to select the two best cable routes with the minimum possible geo-hazard risks. In August , Fugro also carried out the reconnaissance survey for the West link. Assessing undersea power cable routing in support of the development of renewable energy FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT REMUNERATION POLICY FOR THE BOARD OF MANAGEMENT The main objective of Fugro’s remuneration policy is to aract, motivate and retain qualified management that is needed for a global company of the size and complexity of Fugro. The policy targets compensation in line with the median of the labour market reference group. Variable remuneration is an important part of the total package. The policy supports both short and long-term objectives, whereas the emphasis is on long-term value creation, to which it contributes by including both financial and non-financial performance metrics. Labour market reference group In preparing the remuneration policy and to determine the remuneration of the members of the Board of Management, the remuneration commiee uses external benchmark information to assess market comparability. The labour market reference group consists of Dutch listed companies of comparable scope with international/ global business activities. These are currently Aalberts Industries, Accell Group, AMG, Aperam, Arcadis, ASM International, BAM Group, Boskalis, Brunel, Corbion, SBM Oshore, TKH Group, TomTom and Vopak. In addition, an international group has been used to assess market competitiveness within the sector, especially regarding short- and long-term incentive levels. This report has been prepared by the remuneration commiee of the Supervisory Board. The responsibility of this commiee is to prepare the decision-making of the Supervisory Board regarding the remuneration policy and the determination of the remuneration of individual members of the Board of Management within the framework of the remuneration policy. The Supervisory Board remains responsible for the decisions. The members of the remuneration commiee are Anja Montijn (chair), Antonio Campo and Sjoerd Vollebregt. This report contains: ■ Current remuneration policy for the Board of Management ■ Remuneration of the Board of Management in ■ Internal pay ratio and -year analysis ■ Terms of appointment of the members of the Board of Management ■ Remuneration Board of Management per ■ Remuneration of the Supervisory Board. Further information on the remuneration and on option and share ownership of members of the Board of Management and members of the Supervisory Board is available in note of the financial statements in this annual report. The remuneration policy and the remuneration charter, which is included in the Supervisory Board rules, are posted on Fugro’s website. This report takes into account the Shareholders’ Rights Directive which was implemented into Dutch law per December . The current remuneration policy was first adopted by the AGM in and adjusted by the AGM in , primarily to change the long-term incentive plan to performance shares only with the addition of a longer-term strategic target. Early , the remuneration commiee evaluated the remuneration policy, taking into account the Shareholders’ Rights Directive, an updated benchmark analysis of the labour market reference group and feedback from stakeholders, including shareholders and their representatives. Based on that evaluation, the Supervisory Board decided not to adjust the remuneration policy, other than required by the Shareholder Rights’ Directive. These adjustments included the addition of a derogation clause and increased transparency on target seing and achievements of the short-term incentive plan. At the AGM in April , the remuneration report was on the agenda. The advisory vote on the remuneration report had of the votes in favour. No comments were raised during the AGM on the report. In line with the Shareholders’ Rights Directive, the remuneration policy will be submied for adoption to the AGM at least every four years, so ultimately at the AGM in . REMUNERATION REPORT 2021 FUGRO ANNUAL REPORT Fugro’s strategy and to enable adequate responses to the challenges the company is facing, flexibility with respect to the STI metrics is important. Therefore, at the beginning of each financial year, the Supervisory Board will set the metrics and targets, based on the budget and taking into account the strategic goals of the company. The Supervisory Board will also determine the relative weight for the selected performance metrics and the applicable performance zones for each metric (financial and non-financial). These zones determine: ■ Threshold performance below which no pay-out is made ■ Target performance at which pay-out is made ■ Excellent performance at which the maximum pay-out is made. Between these levels, pay-out is based on linear interpolation. Overall, maximum pay-out is . times pay-out at target level (from . at target to maximum). As there is no overshoot possibility for the non-financial metrics, maximum pay-out for the financial metrics is . times pay-out at target performance. The Supervisory Board ensures that the targets are challenging, realistic and consistent with Fugro’s strategic goals. Aer the end of the financial year, the remuneration commiee determines to what extent the targets have been met. The Supervisory Board, following a proposal from the remuneration commiee, will decide upon the STI to be awarded over the past financial year. The STI, if any, is paid aer adoption by the AGM of the financial statements. Remuneration elements The remuneration of the Board of Management consists of the following four elements: ■ Fixed base salary ■ Short-term incentive (STI), consisting of an annual cash bonus opportunity ■ Long-term incentive (LTI), consisting of conditional performance shares ■ Pension and other benefits. The principles of the remuneration policy are cascaded to the next senior management level. Fixed base salary Fixed base salaries of the members of the Board of Management are determined by the Supervisory Board (based on advice of the remuneration commiee) and set in line with the median of the labour market reference group. Once a year, the Supervisory Board determines whether, and if so, to what extent the base salaries will be adjusted. The outcome of external benchmarking by an independent consultant is taken into consideration. Short-term incentive Each member of the Board of Management is eligible for an annual bonus. The bonus may vary from to of fixed base salary, with being applicable when targets are achieved. The STI is linked to financial performance metrics and to non-financial (personal) performance metrics. The non-financial metrics give the possibility to take for example health and safety, ESG and personal development goals into consideration. At target level, the financial metrics count for of the bonus payment and the non-financial metrics count for . To ensure continued alignment of the STI with The remuneration commiee periodically evaluates the composition of this group, amongst others in light of corporate events and overall fit. Companies removed from the reference group will be replaced by other listed companies of comparable scope with international/ global business activities with the objective to position Fugro around the midpoint in terms of the average of the scope parameters revenues, market capitalisation, assets and employees. Analyses In the design of the remuneration policy and in determining the remuneration of the members of the Board of Management, the Supervisory Board takes into consideration: ■ Fugro’s purpose, vision and strategy ■ Related strategic enablers and Fugro’s values ■ Internal pay dierentials ■ Scenario analyses, indicating possible outcomes of the variable remuneration elements and how these may aect the remuneration ■ Performance indicators relevant to the long-term objectives of the company. Fugro considers sustainable development an important driver to help create a safe and liveable world. This requires balancing the short- and long-term interests of stakeholders and taking into account environmental, social and governance (ESG) aspects of Fugro's business and operations, as included in the strategic agenda. The remuneration structure and elements do not encourage risk taking that is not in line with Fugro’s strategy and risk appetite. The remuneration commiee takes note of individual Board of Management members’ views with regard to the level and structure of their remuneration. FUGRO ANNUAL REPORT Each year at granting, the Supervisory Board will determine the target and performance zones with respect to ROCE for the last year of the performance period. Return will be based on NOPAT, excluding impairments; capital employed will be corrected for impairments (these will be set back when applying the vesting criteria). The strategic target is part of the LTI as achieving strategic goals is an important driver for long-term value creation. Each year at granting, the Supervisory Board will set a strategic target to be achieved in the coming period. These targets will be derived from Fugro’s strategy to create long-term value for its shareholders and other stakeholders. Achievement of the performance targets is determined by the Supervisory Board in the first quarter of the year following the three-year performance period. The vesting period starts at the first day following the grant date. Vested shares have a holding (lock-up) period of years and may be partly sold only to meet tax requirements at vesting. The holders of performance shares are not entitled to shareholders’ rights, including the right to dividends, during the period between granting and vesting. January of the year of granting to December three years later. The maximum number of shares that can vest aer three years equals of the conditionally granted number of shares (only in the case that excellent performance is achieved on all criteria). As of the granting in , the criteria used for vesting and their relative weight are as follows: ■ Total shareholder return (TSR): . ■ Return on capital employed (ROCE): . ■ Strategic target: . TSR is defined as the share price increase, including reinvested dividends. TSR is measured over a three-year (calendar year) period based on a three-month average of the last three months of the year before grant and before vesting date. The relative position within the peer group determines the award level. The composition of the peer group is evaluated on a yearly basis, amongst others, in light of corporate events, and comprises Arcadis, Boskalis, Core Laboratories, Fluor, John Wood Group, Oceaneering International, Schlumberger, Subsea , TechnipFMC, Transocean and WorleyParsons. As per , the metrics that will be used for the financial targets and their relative weight are disclosed at the beginning of the financial year in the remuneration report regarding the previous year. The incentive zones qualify as sensitive information and will not be disclosed. Aer the end of the financial year, the performance will be disclosed in relation to the incentive zones that had been applied. Long-term incentive To strengthen the alignment with shareholder’s interests, the LTI consists of performance shares which are conditionally granted annually to members of the Board of Management (and to other senior management). These shares vest aer three years, conditional on the achievement of predetermined targets, which are focused on long-term value creation. Vesting is also subject to continuous employment with exceptions in connection with retirement, long-term disability and death. As from , the number of granted performance shares is set for a period of three years. The principle being that the expected value as percentage of fixed base salary of the members of the Board of Management is as follows: ■ CEO: ■ CFO: . As from , a new number of annual granted performance shares was set for the granting in , and . This number will remain the same for the set period. A new three year period started with the granting on March . Conditional grants under the LTI are made each year in the open period immediately following the publication of the annual results. The performance period is from Total shareholder return ranking (weight: 37.5%) and applicable vesting (% of conditional award) Ranking Vesting % % % % % % % % % % % % Vesting percentage for ROCE (weight 37.5%) and strategic target (weight 25%) Performance Below threshold Threshold At target Excellent Vesting as % of conditional grant 1 % % % % Vesting in between performance levels as from threshold is based on linear interpolation. FUGRO ANNUAL REPORT For the CEO this amounts to of fixed base salary and for the other members of the Board of Management this amounts to . The target period to achieve these levels is years, but in practice timing will (also) depend on share price developments and the vesting of shares and options that have been granted under the LTI programme. Ratio between fixed and variable pay Based on Fugro’s remuneration policy as described above, the pie charts on this page represent the pay mix for the CEO and CFO in case of ‘at target’ performance. variable remuneration component was based or with respect to the circumstances on which this variable remuneration component was dependent. Derogation clause In exceptional circumstances the Supervisory Board may decide to temporarily deviate from its remuneration policy based on a proposal of its remuneration commiee, when this is necessary to serve the long-term interests and sustainability of the company as a whole or to assure its viability. The derogations can concern the objective seing and pay-out of the short-term and long-term incentive plans. Share ownership guidelines The Supervisory Board encourages the Board of Management to hold shares in Fugro to emphasise their confidence in the company and its strategy. Since , minimum share ownership guidelines are applicable. Pension and other benefits The pension contribution for the members of the Board of Management is in line with market practice. In accordance with Dutch law, tax deductible pension accruals are only possible for the part of salary up to EUR , (). Members of the Board of Management are compensated by a non-tax deductible, age dependent pension contribution, which allows building up pension out of net salary, resulting in pension costs for Fugro at a similar level as before the legislative changes per January . In , Fugro transferred all employees in the Netherlands to a new defined contribution plan up through the legal maximum pensionable salary. The Board of Management also participates in this plan up through the legal maximum. The fringe benefits of the members of the Board of Management are commensurate with the position held and include expense and relocation allowances, a company car and health and accident insurance. Fugro does not grant loans, advance payments or guarantees to members of the Board of Management. Claw back and value adjustment Pursuant to section : paragraph of the Dutch Civil Code (DCC), the Supervisory Board is authorised to adjust a variable remuneration component to an appropriate level if payment of that variable remuneration component would be unacceptable according to standards of reasonableness and fairness. Pursuant to section : paragraph DCC, Fugro is authorised to claw back a variable remuneration component in full or in part to the extent the payment was made on the basis of incorrect information with respect to the achievement of the targets on which the LTI STI Base salary LTI STI Base salary LTI STI Base salary Base salary STI LTI CEO 37.5% 25% 37.5% Base salary LTI 39% 35% Base salary LTI 41% 32% STI CFO 26% STI Other member 27% Ratio between fixed and variable pay FUGRO ANNUAL REPORT Contrary to earlier expectations, the pandemic continued to impact Fugro’s operations throughout the year, in particular in Asia Pacific and the Middle East. In light of the challenging market dynamics and related operational hurdles, management has shown a strong performance in driving the boom-line results closer to the mid-term targets. Fugro is on its Path to Profitable Growth strategy, with good management of cash flow including working capital. Additionally, several important transformation targets were met, supporting future growth and further performance improvement of the company. This resulted in a target bonus for the members of the Board of Management of . of fixed base salary. On February , the Supervisory Board discussed this proposal and agreed with it. ■ for the CFO ■ analysis of Fugro’s current financial position and global finance function ■ development of the roadmap for Fugro’s financial planning towards the mid-term ■ define Fugro’s enterprise resource planning (ERP) system setup and implement kick-o. In evaluating performance on these personal metrics, the remuneration commiee concluded that both members fully delivered on their metrics. However, the organisation did not fully deliver upon the HSSE targets and therefore, in line with the bonus plan for management, the remuneration commiee decided to adjust the STI for the CEO and CFO by reducing the individual performance by .. This leads to a pay-out on the personal metrics of . of fixed base salary. The total performance regarding the financial and personal targets results in a bonus of . of fixed base salary. REMUNERATION BOARD OF MANAGEMENT IN 2021 Fixed base salary In , the fixed base salaries of the members of the Board of Management have not changed. A new CFO, Barbara Geelen has been appointed as member of the Board of Management per the AGM on May , following the resignation of Paul Verhagen per April. Short-term incentive The remuneration commiee evaluated the performance of the Board of Management in in relation to the targets that had been set for the year. The financial metrics for the STI in were: adjusted EBIT margin, working capital, business cash flow and adjusted net profit. The actual performance in relation to the performance zones that had been set for each of the financial metrics, would result in a bonus of . of fixed base salary. The personal metrics were: ■ for the CEO ■ launch of the company values including a full implementation programme worldwide ■ review of the company’s innovation portfolio ■ redefine targets for mid-term and implement a monitoring dashboard ■ implementation of the net zero carbon emission roadmap including the related reporting ■ positioning of Fugro in the international playing field. Performance Board of Management on short-term incentive targets 2021 Performance zones Bonus as % of base salaryWeight Result 2021 Threshold At target Excellent Adjusted EBIT margin % % .% % .% .% Working capital % of 4 times Q4 revenue % % % % .% .% Business cash flow in EUR million % . .% Adjusted net profit in EUR million % . .% Personal targets % On individual basis .% Total .% FUGRO ANNUAL REPORT Long-term incentive As of , the long-term incentive (LTI) scheme consists of a mix of conditional performance shares and performance options. These have been granted per December , and . As of , the form of conditional grants has been changed – in line with market practice – from a mix of performance shares and performance options to conditional grants in the form of performance shares only. Furthermore, the moment on which LTI grants are made was shied to the open period immediately following the publication of the annual results, instead of as per December. As a result, the grants at the end of were shied to March . These changes as of have been approved by the AGM in . Vesting of 2019 performance shares On February , the performance shares which were granted on February to the Board of Management and other senior management, will vest. On TSR, Fugro ended at the th position in the ranking of the peer group, resulting in vesting. ROCE came out above the threshold, which resulted in . vesting. The strategic target was related to the extent in which that revenue growth in Fugro’s strategic growth markets wind, infrastructure and water in the period - exceeded GDP growth. GDP growth was the target level, where Fugro scored just below the maximum target, which resulted in an . vesting. Taking into account the relative weight of the three criteria, the total vesting over the period – amounted to .. Long term incentives M.R.F. Heine P.A.H. Verhagen B.P.E. Geelen Performance shares Outstanding on 31 December 2020 , , Not Vested on 1 March 2021 as a result of partly achieving targets (,) (,) - Vested on 1 March 2021 as a result of partly achieving targets, locked for 2 years (,) (,) - Granted on 26 February 2021 , , Outstanding on 31 December 2021 , , , Performance options Outstanding on 31 December 2020 , , Lapse due to end of employment per 30 April 2021 - (,) Outstanding on 31 December 2021 , Performance shares Barbara Geelen were granted at appointment on May . Shares and options M.R.F. Heine 1 P.A.H. Verhagen B.P.E. Geelen Number of shares 31 December 2020 , , 31 December 2021 , NA , 30 April 2021 , Number of options 31 December 2021 , Including , restricted shares vested in with a lock-up period of years. These restricted shares were granted per March as bonus for the performance (approved by the AGM in ). FUGRO ANNUAL REPORT Calculation of vesting of 2019 performance shares Weight Result Vesting TSR .% % % ROCE .% ,% .% Strategic target % .% .% Total % .% 2019 Performance shares M.R.F. Heine P.A.H. Verhagen B.M.R. Bouard Grant March 2019 , , , Vested per February 2022 , , , Pro rated due to end of service per April . Pro rated due to end of service per April . Total remuneration Board of Management in 2020–2021 The table below gives an overview of the remuneration of the Board of Management in and . In this table the LTI incentive refers to the IFRS expense as included in the financial statements. Total remuneration Board of Management in 2020–2021 % of total in 2021 M.R.F. Heine % of total in 2021 P.A.H. Verhagen B.P.E. Geelen Fixed base salary 1 .% , , .% , , , NA Short-term incentive 2 .% , , % , , NA Pension costs including disability insurance and related costs .% , , .% , , , NA Pension compensation .% , , .% , , , NA Severance % Long-term incentive 2 .% , , .% , , , NA Total % ,, ,, % , ,, , NA . STI is related to performance, paid in ; STI is related to performance, paid in . . The LTI incentive refers to the IFRS expense as included in the financial statements. The vesting value of the LTI (, shares) in for Mark Heine amounted to EUR ,. FUGRO ANNUAL REPORT Other benefits The additional benefits, i.e. company car and health and accident insurance, remained unchanged in . INTERNAL PAY RATIO AND 5YEAR ANALYSIS Pay ratios In designing the remuneration policy, the pay ratios within Fugro are taken into consideration. An external consultant assisted in developing an approach to review pay ratios and, more specifically, the pay ratio between the CEO and the average of the employees for the relevant year. Based on the value of the actual long-term incentive awarded to the CEO in and the STI pay-out for , the ratio amounted to (: ), implying that the CEO pay was times the average pay within the organisation. The average pay takes into account all employee costs, i.e. salaries, variable pay, pensions and other benefits. Based on the expected value of the CEO’s long-term incentive at target vesting, the pay ratio would have been (: ). The remuneration commiee considers these pay ratios acceptable, also in view of market practices for companies comparable to Fugro. 5-year analysis Due to Fugro’s business environment and results, salary increases for all employees in were limited. In , Fugro adjusted salaries at slightly below of market movement and in had a regular salary review. In salary review was cancelled and in limited due to the pandemic. The base salary of the Board of Management was unchanged during their four year appointment and changed only as a result of the Five year remuneration Board of Management compared to company performance 1 M.R.F. Heine 2 Remuneration ,, , ,, , , Remuneration Including LTI (IFRS) ,, ,, ,, ,, , % change % (%) % % Remuneration Including LTI (vesting) ,, , , , , % change % (%) % % P.A.H. Verhagen 3 Remuneration , , , , , Including LTI (IFRS) , ,, ,, ,, , B.P.E. Geelen 4 Remuneration , Including LTI (IFRS) , Adjusted EBITDA Actual . . . Personnel expenses per FTE 5 Actual , , , , % change (%) (%) % (%) (%) Remuneration includes base salary, short term incentive, long term incentive, pension and pension contribution. Appointed CEO in October . Reappointed CFO at AGM . Appointed CFO at AGM . Personnel expenses include all salary costs, bonus, LTI plans, social security and retirement contributions. re-appointment in of Paul Verhagen and the appointment of Mark Heine as CEO in . Due to the exceptional circumstances in relation to the pandemic, Fugro limited salary increases globally. The Executive Leadership Team took a voluntary pay-cut in that was restored per January , . The table below shows the overall remuneration for five years compared to personnel expenses and company performance. FUGRO ANNUAL REPORT REMUNERATION SUPERVISORY BOARD Remuneration policy for the Supervisory Board On the basis of the revised Shareholders’ Rights Directive, the remuneration policy for the Supervisory Board was adopted by the AGM of . The Supervisory Board draws up the Supervisory Board remuneration policy based on advice from its remuneration commiee. The remuneration policy will be evaluated regularly and will be put forward for adoption by the AGM at least every four years. The Supervisory Board remuneration policy is geared to aract and retain members that contribute to the desired composition with regard to expertise, experience, diversity and independence, as set out in the profile of the Supervisory Board. The policy aims to reward Supervisory Board members for the time spent and the responsibilities of their role, including but not limited to the responsibilities imposed by the Dutch Civil Code, Dutch Corporate Governance Code and the articles of association. The remuneration for Supervisory Board members consists of the following elements: ■ a fixed remuneration and a commiee fee, which varies for the chair, vice-chair and members, to reflect the time spent and the responsibilities of the role ■ an aendance allowance per meeting held outside the country of residence, to compensate for additional time spent to aend meetings ■ a reimbursement for actual costs in the performance of the duties for Fugro. In , no severance payments were commied to (former) members of the Board of Management. REMUNERATION BOARD OF MANAGEMENT PER 2022 The remuneration policy was evaluated by the remuneration commiee at the beginning of and adjusted based on the Shareholders’ Rights Directive which was implemented into Dutch law per December . The remuneration commiee concluded that the policy still supports Fugro’s strategy and company objectives. It is also considered to be well aligned with the external environment in which the company operates as well as with all applicable rules, regulations and best practices. The commiee is aware of the public debate surrounding the topic of remuneration, including the increasing relevance and importance of ESG performance, internal pay dierentials, and it strives for broad stakeholder support. In line with the Shareholders’ Rights Directive, the remuneration policy for the Board of Management, was submied for shareholder approval on April and adopted accordingly. The remuneration commiee will regularly evaluate remuneration of the Board of Management to check on market conformity. The remuneration of the Board of Management in will be based on the remuneration policy as adopted by the AGM in . The metrics that will be used for the financial targets and their relative weight for the short-term incentive plan are as follows: ■ Adjusted EBIT margin, weight ■ Net working capital as of revenue, weight ■ Free cash flow, weight TERMS OF APPOINTMENT OF THE MEMBERS OF THE BOARD OF MANAGEMENT When members of the Board of Management are nominated for (re)appointment, the nomination is for a maximum period of four years. Members of the Board of Management deliver their services under a management services contract. For termination of contract, a three months’ notice period is applicable for both Fugro and the members of the Board of Management. The current appointment of Mark Heine (CEO) expires at the AGM . The Supervisory Board announced in January that Paul Verhagen (CFO) had decided to leave the company. On May Barbara Geelen was appointed as the new CFO. Severance pay Severance payment for members of the Board of Management is limited to one year’s fixed base salary and is in principle applicable in the event of termination or annulment of the management services agreement, unless this is for cause. No severance payment will apply if the agreement is terminated at the initiative of the member of the Board of Management. Severance payment is also applicable when the termination is justified by such change of circumstances that the members of the Board of Management cannot reasonably be expected to continue the performance of their function/ services as a statutory director of Fugro. This may be the case, for example, if Fugro is liquidated, is merged with or taken over by a third party, is subject to an important reorganisation or to a major change of policy. FUGRO ANNUAL REPORT In exceptional circumstances the Supervisory Board may decide to temporarily deviate from its remuneration policy based on a proposal of its remuneration commiee. The derogations can concern increasing remuneration and/or commiee fees in case a significant increase in time investment by its members is necessary to serve the long-term interests and sustainability of the company as a whole, or to assure its viability, e.g. in case someone is asked to act as delegated member of the Supervisory Board. In such a case the additional remuneration will be EUR , per half-day. Remuneration Supervisory Board 2021 (x EUR) Fixed fee Membership commiee Aendance allowance Total H.L.J. Noy (chairman through AGM ) , , , Sj.S. Vollebregt (chairman per AGM ) , , , P.H.M. Hofsté (vice-chair per May ) , , , A.J. Campo , , , , R. Mobed , , , , A.H. Montijn , , , M.J.C. de Jong (per May ) , , , D.J. Wall (stepped down AGM ) , , , Ownership Fugro shares (per December 2021) Sj.S. Vollebregt , R. Mobed , M.J.C. de Jong , Leidschendam, February On behalf of the remuneration commiee Anja Montijn Chair Commiee impact and responsibility is deemed to be comparable, hence no dierence in commiee fees. For remuneration purposes, the remuneration commiee and the nomination commiee are considered a combined commiee. The remuneration commiee uses external benchmark information to assess market comparability of the remuneration. Remuneration levels are aimed at the median of Dutch listed companies with a two-tier board structure comparable in size and scope. For the past years the remuneration level did not change. Remuneration Supervisory Board Fixed remuneration per year ■ Chair EUR , ■ Vice-chair EUR , ■ Member EUR , Commiee fee per year ■ Chair EUR , ■ Member EUR , Aendance allowance for meetings outside country of residence ■ EUR , per meeting Expenses ■ Reimbursement of actual incurred costs The remuneration is not dependent on the results of Fugro. Members of the Supervisory Board will not be awarded remuneration in the form of shares and/or rights to shares. In addition, Fugro does not grant loans, advance payments, guarantees, shares or rights to shares. With the changing climate and rising water levels, a ecting urban areas and critical infrastructure, water management and fl ood protection are key and subject to new safety standards. The . km dike between Tiel and Waardenburg lies along the river Waal, a major waterway in the Netherlands. In the past, various bends and meanders were cut o by the river and, as a result, at many locations, the dike no longer lies on the original banks. The dike needs to be reinforced to meet new safety standards, which is a complex task as the old cut-o s, sometimes close together, make for variable soil conditions below the dike’s base. On behalf of consortium Mekante Diek, Fugro’s scope of work in this multi-year project includes a wide range of consultancy and design services, including specialist soil investigation and laboratory testing, the construction and management of an integrated building information model, and monitoring of the environment and quality control of the groundwork during the construction. The project is a clear example of Fugro’s fl ood defence expertise, aimed at mitigating ground and fl ood risks in the design and execution phase of the project. Solutions for fl ood protection FUGRO ANNUAL REPORT FUGRO ANNUAL REPORT OTHER INFORMATION Independent auditor’s report Statutory provisions regarding the appropriation of net result ADDITIONAL INFORMATION Foundation Boards Five-year historical review Selected non-financial data Reconciliation of non-IFRS performance measures Glossary FINANCIAL STATEMENTS 2021 Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Company balance sheet Company income statement Notes to the company financial statements FUGRO ANNUAL REPORT Notes (EUR x ,) 2020 Continuing operations , Revenue 1,461,725 1,386,303 Third party costs (585,258) (520,607) Net revenue own services 1 876,467 865,696 Other income 20,045 27,485 Personnel expenses (577,936) (585,011) , Depreciation (112,104) (111,850) Amortisation (557) (1,898) Impairments (619) (5,858) Other expenses (145,035) (168,792) Results from operating activities (EBIT 1 ) 60,261 19,772 Finance income 19,826 2,207 Finance expenses (38,090) (76,188) Net finance income/(expenses) (18,264) (73,981) Share of profit/(loss) of equity-accounted investees (net of income tax) 17,476 7,448 Profit/(loss) before income tax 59,473 (46,761) Income tax gain/(expense) 3,049 (25,189) Profit/(loss) for the period from continuing operations 62,522 (71,950) Profit/(loss) for the period from discontinued operations 11,487 (99,790) Profit/(loss) for the period 74,009 (171,740) Aributable to: Owners of the company (net result) 71,123 (173,824) Non-controlling interests 2,886 2,084 Earnings per share (euro) Basic earnings per share 0.70 (2.85) Basic earnings per share from continuing operations 0.59 (1.21) Diluted earnings per share 0.70 (2.85) Diluted earnings per share from continuing operations 0.59 (1.21) Non-IFRS performance measure. Reference is made to the reconciliation of non-IFRS performance measures and glossary. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ( CONTINUED ) For the year ended 31 December Notes (EUR x ,) 2020 Profit/(loss) for the period 74,009 (171,740) , Defined benefit plan actuarial gains/(losses) 31,601 (8,240) Total of items that will not be reclassified to profit or loss 31,601 (8,240) Foreign currency translation dierences of foreign operations 38,968 (45,817) Foreign currency translation dierences of equity-accounted investees 3,295 4,352 Net change in fair value of hedge of net investment in foreign operations - 5,361 Total of items that will be reclassified subsequently to profit or loss 42,263 (36,104) Other comprehensive income/(loss) for the period 73,864 (44,344) Total comprehensive income/(loss) for the period 147,873 (216,084) Aributable to: Owners of the company 144,194 (217,325) Non-controlling interests 3,679 1,241 Total comprehensive income aributable to owners of the company arises from: Continuing operations 132,707 (122,690) Discontinued operations 11,487 (94,635) The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT Notes (EUR x ,) 2020 ASSETS Property, plant and equipment 535,160 523,043 Right-of-use assets 143,421 135,007 Intangible assets including goodwill 289,839 277,291 Investments in equity-accounted investees 46,366 36,214 Other investments 63,095 47,417 Deferred tax assets 48,989 35,618 Total non-current assets 1,126,870 1,054,590 Inventories 29,098 27,615 Trade and other receivables 512,820 406,331 Current tax assets 10,881 11,542 Cash and cash equivalents 148,956 183,462 701,755 628,950 Assets classified as held for sale 9,712 17,504 Total current assets 711,467 646,454 Total assets 1,838,337 1,701,044 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT Notes (EUR x ,) 2020 EQUITY Total equity aributable to owners of the company 851,203 702,070 Non-controlling interests 10,361 9,580 Total equity 861,564 711,650 LIABILITIES Loans and borrowings 199,178 286,221 Lease liabilities 117,147 106,566 Employee benefits 48,174 72,498 Provisions 15,125 14,876 Deferred tax liabilities 1,933 3,517 Total non-current liabilities 381,557 483,678 Bank overdra 1,824 2,336 Loans and borrowings 93,241 58,021 Lease liabilities 30,277 26,126 Trade and other payables 383,007 322,247 Provisions 7,723 10,418 Current tax liabilities 31,459 26,440 Other taxes and social security charges 47,685 46,642 595,216 492,230 Liabilities classified as held for sale - 13,486 Total current liabilities 595,216 505,716 Total liabilities 976,773 989,394 Total equity and liabilities 1,838,337 1,701,044 The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF FINANCIAL POSITION ( CONTINUED ) As at 31 December FUGRO ANNUAL REPORT Notes (EUR x ,) Share capital Share premium Translation reserve Reserve for own shares Equity component of conver- tible bonds Retained earnings Unappro- priated result Total Non- controlling interest Total equity Balance at 1 January 2021 10,319 757,336 (136,494) (158,496) 19,802 383,427 (173,824) 702,070 9,580 711,650 Profit or (loss) - - - - - - 71,123 71,123 2,886 74,009 , Other comprehensive income - - 41,470 - - 31,601 - 73,071 793 73,864 Total comprehensive income/(loss) for the period - - 41,470 - - 31,601 71,123 144,194 3,679 147,873 . Change in nominal value of ordinary shares (5,159) 5,159 - - - - - - - - Share-based payments - - - - - 4,939 - 4,939 - 4,939 Delivery of treasury shares for share-based payment plans - - - 9,209 - (9,209) - - - - . Transfer of equity component of convertible bonds to retained earnings upon repayment bonds - - - - (7,971) 7,971 - - - - Addition to/(reduction of) reserves - - - - - (173,824) 173,824 - - - Transactions with non-controlling interests - - - - - - - - - - Dividends to shareholders - - - - - - - - (2,898) (2,898) Total contributions by and distributions to owners (5,159) 5,159 - 9,209 (7,971) (170,123) 173,824 4,939 (2,898) 2,041 Balance at 31 December 2021 5,160 762,495 (95,024) (149,287) 11,831 244,905 71,123 851,203 10,361 861,564 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ( CONTINUED ) Notes (EUR x ,) Share capital Share premium Translation reserve Reserve for own shares Equity component of conver- tible bonds Retained earnings Unappro- priated result Total Non- controlling interest Total equity Balance at 1 January 2020 4,228 431,227 (101,233) (160,732) 38,022 494,237 (108,492) 597,257 10,630 607,887 Profit or (loss) - - - - - - (173,824) (173,824) 2,084 (171,740) , Other comprehensive income - - (35,261) - - (8,240) - (43,501) (843) (44,344) Total comprehensive income/(loss) for the period - - (35,261) - - (8,240) (173,824) (217,325) 1,241 (216,084) . Issue of ordinary shares 6,091 326,109 - - - (13,237) - 318,963 - 318,963 Share-based payments - - - - - 4,369 - 4,369 - 4,369 Delivery of treasury shares for share-based payment plans - - - 2,236 - (2,236) - - - - . Repurchase convertible bonds - - - - (718) - - (718) - (718) Change in tax rate - - - - (476) - - (476) - (476) . Transfer of equity component of convertible bonds to retained earnings upon repurchase bonds - - - - (17,026) 17,026 - - - - Addition to/(reduction of) reserves - - - - - (108,492) 108,492 - - - Transactions with non-controlling interests - - - - - - - - 736 736 Dividends to shareholders - - - - - - - - (3,027) (3,027) Total contributions by and distributions to owners 6,091 326,109 - 2,236 (18,220) (102,570) 108,492 322,138 (2,291) 319,847 Balance at 31 December 2020 10,319 757,336 (136,494) (158,496) 19,802 383,427 (173,824) 702,070 9,580 711,650 The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT Notes (EUR x ,) 2020 Continuing operations Cash flows from operating activities Profit/(loss) for the period 62,522 (71,950) Adjustments for: , , Depreciation and amortisation 112,661 113,748 Impairments 619 5,858 Share of (profit)/loss of equity-accounted investees (net of income tax) (17,476) (7,448) Net gain on sale of property, plant and equipment (6,893) (5,949) Equity-seled share-based payments 4,939 4,369 Change in provisions and employee benefits (19,305) (6,802) Income tax gain/(expense) (3,049) 25,189 Income tax paid (5,985) (10,812) Finance income and expense 18,264 73,981 Interest paid (27,099) (33,877) Loss on divestment of subsidiaries 26 - Operating cash flows before changes in working capital 1 119,224 86,307 Decrease/(increase) in working capital: (28,023) 53,483 ■ Decrease/(increase) in inventories (1,014) 935 ■ Decrease/(increase) in trade and other receivables (44,262) 37,789 ■ Increase/(decrease) in trade and other payables 17,253 14,759 Net cash generated from operating activities 91,201 139,790 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December Non-IFRS performance measure. Reference is made to the reconciliation of non-IFRS performance measures and glossary. The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS ( CONTINUED ) For the year ended 31 December Notes (EUR x ,) 2020 Cash flows from investing activities Capital expenditures on property, plant and equipment (77,799) (81,211) Acquisition of and other additions to intangible assets (2,366) (932) Proceeds from sale of property, plant and equipment 11,513 12,886 Disposal of intangible assets - 71 Proceeds from sale of financial assets 324 - Dividends received 5,133 55,882 Acquisitions, net of cash acquired - (4,403) Additions to other investments (1,851) (16,686) Net cash (used in)/from investing activities (65,046) (34,393) Cash flows from operating activities aer investing activities 1 26,155 105,397 Cash flows from financing activities Proceeds from the issue of ordinary shares - 332,200 Transaction costs on issue of ordinary shares - (13,237) Proceeds from the issue of long-term loans 55,132 - Transaction costs on long-term loans - (13,433) Repayment of borrowings (99,682) (376,804) Dividends paid (2,841) (3,027) Payments of lease liability (25,599) (23,560) Net cash from/(used in) financing activities (72,990) (97,861) Net cash provided by (used for) continuing operations (46,835) 7,536 Non-IFRS performance measure. Reference is made to the reconciliation of non-IFRS performance measures and glossary. The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS ( CONTINUED ) For the year ended 31 December Notes (EUR x ,) 2020 Discontinued operations Cash flows from operating activities (33) (18,294) Cash flows from investing activities 13,360 1,295 Cash flows from financing activities (13,327) 14,036 Net cash provided by (used for) discontinued operations - (2,963) Total net cash provided by (used for) operations (46,835) 4,573 Eect of exchange rate fluctuations on cash held 12,841 (25,214) Cash and cash equivalents at 1 January 181,126 201,767 Cash and cash equivalents at 31 December 147,132 181,126 Presentation in the statement of financial position Cash and cash equivalents 148,956 183,462 Bank overdra (1,824) (2,336) The accompanying notes are an integral part of these consolidated financial statements. FUGRO ANNUAL REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 GENERAL INFORMATION Fugro N.V., hereinaer to be referred to as ‘Fugro’ or ‘the company’, has its corporate seat in the Netherlands. The address of the company’s principal oce is Veurse Achterweg , SG, Leidschendam, The Netherlands. The consolidated financial statements of Fugro as at and for the year ended December include Fugro and its subsidiaries (together referred to as the ‘Group’) and the Group’s interests in equity-accounted investees. The financial statements are presented in EUR x ,, unless stated otherwise. The Euro is the presentation currency of the company. 2 BASIS OF PREPARATION The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and with Part of Book of the Netherlands Civil Code. On February , the Board of Management and Supervisory Board authorised the financial statements for issue. The financial statements will be submied for adoption to the annual general meeting which takes place on April . The financial statements have been prepared on the measurement basis of historical cost, except for the following assets and liabilities that are stated at their fair value: derivative financial instruments, equity securities and plan assets associated with defined benefit plans. For more detailed information on the measurement basis, reference is made to the relevant notes to the consolidated financial statements. Estimates, judgements and uncertainties The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that aect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The reported amounts are based on factors which by default are associated with uncertainties. Actual results may therefore dier materially from these estimates. The notes dealing with the most significant estimates, judgements and uncertainties are as follows: Estimates, judgements and uncertainties with respect to Note Impairment of non-financial assets (property, plant and equipment, right-of-use assets and intangible assets including goodwill) Impairment of financial assets (trade receivables, unbilled revenue on (completed) projects, and other receivables) The Covid-19 pandemic and implications for the financial statements , and Leases Deferred tax Employee benefits Provisions 3 SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies have been included in the relevant notes to the consolidated financial statements. Certain new accounting standards and interpretations have been published that are not yet eective for these consolidated financial statements and have not been early adopted by the Group. The impact of these new standards and interpretations are either not expected to be material for Fugro or not applicable to Fugro. Several amendments and interpretations apply for the first time as of January , but these do not have a material impact on the consolidated financial statements of the Group. 4 OTHER ACCOUNTING POLICIES Statement of cash flows The consolidated statement of cash flows is prepared using the indirect method. Cash flows in foreign currencies are converted at the exchange rate at the dates of the transactions. Currency exchange dierences on cash held are presented separately. Payments and receipts of corporate taxes are included as cash flow from operating activities and interest paid is shown as cash flow from operating activities. The line item interest paid includes cash payments for the interest portion of lease liabilities. Cash flows as a result from acquisition/divestment of financial interests in subsidiaries and equity- accounted investees are included as cash flow from investing activities, taking into account the available cash in these interests. Dividends paid are part of the cash flow from financing activities. FUGRO ANNUAL REPORT amortised cost in the functional currency at the beginning of the year, adjusted for eective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at foreign exchange rates eective at the date the fair value was determined. Foreign currency dierences arising on retranslation are recognised in profit or loss, except for dierences arising on the retranslation of equity-accounted investees, a financial liability designated as a hedge of the net investment in a foreign operation (see below) that is eective, or qualifying cash flow hedges (insofar applicable), which are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to EUR at foreign exchange rates eective at the reporting date. The income and expenses of foreign operations are translated to EUR at exchange rates eective at the dates of the transactions. Foreign currency dierences are recognised in other comprehensive income, and presented in the foreign currency translation reserve for foreign operations (translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation dierence is allocated to the non-controlling interests. When a foreign operation is disposed of, such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount in the translation reserve is reaributed to non-controlling interests. If the Group disposes of only part of its investment in an equity-accounted investee that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount in the translation reserve is reclassified to profit or loss. Basis of consolidation Accounting for business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. In assessing control, the Group takes into consideration potential voting rights, if the rights are substantive. Non-controlling interests in the acquiree are measured at the proportionate share of the acquiree’s identifiable net assets. Subsidiaries Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to aect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, it is accounted for as an equity- accounted investee or as an equity security depending on the level of influence retained. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no objective evidence of impairment conditions. Foreign currency Foreign currency transactions and translation Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the respective functional currency at the foreign exchange rate at that date. The foreign currency gain or loss on monetary items is the dierence between FUGRO ANNUAL REPORT 5 SEGMENT REPORTING Fugro has four integrated regions: Europe-Africa (E-A), Americas (AM), Asia Pacific (APAC) and Middle East & India (MEI). The organisational and reporting structure consists of these four regions. Within the regions, the following business line structure exists: Marine Site Characterisation (MSC), Marine Asset Integrity (MAI), Land Site Characterisation (LSC) and Land Asset Integrity (LAI). The operating results of the four regions are directly reported to and reviewed by the Board of Management, being the Chief Operating Decision Maker. These operating segments are therefore also reportable segments. In presenting information on the basis of geographical areas, segment revenue is based on the geographical location of operating companies. The allocation of segment assets is based on the geographical location of the operating company using the assets (‘region of origin’). Information regarding the results of each reportable segment is included below. Performance is measured based on reported result from operating activities before interest and taxation (EBIT) as included in the internal management reports that are reviewed by the Board of Management. Segment profit or loss is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Fugro allocates all other corporate expenses and finance income to the reportable segment profit (or loss) before income tax of the respective operating segments pro-rata based on net revenue. Assets that are used by more than one operating segment and liabilities that relate to more operating segments are pro-rata allocated based on net revenues to the respective reporting segments. Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly aributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill. The E-A, AM, APAC, MEI operating segments generate revenues from: ■ Marine environment: The determination of soil composition via cone penetration testing or the acquisition of soil samples and related laboratory testing; and the mapping of seabed and geological features and hazards below using non-invasive techniques including the related interpretation and visualisation. Its services also include geo consulting, general purpose navigation charts and environmental, If the selement of a monetary item, receivable from or payable to a foreign operation, is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such monetary items are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the translation reserve in equity. Previous net investment hedge of foreign operations Prior to the refinancing completed in December , the Group hedged the foreign currency exposure in USD for net investment in foreign operations in the United States with the USD part of the incumbent revolving credit facility as hedging instruments. Foreign currency dierences arising on the (re-)translation of a financial liability designated as a hedge of a net investment in a foreign operation were recognised in other comprehensive income to the extent that the hedge was eective, and was presented and accumulated within equity in the translation reserve. To the extent that the hedge was ineective, such dierences were recognised in profit or loss. Aer the refinancing in December , the previous USD revolving credit facility was redeemed. At that time, Fugro discontinued hedge accounting for the net investment in foreign operations. Fugro ceased to recognise any foreign currency dierences on the designated hedging instruments in other comprehensive income as part of the foreign currency translation reserve from the date of discontinuation. The cumulative foreign currency dierences on the hedging instrument relating to the eective portion of the hedge that was accumulated in the foreign currency translation reserve in other comprehensive income remains there, until the hedged net investment is disposed of. Upon disposal, the translation reserve is transferred to profit or loss. Derivative financial instruments and hedge accounting When a derivative financial instrument is not designated in a hedge relationship that qualifies for hedge accounting, all changes in its fair value are recognised immediately in profit or loss. The Group does not engage in material hedging transactions with derivatives. Accordingly, consistent with prior year, there are no qualifying fair value hedge or cash flow hedge relationships as of December . The Group does not have separately accounted embedded derivative financial liabilities. The Group does not have derivatives embedded within a hybrid contract containing a financial asset host. FUGRO ANNUAL REPORT meteorological & oceanographic measurement services. In addition, the activities consist of positioning signals and services, construction support, monitoring and forecasting services, remote systems technology, and inspection, repair and maintenance services (IRM). ■ Land environment: The determination of soil characteristics via cone penetration testing and/or the acquisition of soil samples and related laboratory testing. These services are oered both onshore and in near shore environments. In addition, the activities consist of material testing and geo-consulting services as well as asset integrity solutions (monitoring, analysis, modelling) for clients in the electrical power business, railroads, roads and infrastructure. Operating segments (EUR x ,) E-A AM APAC MEI Eliminations Total 2020 2020 2020 2020 2020 2020 Segment revenue , , , , , , , , - - ,, ,, Of which inter-segment revenue (,) (,) (,) (,) (,) (,) (,) (,) - - (,) (,) Revenue from external customers , , , , , , , , - - ,, ,, Segment result , , , , , , , , - - , , Depreciation (,) (,) (,) (,) (,) (,) (,) (,) - - (,) (,) Amortisation () () () () () () () () - - () (,) Impairments () () (,) (,) - (,) - - () (,) Result from operating activities (EBIT) , , , (,) (,) (,) - - , , EBIT in % of revenue .% .% .% (.%) .% (.%) (.%) .% - - .% .% Finance income , , , , , , , , (,) (,) , , Finance expense (,) (,) (,) (,) (,) (,) (,) (,) , , (,) (,) Share of profit/(loss) of equity-accounted investees (,) - - , , , , - - , , Reportable segment profit/(loss) before income tax , (,) () (,) , (,) () () - - , (,) Income tax (,) (,) , (,) , , (,) - - , (,) Profit/(loss) for the period from continuing operations , (,) , (,) , (,) (,) - - , (,) Capital employed , , , , , , , , - - ,, , Non-current assets , , , , , , , , - - ,, ,, Capital expenditure property, plant and equipment , , , , , , , , - - , , Capital expenditure E&E, soware and other intangible assets , - - - , Trade receivables and unbilled revenue on (completed) contracts , , , , , , , , - - , , FUGRO ANNUAL REPORT The consolidated statement of comprehensive income below presents the discontinued operations on a stand-alone basis: (EUR x ,) Twelve months ended 31 December 2021 Twelve months ended 31 December 2020 From discontinued operations Revenue , , Third party costs (,) (,) Other income , , Personnel expenses (,) (,) (Impairment)/Reversal of impairment (,) (,) Other expenses (,) (,) Results from operating activities (EBIT) , (,) Net financing income/(expenses) , (,) Share of profit/(loss) of equity-accounted investees (net of income tax) - Income tax gain/(expenses) () (,) Gain on sale , - Profit/(loss) for the period from discontinued operations , (,) Basic earnings per share from discontinued operations . (.) Diluted earnings per share from discontinued operations . (.) An amount of EUR . million (gain) of cumulative foreign currency translation reserves related to Seabed Geosolutions, was recycled to profit and loss and included in the gain on sale upon disposal. Restructuring costs amounting to EUR . million were recorded in other expenses. 6.2 Assets held for sale The 31 December 2020 assets and liabilities held for sale primarily pertained to the Seabed Geosolutions disposal group and were derecognised as of 28 June 2021. The 31 December 2021 assets held for sale (EUR 9.7 million) consist of property, plant and equipment for an amount of EUR 4.3 million and the remaining interest in the Global Marine Group (GMG) associate for EUR 5.4 million. 6 ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS Non-current assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, these assets are remeasured in accordance with the Group’s accounting policies. Thereaer generally the assets are measured at the lower of their carrying amount and fair values less costs to sell. Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated and any equity-accounted investees are no longer equity-accounted. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss aer tax from discontinued operations in the statement of profit or loss. 6.1 Discontinued operations Seabed Geosolutions had been presented as a disposal group held for sale and a discontinued operation since June . On March , Fugro reached a binding agreement with PXGEO Seismic Services Limited to sell certain assets and the related business of its non-core subsidiary Seabed Geosolutions for USD million (EUR .million) in cash. The USD million cash proceeds are presented as investing activities from discontinued operations in the statement of cash flows. The closing date of this transaction was June . On this date, Fugro derecognised the assets and liabilities that were sold to PXGEO from the statement of financial position. A gain on sale of EUR . million was recognised as a profit for the period from discontinued operations (refer to the table below). The net results for and of the discontinued operation have been presented on a separate line in the consolidated statement of comprehensive income. The consolidated statement of cash flows for and include separate cash flows and cash balances of the discontinued operation. The assets and liabilities of the disposal group were still classified as held for sale in the comparative consolidated statement of financial position as of December and were derecognised as of June . FUGRO ANNUAL REPORT The Group’s services are typically sold in a bundled package of services which together form a single performance obligation. Control of the single performance obligations is generally transferred to the customer over time. The transfer of control over time is supported mostly by one of the following conditions being met: ■ Clauses in the contract that allow the customer to terminate the contract, pay for costs incurred plus a reasonable profit margin and take control of any work in progress. The Group does not create an asset with alternative use to the Group. ■ The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs. In limited cases, the Group may also create or enhance an asset that the customer controls as the asset is created or enhanced. For performance obligations that are satisfied over time, revenue and cost are recognised based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgement and is based on the nature of the services to be provided. The Group generally determines progress towards completion by measuring the proportion of actual cost incurred for work performed to date, compared to total estimated cost to completion. In the Group’s view this best depicts the Group’s performance in transferring control of services promised to its customers. When it becomes probable that the total estimated cost to completion (i.e. incremental costs and an allocation of costs directly related to contract activities) exceed the total consideration for a certain contract, the Group recognises a provision for the lower of the net expected cost of performing under the contract and cost of terminating the contract. Payment terms for service contracts are usually based on several instalments over the duration of the contract based on pre-set contract milestones. Significant financing components are not prevalent nor material within the Group. When applicable, the Group does not adjust the promised amount of consideration for the eects of a significant financing component if it is expected, at contract inception, that the period between when the entity transfers a promised good or service and when the customer pays for the good or service is one year or less. Property, plant and equipment held for sale pertains to an airplane, a jack-up platform and other aerial vehicles. These assets were presented in the APAC, E-A, and AM operating segments respectively. Due to the advanced stage of negotiations with the respective potential buyers, it is deemed highly probable that these assets will be sold in exchange for cash in 2022. Other than an impairment loss of EUR 1.1 million for the jack-up platform, there were no impairments or reversals of impairments with respect to these assets in 2021. HC2 Holdings Inc is a third party and the majority owner of the Global Marine Group (GMG). In connection with the highly probable exercise by HC2 of a put option agreement to sell GMG’s stake in Huawei Marine Networks Co. Limited, the GMG associate has been classified as held for sale as of 31 December 2021. There were no impairment losses or reversals with respect to GMG in 2021. GMG is presented in the E-A operating segment. 7 REVENUE Revenue is recognised when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services. Fugro primarily generates revenue from services which are based on geo-intelligence derived by acquiring bespoke data and providing analysis and advisory. Revenue from sales of goods, soware licences and subscription income are not a significant category of revenue. Sales within the Group are eliminated and not included in revenue shown. Revenue is measured based on the consideration contractually agreed with the customer. Common considerations are fixed price, daily rates or rates per (square) kilometre. The transaction price excludes amounts collected on behalf of third parties, such as value-added taxes. It is common for the Group’s contracts with customers to include liquidated damages, weather standby fees or discounts that can either increase or decrease the transaction price, leading to the consideration to be variable. Variable considerations are generally constrained and recognised as revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved. The Group estimates variable consideration using either the expected value method or the most likely amount method based on which method beer predicts the amount of consideration to which it will be entitled. FUGRO ANNUAL REPORT 7.2 Performance obligations The table below presents the transaction price allocated to performance obligations that are (partially) unsatisfied as at December. Certain amounts of variable consideration are not included in the amounts presented below as these are considered to be constrained. The Group applies the practical expedient allowing not to disclose information about remaining performance obligations that have an original expected duration of one year or less. The amounts therefore dier from the backlog. (EUR x ,) 2020 Within one year , , More than one year , , Total , , * Restated to reflect an additional EUR million of unsatisfied performance obligations erroneously not captured in . 7.3 Contract balances The Group has recognised the following assets and liabilities related to contracts with customers: (EUR x ,) Note 2020 Unbilled revenue on (completed) projects , , Trade receivables , , Advance instalments to work in progress (,) (,) 8 THIRD PARTY COSTS (EUR x ,) 2020 Cost of suppliers , , Lease expenses , , Other costs , , Total , , Generally, the Group does not incur costs to obtain a contract. Up-front fees and pre-production costs are not prevalent in the Group’s business. Contract balances When revenue recognised to date exceeds the progress billings to the customer, the surplus is accounted for as a contract asset and presented as unbilled revenue. Unbilled revenue is accounted net of any impairment losses. When progress billings exceed the revenue, measured as costs incurred plus profits recognised to date, the balance is accounted for as a contract liability, which is presented as advance instalments to work in progress. 7.1 Disaggregation of revenue from contracts with customers Revenue by businesses and market segment 2020 (EUR x ,) Marine Land Total Marine Land Total Oil and gas , , , , , , Infrastructure , , , , , , Renewables , , , , , , Nautical , , , , , , Other , , , , , , Total ,, , ,, , , ,, Of which: Site characterisation , , , , , , Asset integrity , , , , , , * Restated for the reclassification of nearshore infrastructure services from Land to Marine, following changes in internal management reporting. The reclassification impact is EUR . million for . FUGRO ANNUAL REPORT 10 PERSONNEL EXPENSES (EUR x ,) 2020 Wages and salaries , , Social security contributions , , Equity-seled share-based payments , , Expense related to defined contribution plans , , Expense/(gain) related to defined benefit plans () Increase/(decrease) in liability for long service leave , , Total , , 11 EMPLOYEES The total number of full-time equivalent (FTE) employees as at December and average number for the year is as follows: 2020 Nether- lands Other countries Total Nether- lands Other countries Total Technical sta , , , , Management and administrative sta , , , , Temporary and contract sta Total number of employees at 31 December , , , , , , Average number of employees during the year , , , , , , Cost of suppliers comprises costs of short-term third-party hire, lease of low-value assets, fuel, demobilisation and mobilisation, consumables and third-party personnel. Also included are costs of maintenance and operational supplies amounting to EUR . million (: EUR . million) directly related to projects. Lease expenses relate to short-term vessel leases and variable lease payments not included in the measurement of vessel lease liabilities. Other costs mainly relate to subcontracted cost at request of the client which can be recharged to the client directly. 9 OTHER INCOME Other income consists of income not related to the key business activities of the Group, such as income from the sale of non-monetary assets and/or liabilities, and/or non-recurring income. Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Grants that compensate the Group (partly) for expenses incurred are recognised in profit or loss on a systematic basis in the same periods in which the expenses are recognised. Grants that (partly) compensate the Group for the cost of an asset are recognised in profit or loss on a systematic basis over the useful life of the asset. (EUR x ,) 2020 Government grants , , Gain on sale of property, plant and equipment , , Sundry income , , Total , , During the financial year , Fugro recognised EUR . million in connection with Covid- related government support in various countries (: EUR . million). Sundry income includes research and developments tax credits received. FUGRO ANNUAL REPORT 12.1 Performance shares Under the long-term incentive plan, the company grants performance shares (and performance options prior to an amendment in ) to members of the Board of Management and other selected senior employees. Vesting is subject to continuous employment and performance measurement. The performance period is three years starting on January in the year of the grant. The maximum number of performance shares that can vest aer three years equals of the conditionally granted number of shares (only in case maximum performance is achieved on all criteria). The performance targets and their relative weights for the grants made under the plan are as follows: Performance targets 2017-2021 TSR .% ROCE .% Strategic targets .% ■ Total shareholder return (TSR) is defined as share price increase, including reinvested dividends. TSR is measured over a three-year period based on a three-month average period measured immediately prior to the start and end date of the performance period. The relative position within the peer group determines the vesting level. ■ Return on capital employed (ROCE) is calculated as net operating profit aer tax (NOPAT) over the last twelve months as a percentage of a three-point moving average adjusted capital employed. ■ Strategic target achievement is determined by the Supervisory Board in the first quarter of the year following the three-year performance period for the Board of Management and for other employees by the Board of Management. 12 SHARE-BASED PAYMENTS The following equity-seled share-based payment arrangements exist under the long-term incentive plan: ■ performance shares and performance options (Board of Management, Executive Leadership Team and other selected senior employees) ■ share options (eligible and selected other employees for grants up to 2021) ■ restricted shares (Board of Management, 2018 grant only) ■ restricted share units (eligible and selected other selected employees). The cost of equity-seled share-based payment arrangements is determined by the fair value at the date when the grant is made. Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the company’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. If awards do not vest, due to non-market conditions and/or service conditions not being met, no expense is recognised. Awards that include a market condition are treated as vested irrespective of whether the market condition is satisfied, provided that all other (non-market) performance conditions and/or service conditions are satisfied. The grant-date fair value of equity-seled share-based payment awards granted to employees is recognised as personnel expense, with a corresponding increase in equity, over the vesting period of the award. The cumulative expense recognised for equity- seled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the company’s best estimate of the number of equity shares that will ultimately vest. The expense or credit in the consolidated statement of comprehensive income for a period represents the movement in cumulative expense recognised as at respectively the beginning and end of that period. FUGRO ANNUAL REPORT The expected volatility is based on the annualised historical volatility for a prior to the date of grant corresponding with the remaining performance period, and the dividend yield is estimated based on the historic dividend yield on Fugro shares at the date of grant. The last time that performance options were granted in connection with the long-term incentive plan was in . The last remaining performance options vested in . No expense was recognised for performance options in and . As at December, the following performance options (all granted prior to ) were outstanding: 2020 Number of options Weighted average exercise price Number of options Weighted average exercise price Performance options outstanding at 1January , . , . Forfeited during the period , . , . Exercised during the period - - - - Performance options outstanding and exercisable at 31 December , . , . The average remaining term of the performance options outstanding as at December is . years ( December : . years). The total expense recognised in related to performance shares amounted to EUR ,, (: EUR ,,). 12.2 Share options Fugro’s share option scheme allows some assigned Group employees to acquire shares in Fugro. A share option entitles the employee to purchase ordinary shares in Fugro. The vesting period of the options granted from is three years starting at the grant date. The maximum contractual option life is six years. The options granted are not subject to any further conditions of vesting, except that the option holder remains employed by Fugro or one of its subsidiaries. A new discretionary restricted share unit plan was introduced in (see below). As a result, no share options were granted in . A summary of performance shares movements and outstanding balance as at December is presented below. 2021 2020 Number of shares Weighted average grant date fair value Number of shares Weighted average grant date fair value Performance shares outstanding at 1January , . , . Granted during the period , . , . Forfeited during the period , . , . Vested during the period , . , . Performance shares outstanding at 31December , . , . The grant date fair value of the portion with a TSR market performance condition, a market performance condition, has been derived using a Monte Carlo simulation model. The fair value of the portion with a ROCE or a strategic performance condition is equal to the share price at date of grant adjusted for expected dividends during the vesting period. The significant inputs into the valuation model are (including the actual historical share prices at the date of grant): 2020 Performance Shares Performance Shares Share price (in EUR) . – . . – . Volatility (%) .% - .% .% - .% Dividend yield (%) .% .% Vesting period (in years) . – . . - . Risk-free interest rate (%) (.)% - (.)% (.)% - (.)% Remaining performance period (in years) . – . . - . FUGRO ANNUAL REPORT 12.3 Restricted shares The vesting of the restricted shares is only dependent on continued services during the vesting period. No shares have been granted in . A summary of restricted share movements and the outstanding balance as at December is presented below. 2020 Number of shares Weighted average grant date fair value Number of shares Weighted average grant date fair value Restricted shares outstanding at 1January , . , . Granted during the period - - , . Forfeited during the period , . , . Vested during the period , . , . Restricted shares outstanding at 31December , . , . The total expense recognised in related to restricted shares amounted to EUR , (: EUR ,). 12.4 RSU plan In February , Fugro replaced the discretionary share option plan for eligible and selected other employees with a new discretionary restricted share unit (RSU) plan. A RSU entitles the employee to receive a number of Fugro shares. RSU’s vest when an employee remains employed by Fugro or one of its subsidiaries for three years following the grant date. There are no other vesting conditions. The Board of Management and the Supervisory Board decide annually on the granting of RSU’s. The grant date fair value of the RSU’s is the share price at date of grant adjusted for expected dividends during the vesting period (: EUR .). The exercise price for the options granted was determined based on the average closing price of days preceding the grant date. A summary of movements during the year of options and balances outstanding as at December is presented below: 2020 Number of options Weighted average exercise price (EUR) Number of options Weighted average exercise price (EUR) Options outstanding at 1January ,, . ,, . Forfeited during the period , . , . Expired during the period , . , . Options granted during the period - - , . Options outstanding at 31December , . ,, . Options exercisable at 31 December , . , . The outstanding options have an exercise price ranging from EUR . to EUR . as at December . The average remaining term of the options is . years (: . years). The fair value of the share options with only service conditions is determined by using a binomial model. The option life is estimated based on the expected behaviour for exercising the options, and the estimate is that the employees will hold the options until the end of the exercise period. Expected volatility is estimated by considering historical share price volatility. The total expense recognised in related to share options amounted to EUR , (: EUR ,,). FUGRO ANNUAL REPORT 14 OTHER EXPENSES (EUR x ,) 2020 Maintenance and operational supplies , , Indirect operating expenses , , Occupancy costs , , Property lease expense , , Communication and oce equipment , , Impairment of receivables , , Restructuring costs , , Research costs , , Loss on disposal of property, plant and equipment Marketing and advertising costs , , Tax fines and other penalties - Professional services fees , , Other , , Total , , Other expenses include training costs, and miscellaneous charges. A summary of RSU movements and the outstanding balance as at December is presented below. Number of shares Weighted average grant date fair value RSU’s outstanding at 1 January - - Granted during the period , . Forfeited during the period , . Vested during the period - - RSU’s outstanding at 31 December , . The total expense recognised in related to RSU’s amounted to EUR ,. 13 IMPAIRMENTS Intangible assets that have an indefinite useful life or intangible assets not ready for use are not subject to amortisation and are tested annually for impairment. Other non-financial assets that are subject to depreciation and amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. (EUR x ,) 2020 Impairments of non-financial assets , , Reversals of impairment of non-financial assets (,) () Net impairment loss , The EUR . million reversal of impairment during mainly pertained to the improved business outlook for a vessel (Fugro Synergy). FUGRO ANNUAL REPORT (EUR x ,) 2020 Interest income on loans and receivables (,) (,) Net foreign exchange gain (,) - Finance income (,) (,) Interest expense on financial liabilities measured at amortised cost , , Net change in fair value of financial assets at fair value through profit or loss Net foreign exchange loss - , Finance expense , , Net finance (income)/expenses recognised in profit or loss , , The table set below summarises the net finance cost recognised in other comprehensive income and how they are categorised in the statement of changes in equity. (EUR x ,) 2020 Recognised in other comprehensive income Change net investment hedge of foreign operations - , Foreign currency translation dierences of foreign operations , (,) Foreign currency translation dierences recycled to profit and loss (,) - Foreign currency translation dierences of equity-accounted investees , , Total , (,) Recognised in: Translation reserve , (,) Non-controlling interests () Total , (,) 15 NET FINANCE ( INCOME ) /EXPENSES Net finance income and expenses consist of finance expenses, finance income and foreign currency gains and losses. Finance expenses comprise interest expense on borrowings and lease liabilities, unwinding of the discount on provisions, losses on disposal of equity securities, fair value losses on financial assets at fair value through profit or loss, impairment losses recognised on financial assets (other than trade receivables), and losses on hedging instruments that are recognised in profit or loss. Finance income comprises interest income on funds invested, dividend income, gains on the disposal of equity securities, fair value gains on financial assets at fair value through profit or loss, gains on the re-measurement to fair value of any pre-existing interest in an acquiree, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised in profit or loss as it accrues, using the eective interest method. Dividend income is recognised in profit or loss on the date the Group’s right to receive payment is established, which in the case of quoted shares is normally the ex-dividend date. Borrowing costs that are not directly aributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the eective interest method. Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position. FUGRO ANNUAL REPORT In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. 16.1 Income tax expense/(gain) Recognised in profit or loss (EUR x ,) 2020 Current income tax expense/(gain) Current year , , Adjustments for prior years () , , Deferred income tax expense/(gain) Origination and reversal of tax losses and temporary dierences , Change in tax rate (,) (,) Recognition of previously unrecognised tax losses and temporary dierences (,) (,) Impairment of deferred tax assets - , Liability for undistributed foreign earnings (deferred) , Adjustments for prior years , () (,) , Total income tax expense/(gain) (,) , 16 INCOME TAX Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends. Deferred tax is recognised in respect of temporary dierences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for taxable temporary dierences arising on the initial recognition of goodwill, temporary dierences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that aects neither accounting nor taxable profit or loss, and temporary dierences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary dierences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are oset if there is a legally enforceable right to oset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on dierent tax entities, but they intend to sele current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary dierences, to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. FUGRO ANNUAL REPORT are included in the table under Recognition of previously unrecognised tax losses and temporary dierences. The write down of intercompany positions benefit (EUR . million) relates to deductible write downs recognised on intercompany positions with Seabed Geosolutions and Fugro Angola. Income tax recognised in other comprehensive income and in equity (EUR x ,) 2020 Before tax Tax (expense)/ benefit Net of tax Before tax Tax (expense)/ benefit Net of tax Defined benefit plan actuarial gains (losses) , (,) , (,) , (,) Net change in hedge of foreign operations - , (,) , Share-based payment transactions , - , , - , Costs related to issue of new shares - , , - - - Subordinated unsecured convertible bonds - () () - () () Transactions with non-controlling interests - - - - Foreign currency translation dierences of foreign operations and equity-accounted investees , , , (,) (,) (,) Total , , (,) (,) (,) Reconciliation of eective tax rate (EUR x ,) % 2020 % 2020 Profit/(loss) for the period from continuing operations , (,) Income tax expense/(gain) (,) , Profit/(loss) before income tax , (,) Income tax using the weighted domestic average tax rates . , . (,) Change in tax rate (.) (,) . (,) Recognition of previously unrecognised tax losses and temporary dierences (.) (,) . (,) Impairment of deferred tax assets - - (.) , Current year tax losses and tax credits not recognised . , (.) , Non-deductible expenses . , (.) , Tax exempt income (.) (,) . (,) Write down of intercompany positions (.) (,) - - Liability for undistributed foreign earnings (deferred) . , (.) Adjustments for prior years (deferred) . , . () Adjustments for prior years (current) . . () Dividend and other income taxes . (.) Total (.) (,) (.) , The weighted domestic average tax rate is computed by multiplying the result before tax of each tax group with the applicable domestic corporate income tax rates, varying from to . The increase of the average tax rate compared to prior year is caused by a significantly dierent mix of results in the various tax groups. The change in tax rate benefit is mainly (EUR . million) the eect of the deferred tax rate change in the UK Unity (increase from to ). Due to increased profitability mainly in the Netherlands and Germany, carry forward tax losses and temporary dierences were recognised for an amount of EUR . million. In addition, tax losses were utilised for EUR . million in South Africa, following debt forgiveness of intercompany positions. The items combined FUGRO ANNUAL REPORT Movement in temporary dierences during the year (EUR x ,) Balance 1 January 2021 Recognised in profit or loss Recognised in other comprehen- sive income Recognised directly in equity Balance 31 December 2021 Property, plant and equipment , , - - , Intangible assets (,) () - - (,) Subordinated unsecured convertible bonds (,) , - () (,) Leases - - , Employee benefits , () (,) - Provisions , (,) - - () Tax loss carry-forward , , - - , Other items (,) , - Exchange dierences - (,) , - - Total , , () , 16.2 Current tax assets and liabilities The net current tax liability of EUR , thousand (: EUR , thousand liability) represents the balance of current tax assets and liabilities in respect of current and prior periods less advance tax payments. 16.3 Deferred tax assets and liabilities Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are aributable to the following items: (EUR x ,) Assets Liabilities 2020 2020 Property, plant and equipment , , (,) (,) Intangible assets (,) (,) Subordinated unsecured convertible bonds - - (,) (,) Leases , , (,) (,) Employee benefits , , (,) () Provisions , , (,) (,) Tax loss carry-forwards , , - - Other items , , (,) (,) Deferred tax assets/(liabilities) , , (,) (,) Set-o of tax components (,) (,) , , Reflected in the statement of financial position as follows , , (,) (,) The recognised deferred tax assets are dependent on future taxable profits in excess of profits arising from the reversal of existing taxable temporary dierences. The recognised amounts relate to tax groups that are profitable or are expected to be profitable in the foreseeable future. FUGRO ANNUAL REPORT The deductible temporary dierences and capital allowances do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items, because it is not probable that future taxable profit will be available against which the Group can utilise these benefits. Unrecognised tax assets changed over the period as follows: Unrecognised deferred tax assets (EUR x ,) 2020 As at 1 January , , Movements during the period: Additional unrecognised losses and temporary dierences , , Recognition of previously unrecognised tax losses and temporary dierences (profit or loss) (,) (,) Recognition of previously unrecognised tax losses and temporary dierences (equity) (,) , Eect of change in tax rates , Exchange rate dierences , (,) Expiration of tax losses () (,) Change from reassessment () (,) Acquisitions and divestments (,) - As at 31 December , , Of the total recognised and unrecognised deferred tax assets in respect of tax losses carried forward an amount of EUR , thousand expires in periods varying from one to five years. An amount of EUR , thousand expires between five and ten years, an amount of EUR , thousand expires between ten and twenty years and an amount of EUR , thousand can be oset indefinitely. Based on forecasted results per tax jurisdiction, management considered it probable that sucient future taxable profit will be generated to utilise recognised deferred tax assets depending on taxable profits in excess of the profits arising from the reversal of existing temporary dierences. Temporary dierences relating to investments in subsidiaries At December a deferred tax liability of EUR , thousand relating to investments in subsidiaries has been recognised (: EUR thousand). No deferred tax liability is (EUR x ,) Balance 1 January 2020 Acquired in business combina- tions Recognised in profit or loss Recognised in other compre- hensive income Recognised directly in equity Balance 31 December 2020 Property, plant and equipment , () , - - , Intangible assets () - () - - (,) Subordinated unsecured convertible bonds (,) - , - () (,) Long term loans - - , (,) - - Leases - - - Employee benefits , - (,) , - , Provisions , - () - - , Tax loss carry-forward , - (,) - - , Other items (,) - (,) - - (,) Exchange dierences - - , (,) - - Total , () (,) (,) () , * Includes EUR , thousand recognised in profit & loss of discontinued operations. 16.4 Unrecognised deferred tax assets and liabilities Deferred tax has not been recognised in respect of the following items: Unrecognised deferred tax assets (EUR x ,) 2020 Tax credits , , Deductible temporary dierences , , Tax losses , , Total , , Unrecognised deferred tax assets relate to tax units previously suering losses for which it is currently not probable that future taxable profit will be available to oset these losses, taking into account fiscal restrictions on the utilisation of loss compensation. FUGRO ANNUAL REPORT reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is dierent from the remainder of that asset, that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. The estimated useful lives for the current and comparative period of significant items of property, plant and equipment are as follows: Category Years Land Infinite Buildings – Plant and equipment – Vessels – Other – The carrying amounts of the Group’s non-financial assets other than assets arising from employee benefits and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit (CGU) is the higher of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating unit. recognised in case Fugro controls whether the liability will be incurred and it is satisfied that it will not be incurred in the foreseeable future due to permanent reinvestments. The aggregate amount of temporary dierences for which these deferred tax liabilities have been recognised is EUR , thousand (: EUR , thousand). In some of the countries where the Group operates, local tax laws provide that gains on disposal of certain assets are tax exempt, provided that the gains are not distributed. The company does not intend to distribute such gains; therefore no tax liabilities are recognised in this respect. 17 PROPERTY, PLANT AND EQUIPMENT Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment includes expenditure that is directly aributable to the acquisition of the asset. The cost of self-constructed assets includes the costs of materials and direct labour, any other costs directly aributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased soware that is integral to the functionality of the related equipment is capitalised as part of that equipment. Property, plant and equipment that is being constructed or developed for future use is classified as property, plant and equipment under construction and stated at cost until construction or development is complete, at which time it is reclassified as land and buildings, plant and equipment, vessels (including jack-ups) or other property, plant and equipment. Property, plant and equipment is recognised from the point in time when the Group obtains control. Any (pre-)payments made before that point in time are classified as other long-term asset. When parts of an item of property, plant and equipment have dierent useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised net within ‘other income’ or ‘other expenses’ in profit or loss. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured FUGRO ANNUAL REPORT The Group’s corporate assets do not generate separate cash inflows and are utilised by more than one cash-generating unit. Corporate assets are allocated to cash-generating units on a reasonable and consistent basis and tested for impairment as part of the testing of the cash generating units to which the corporate asset is allocated. Impairment losses recognised in prior periods are reviewed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (EUR x ,) Land and buildings Plant and equipment Vessels Fixed assets under construction Other Total Balance at 1 January 2021 Cost , , , , , ,, Accumulated depreciation and impairment (,) (,) (,) - (,) (,,) Carrying amount , , , , , , Change in carrying amount: Investments , , , , , Transfers from fixed assets under construction , , , (,) , - Depreciation (,) (,) (,) - (,) (,) Impairment (loss)/reversal () (,) , - - , Disposals (,) () (,) () () (,) Eects of movement in foreign exchange rates , , , , , Transfers from/(to) assets classified as held for sale - (,) (,) - () (,) Total changes (,) (,) (,) , , , Balance at 31 December 2021 Cost , , , , , ,, Accumulated depreciation and impairment (,) (,) (,) () (,) (,,) Carrying amount , , , , , , The transfer to assets classified as held for sale in plant and equipment relates to aerial vehicles in the Americas region. The transfer to assets classified as held for sale in vessels relates to a jack-up platform in the Europe-Africa region. Refer to note . for more details. FUGRO ANNUAL REPORT (EUR x ,) 2020 Land and buildings Plant and equipment Vessels Fixed assets under construction Other Total Balance at 1 January 2020 Cost , , , , , ,, Accumulated depreciation and impairment (,) (,) (,) - (,) (,,) Carrying amount , , , , , , Change in carrying amount: Investments , , , , , , Acquisition through business combination , - - , Transfers from fixed assets under construction , , (,) - Depreciation (,) (,) (,) - (,) (,) Impairment (loss)/reversal (,) () (,) - - (,) Disposals (,) () () (,) () (,) Eects of movement in foreign exchange rates (,) (,) (,) (,) () (,) Transfer between asset classes - (,) - - , - Reclassification adjustment () - - - - () Transfers from/(to) assets classified as held for sale - (,) , - - , Total changes (,) (,) (,) () (,) Balance at 31 December 2020 Cost , , , , , ,, Accumulated depreciation and impairment (,) (,) (,) - (,) (,,) Carrying amount , , , , , , FUGRO ANNUAL REPORT The lease liability is measured at the present value of the lease payments that are not paid at the commencement date. The discount rate is the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. Lease payments included in the measurement of the lease liability comprise the following: ■ fixed payments, including in-substance fixed payments; ■ variable lease payments that depend on an index, initially measured using the index as at the commencement date; ■ amounts expected to be payable under a residual value guarantee; and ■ the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and ■ penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. The lease liability is measured at amortised cost using the eective interest method. It is remeasured when: ■ there is a change in future lease payments arising from a change in an index or if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee. In these cases, the lease liability is remeasured by discounting the revised lease payments by using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); ■ the Group changes its assessment of whether it will exercise a purchase, extension or termination option. In this case, the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; ■ a lease contract is modified and the lease modification is not accounted for as a separate lease. In this case, the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. 18 LEASES Accounting policies Fugro as lessee Definition of a lease At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At inception or on reassessment of a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone selling prices. However, for leases of property and equipment, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component. Recognition and measurement The Group recognises a right-of-use asset and lease liability at the lease commencement date. The Group applies the short-term lease recognition exemption to its short term leases of vessels, property and equipment (i.e., those leases that have a lease term of months or less from the commencement date and do not contain a purchase option). The Group also applies the lease of low-value assets recognition exemption. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term. The right-of-use asset is initially measured at cost. Cost comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. FUGRO ANNUAL REPORT Property The Group has more than property leases, which consist of land and buildings (e.g. oces, laboratory facilities, warehouses and housing). The lease terms vary from to years. Land leases have longer durations than buildings. Some leases contain options to extend or terminate certain property leases. Periods covered by extension options and termination options are reflected in the lease term, depending on whether the reasonably certain threshold is satisfied. In making this judgement, the Group considers favourable terms compared to market rates, termination costs (e.g. relocation and negotiation costs), lack of suitable alternatives and other facts and circumstances. Significant leasehold improvements are rare. The reasonably certain threshold for extension and termination options is generally not satisfied. Fixed lease payments are generally subject to periodic adjustment to market rentals by means of a retail price index and/or in-substance fixed annual rent escalations. The relative magnitude of these adjustments compared to the fixed lease payments is not significant. The potential future lease payments not included in the measurement of lease liabilities and the prevalence of the exercise of options is not significant. Property leases do not include material residual value guarantees. The sensitivity of reported information to the aforementioned variables (e.g. future variable lease payments) is low. Some leases of oce buildings contain extension options exercisable by the Group which provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement whether it is reasonably certain to exercise the options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. The prevalence of the exercise of options that were not included in the measurement of lease liabilities is low. Equipment The Group has more than equipment leases, comprising vehicles, IT equipment (data storage, copiers, printers, scanners, servers etc.), telecom (telecom, radio and satellite devices), aerial vehicles, drilling equipment, compressors, subsea equipment and cranes. The average lease term is years. Although these leases may contain renewal options, the Group has determined that it is not reasonably certain to exercise these options. The lease payments are generally fixed in nature. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero. Lease payments are allocated between the liability and finance expenses (interest costs). The finance cost is charged to the consolidated statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Accounting policies Fugro as lessor The Group does not act as lessor. Accordingly, no accounting policies for lessors are applicable. The Group’s lease portfolio consists of vessels, property and equipment. Vessels The Group leases vessels to perform site characterisation and asset integrity services for clients. Leased vessels generally oer more flexibility than the Group’s owned vessels. The non-cancellable periods of these leases vary from to years. The Group has options to extend, terminate or purchase certain vessel leases. These options facilitate the Group’s asset portfolio management to market conditions. Periods covered by extension options and termination options are generally not reflected in the lease term, due to the reasonably certain threshold. Purchase options are not reasonably certain to be exercised. The operational and financial eects of such options are therefore not significant. The lease payments generally include a fixed component (e.g. a fixed day rate). In addition, a variable component based on actual vessel utilisation generally applies. These variable lease payments based on the utilisation of vessels are common in the industry. The Group typically guarantees a minimum utilisation rate (e.g. a minimum number of charter days per annum at a predetermined day rate), which is reflected in the lease liability. Residual value guarantees are not prevalent in vessel leases. The sensitivity of reported information to the aforementioned variables (e.g. future variable lease payments) is low. FUGRO ANNUAL REPORT (EUR x ,) 2020 Discounted lease liabilities included in the statement of financial position at 31 December Current , , Non-current , , Total discounted lease liabilities in the statement of financial position at 31 December , , Amounts recognised in profit and loss (EUR x ,) 2020 Interest on lease liabilities , , Variable lease payments not included in the measurement of lease liabilities , Low-value asset expense , , Expenses relating to short-term leases , , Amounts recognised in the statement of cash flows (EUR x ,) 2020 Total cash outflow for leases , , Fugro does not act as lessor. Right-of-use assets (EUR x ,) Vessels Property Equipment Total Balance at 1 January 2021 , , , , Balance at 31 December 2021 , , , , Balance at 1 January 2020 , , , , Balance at 31 December 2020 , , , , (EUR x ,) Depreciation 2021 Additions 2021 Depreciation 2020 Additions 2020 Vessels , , , - Property , , , , Equipment , , , , Total , , , , Lease liabilities (EUR x ,) 2020 Maturity analysis – contractual undiscounted cash flows: Less than one year , , One to five years , , More than five years , , Total undiscounted lease liabilities at 31 December , , * Restated to include the finance lease erroneously not included in the prior year in the total contractual undiscounted cash flows. There is no impact on the primary statements. FUGRO ANNUAL REPORT Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite life are annually tested for impairment or when there is an indication for impairment. Other intangible assets and soware are amortised from the date they are available for their intended use. The estimated useful life of soware and other capitalised development costs is, in general, five years. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of cash-generating units) and then to reduce the carrying amount of the other assets in the cash-generating unit (or group of cash-generating units) on a pro rata basis. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated, are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are reviewed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 19 INTANGIBLE ASSETS INCLUDING GOODWILL Goodwill that arises upon the acquisition of subsidiaries is presented with intangible assets. For the measurement of goodwill at initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to cash generating units and is not amortised but is tested for impairment annually and when there is an indication for impairment. The measurement date of the annual goodwill impairment test is September. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity-accounted investee as a whole. Fugro incurs exploration and evaluation (E&E) costs in Australian areas of interest in cooperation with Finder Exploration Pty Ltd (Finder), Theia Energy Pty Ltd (Theia) and Finder related parties. These assets are considered non-core business. Fugro capitalises these costs as E&E assets. E&E assets are classified as intangible assets, as they typically relate to drilling permits. A regular review of each area of interest is undertaken to determine the appropriateness of continuing to carry forward costs in relation to that area. Capitalised costs are only carried forward to the extent that they are expected to be recovered. Accordingly, E&E assets are not amortised, but assessed for impairment indications. Research expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sucient resources to complete development and to use or sell the asset. The capitalised expenditure includes the cost of materials, direct labour, overhead costs that are directly aributable to preparing the asset for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses. Soware and other intangible assets acquired or developed by the Group and that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. FUGRO ANNUAL REPORT (EUR x ,) 2020 Goodwill E&E (Finder/ Theia) Soware Other Total Goodwill E&E (Finder/ Theia) Soware Other Total Balance at 1 January 2021 Cost , , , , , , , , , , Accumulated amortisation and impairment (,) (,) (,) (,) (,) (,) (,) (,) (,) (,) Carrying amount , , , , , , , , , Change in carrying amount: Purchase of intangible assets - - - Other additions - , - - , - - - Amortisation - - () () () - - (,) () (,) Impairment - (,) - - (,) - - - - - Disposals - - () () () - - () () () Eect of movements in foreign exchange rates , , (,) () () (,) Transfers from/(to) assets classified as held for sale - - - - - - - Total changes , () , (,) () () (,) Balance at 31 December Cost , , , , , , , , , , Accumulated amortisation and impairment (,) (,) (,) (,) (,) (,) (,) (,) (,) (,) Carrying amount , , , , , , , , FUGRO ANNUAL REPORT The capitalised goodwill was allocated to the following CGUs as at December : (EUR x ,) 2020 Europe-Africa , , Americas , , Asia Pacific , , Middle East & India , , Total , , The key assumptions used in the annual goodwill impairment test at the September measurement date were as follows: Growth rate first year Growth rate long-term Pre-tax discount rate Long-term EBIT margin % 2020 2020 2020 2020 Europe-Africa .% .% .% .% .% .% .% .% Americas .% .% .% .% .% .% .% .% Asia Pacific (.%) .% .% .% .% .% .% .% Middle East & India .% .% .% .% .% .% .% .% The decrease in discount rate from to is mainly driven by a lower equity market risk premium and risk-free rate. Impairment testing for cash-generating units containing goodwill For the purpose of goodwill impairment testing, Fugro allocates goodwill to the following four cash-generating units (CGUs): Europe-Africa, Americas, Asia Pacific and Middle East & India. These CGUs represent the lowest level within the Group at which the goodwill is monitored for internal management purposes, they are consistent with the group’s operating segments. The recoverable amounts of the cash-generating units have been determined based on value in use calculations. Value in use was determined by discounting the expected future cash flows from the continuing use of the CGU’s. The calculation of the value in use was based on the following key assumptions: ■ Cash flows in the first year of the forecast are based on management’s approved financial budget. For all CGU’s, the 2022 projections factor in, amongst others, already signed contracts, expected win rates on contracts out for bid, expected crew and vessel utilisation rates and/or industry developments. Cash flows for the CGU’s beyond one year are extrapolated using an estimated growth rate based on expected market developments, taking into account strategic plans of the company and current market conditions such as Covid-19 and the reduced spending by oil and gas clients. ■ Cash flows for the CGU’s beyond five years are extrapolated using an estimated long-term growth rate of 0.0% (2020: 1.5%). For the CGU’s the growth rates are based on an analysis of the long-term market price trends in the oil and gas industry adjusted for actual experience. ■ The pre-tax discount rate used to discount the pre-tax cash flows for impairment testing purposes is determined through an iterative calculation using the projected post-tax cash flows, expected tax rate for the respective cash generating units and a post-tax discount rate for the Group. FUGRO ANNUAL REPORT 20 INVESTMENTS IN EQUITY-ACCOUNTED INVESTEES The Group’s interests in equity-accounted investees comprise interests in joint ventures and associates. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Associates are all entities over which the group has significant influence but not control or joint control. This is generally the case where the group holds between and of the voting rights. Investments in equity-accounted investees are accounted for using the equity method. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereaer to recognise the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment. Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group. When the Group’s share of losses in an equity- accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables that form part of the entity’s net investment, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. The carrying amount of equity-accounted investments is tested for impairment. Fugro has a call option to acquire the remaining shares of Sea-Kit International Limited (an individually immaterial associate) from its joint venture partner between February and June (which period may be deferred by one year by the joint venture partner). The exercise price is the estimated fair value at that point in time. The joint venture partner has a put option to sell the remaining shares to Fugro under substantially the same conditions as the call option which is capped at a fixed amount. The goodwill sensitivity analysis of each CGU as at the measurement date was as follows: (EUR x ,) Change required in each key assumption for headroom to equal zero Headroom Growth rate first year Growth rate long- term Pre-tax discount rate Long-term EBIT margin % Europe-Africa , (.%) (.%) .% (.%) Americas , (.%) (.%) .% (.%) Asia Pacific , (.%) (.%) .% (.%) Middle East & India , (.%) (.%) .% (.%) Total , Total headroom increased significantly from EUR million in to EUR million in . The changes beyond those in the above table to assumptions used in the goodwill impairment test would, in isolation, lead to an impairment loss being recognised. Exploration and evaluation (E&E) E&E expenditure results in certain items of expenditure being capitalised for an area of interest where it is considered likely to be recoverable. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular, whether an economically viable extraction operation can be established by the parties involved. These estimates and assumptions may change as new information becomes available. If, aer having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be wrien o to the statement of comprehensive income. For the year ended December , this resulted in an impairment charge of EUR , thousand (: EUR nil). FUGRO ANNUAL REPORT ■ The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Subsequent measurement is at amortised cost using the eective interest method and is subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of comprehensive income. Dividends on equity investments are also recognised as net finance income in the statement of comprehensive income when the right of payment has been established. The Group derecognises a financial asset when the rights to receive cash flows from the asset have expired, or have been transferred and the group has transferred substantially all the risks and rewards of ownership. The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the dierence between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original eective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms (insofar applicable). ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next -months (a -month ECL). The Group considers that there has been a significant increase in credit risk when contractual payments are more than days past due. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). The aggregate carrying amount of the equity-accounted investees of EUR , thousand as at December ( December : EUR , thousand), consists fully of joint ventures (: joint ventures for EUR , thousand and associates for EUR , thousand). As of December , the Global Marine Group associate (EUR , thousand) was presented as held for sale (reference is made to note .). The Group’s share of profit from continuing operations from its joint ventures amounted to EUR , thousand in (: EUR , thousand profit). A profit of EUR , thousand was reported as other comprehensive income from its joint ventures in relating to foreign currency exchange dierences (: EUR , thousand loss). In , the Group received dividends of EUR , thousand (: , thousand) from its joint ventures. The Group’s share of profit from continuing operations and of other comprehensive income from associates in amounts to a profit of EUR , thousand (: , thousand loss) and a loss of EUR thousand (: , thousand gain) respectively. The other comprehensive income from Fugro’s associates mainly relates to foreign currency exchange dierences. In , the Group received dividends of EUR thousand (: , thousand) from its associates. None of the group’s equity-accounted investees are publicly listed entities and consequently they do not have published price quotations. The group has no significant commitments to its joint ventures and associates. 21 OTHER INVESTMENTS Equity securities, long-term loans, deposits and other long-term assets are financial assets. The Group does not have material derivative financial assets. The aforementioned financial assets are classified at initial recognition, and subsequently measured at amortised cost or fair value through profit and loss. These measurement categories are specified in the table below. The classification at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. The Group measures financial assets at amortised cost if both of the following conditions are met: ■ The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows. FUGRO ANNUAL REPORT incurred in bringing them to their existing location and condition. Net realisable value of inventories is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. In , EUR , thousand (: EUR , thousand) of inventories was recognised as an expense. 23 TRADE AND OTHER RECEIVABLES Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient when it is expected, at contract inception, that the period between when the Group transfers the promised goods or services and when the customers pays for this good or service is one year or less, are measured at the transaction price determined under IFRS . Other receivables are recognised initially at fair value plus any directly aributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the eective interest method less, any impairment losses. Unbilled revenue on (completed) projects represents the gross amount expected to be collected from customers for contract work performed to date (a contract asset). It is measured at costs incurred plus profits recognised to date less progress billings and recognised losses. Generally, unbilled revenue on (completed) projects is invoiced to customers in the period following the execution of work. Subsequently, trade receivables are paid by customers in accordance with their respective payment term. The contracts in progress for which this amount exceeds progress billings are presented as unbilled revenue on (completed) projects. The contracts in progress for which progress billing exceeds costs incurred plus profits recognised to date less progress billings and recognised losses are presented as advance instalments to work in progress. The Group applies the Expected Credit Loss (ECL) model. For trade receivables and unbilled revenue on (completed) contracts, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The Group does not have material trade receivables or unbilled revenue The Group considers a financial asset in default when contractual payments are days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements (insofar applicable) held by the Group. A financial asset is wrien o when there is no reasonable expectation of recovering the contractual cash flows. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. (EUR x ,) Measurement Category 2020 Equity securities Fair value through profit and loss , , Long-term loans Amortised cost , , Deposits Amortised cost , , Net defined benefit asset Present value , , Other long-term assets Nominal value , , Balance at 31 December , , Equity securities are investments in third party entities in whose activities the Group holds a non-controlling interest and has no control, joint control or significant influence. The Group received no dividends from its equity securities in (: nil). Long-term loans mainly comprise a loan due from Wavewalker B.V. for the carrying amount of EUR . million ( December : EUR . million). The loan has to be fully repaid before April . The net defined benefit asset comprises of a surplus on a UK pension plan as per December (refer to note Employee Benefits). Deposits pertain to the lease of two geotechnical vessels and other long-term deposits. 22 INVENTORIES Inventories are measured at the lower of cost and net realisable value. The cost of inventories is determined using the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs FUGRO ANNUAL REPORT (EUR x ,) Status Estimated total gross carrying amount at default Expected credit loss Expected credit loss rate % From 0 to 30 days Fully performing , . From 31 to 60 days Past due but not (materially) impaired , . From 61 to 90 days Past due but not (materially) impaired , . Over 90 days Past due and (materially) impaired , , . Retentions and special items , . Balance at 31 December , , (EUR x ,) 2020 Status Estimated total gross carrying amount at default Expected credit loss Expected credit loss rate % From 0 to 30 days Fully performing , . From 31 to 60 days Past due but not (materially) impaired , . From 61 to 90 days Past due but not (materially) impaired , . Over 90 days Past due and (materially) impaired , , . Retentions and special items , - - Balance at 31 December , , on (completed) contracts that contain a significant financing component. The Group has no significant lease arrangements in which it is a lessor. A trade receivable is wrien o when there is no reasonable expectation of recovering the contractual cash flows. (EUR x ,) 2020 Trade receivables , , Unbilled revenue on (completed) projects , , Prepayments , , VAT and other tax receivables , , Other receivables , , Balance at 31 December , , Trade receivables are shown net of impairment losses (see below) arising from identified doubtful receivables from customers as well as expected credit losses. Other receivables include short-term deposits and current portion of long-term receivables. Impairment losses Trade receivables were impaired taking into account the financial position of the debtors, the days outstanding, the expected outcome of negotiations and legal proceedings against debtors and probabilities of default. Unbilled revenue on (completed) projects does not include (material) impairment losses which is similar to previous year. The ageing of trade receivables and unbilled revenue on (completed) contracts at the reporting date is as follows: FUGRO ANNUAL REPORT (EUR x ,) 2020 Cash and cash equivalents , , Bank overdra (,) (,) Cash and cash equivalents in the consolidated statement of cash flows , , The cash and cash equivalents disclosed above and in the consolidated statement of cash flows include EUR . million ( December : EUR . million) of Angolan kwanza’s and EUR . million ( December : EUR . million) of Nigerian Naira where exchange controls apply (these balances are considered trapped cash). These trapped cash balances are not available for general use by other entities within the group. 25 TOTAL EQUITY Share capital is classified as equity. The term ‘shares’ as used in the financial statements pertain to ordinary shares and preference shares of Fugro N.V. Ordinary shares of FugroN.V. are listed and traded on the Euronext Amsterdam stock exchange. The surplus paid by shareholders above the nominal value of shares is recognised as share premium. Incremental costs directly aributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax eects. Fugro purchases and sells own shares in relation to the long term incentive plans. Own shares which have been repurchased are held in treasury and are deducted from and presented within equity in a separate ‘reserve for own shares’ on a cost basis. Own shares are recorded at cost, representing the market price paid on the acquisition date. When reissued under the long term incentive plan, shares are removed from the reserve for own shares on a first-in, first-out (FIFO) basis. The dierence between the cost and the cash received is recorded in retained earnings. Dividends are recognised as a liability in the period in which they are declared. Quantitative and qualitative information about amounts arising from expected credit losses The movement in the allowance for impairment in respect of trade receivables and unbilled revenue on (completed) contracts during the year was as follows: (EUR x ,) 2020 Balance at 1 January , , Acquisitions through business combinations - Impairment loss recognised , , Impairment loss reversed (,) (,) Write-o (,) (,) Eect of movements in exchange rates , (,) Balance at 31 December , , The allowance account with respect to trade receivables and unbilled revenue on (completed) contracts are used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point the amount considered irrecoverable is wrien o directly against the allowance. The changes in the aforementioned balances contributed to changes in the loss allowance. Consistent with prior year, there are no material trade receivables which were wrien o during and which are still subject to enforcement activity. 24 CASH AND CASH EQUIVALENTS In the consolidated statement of cash flows, cash and cash equivalents include cash in hand and call deposits. Bank overdras that are repayable on demand and which form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows. Bank overdras are shown within the current liabilities in the consolidated statement of financial position. FUGRO ANNUAL REPORT The issued and authorised shares are as follows: (Numbers of shares) Ordinary shares Preference shares 2020 2020 In issue at 1 January ,, ,, - - Issued for cash - ,, - - In issue at 31 December – fully paid ,, ,, - - Authorised at 31 December – nominal value ordinary shares EUR 0.05 and nominal value preference shares EUR 0.05 in 2021 (EUR 0.10 and EUR 0.05 in 2020 respectively) ,, ,, ,, ,, Consistent with last year, there are no shares issued but not fully paid. On December , the authorised share capital amounts to EUR million (: EUR million), consisting of ordinary shares and various types of preference shares. On December , the issued share capital amounted to EUR . million (: . million). Ordinary shares Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the company. All rights aached to the company’s shares held by the Group are suspended until those shares are transferred to a party outside the Group. 25.1 Share capital and share premium On February , the articles of association of Fugro were amended, consisting of the reduction of the nominal value of the issued ordinary shares from EUR . to EUR .. This reduced the total issued share capital from EUR ,,. to EUR ,,.. As a result of this reduction of issued share capital, the amount of EUR ,,. was added to the share premium reserve. The authorised share capital was also reduced by this amendment from EUR ,, to EUR ,,, by reducing the authorised number of ordinary shares from ,, to ,,. On May , the articles of association of Fugro were amended by increasing the number of ordinary and preference shares. As a result, the authorised share capital increased from EUR ,, to EUR ,,, by increasing the authorised number of ordinary shares from ,, to ,,. On May , the listing of ,, ordinary shares on Euronext Amsterdam took place in the context of the termination of the certification of ,, ordinary shares held by the Fugro Foundation Trust Oce. As a result ,, certificates listed and admied to trading on Euronext Amsterdam ceased to exist and the ordinary shares underlying the certificates were delivered by the Fugro Foundation Trust Oce to the holders of the certificates. The listing also comprised , ordinary shares held by persons other than the Fugro Foundation Trust Oce. These persons held their ordinary shares directly on the company’s shareholders’ register. All of the ,, ordinary shares were listed and admied to trading on Euronext Amsterdam. The company did not receive any proceeds from the listing and the ownership or voting interest in the company was not diluted. The conversion was the final step of the refinancing, abolishing the certification of the Fugro ordinary shares followed by the dissolution of the Fugro Foundation Trust Oce in February . FUGRO ANNUAL REPORT 25.4 Subordinated unsecured convertible bonds-equity component The equity component of the subordinated unsecured convertible bonds as presented in the consolidated statement of changes in equity is summarised as follows: (EUR x ,) Equity component Total equity component of convertible bonds as at 1 January 2020 , Allocation of repurchase price of convertible bonds to equity component () Transfer of remaining equity component of convertible bonds to retained earnings upon repurchase of bonds (,) Change in tax rate () Total equity component of convertible bonds as at 31 December 2020 , Transfer of remaining equity component of convertible bonds to retained earnings upon redemption of bonds (,) Change in tax rate - Total equity component of convertible bonds as at 31 December 2021 , The portion of the equity component pertaining to the convertible bonds redeemed was transferred to retained earnings. Refer to note . Subordinated unsecured convertible bonds for further information. 25.5 Unappropriated result No dividend is proposed to be paid-out for . Refer to note Financial risk management for dividend restrictions. Preference shares No preference shares have been issued. The call option agreements that provided Foundation Continuity Fugro with a right to exercise a call option on preference shares in relation to Fugro’s Curacao based subsidiaries had been terminated in . Following the completion of the refinancing in and in connection with the removal of protective measures, the Foundation Continuity Fugro was dissolved on February . 25.2 Translation reserve The translation reserve comprises all foreign currency dierences arising from the translation of the financial statements of foreign operations. The translation reserve also includes the translation of liabilities that hedge the company’s net investment in a foreign subsidiary (prior to the discontinuance of net investment hedging in December as explained in note ). 25.3 Reserve for own shares Fugro has not purchased own shares to cover its long term incentive plan in (: nil). In , , shares were used (: , pre-share consolidation). As per December , Fugro holds ,, own shares (: ,,) with respect to the long term incentive plan and subordinated unsecured convertible bonds. This was . of the issued capital (: .). FUGRO ANNUAL REPORT (Number of shares) 2020 Outstanding number of ordinary shares at 1 January ,, ,, Eect of delivery of treasury shares for share-based payment plans , - Eect of shares issued during the year - ,, Weighted average number of ordinary shares at 31 December (basic) ,, ,, 26.2 Diluted EPS The calculation of diluted EPS has been based on the following profit (loss) aributable to ordinary shareholders and weighted average number of ordinary shares outstanding aer adjustment for the eects of dilutive potential ordinary shares. 2020 (EUR x ,) Continuing operations Discon- tinued operations Total Continuing operations Discon- tinued operations Total Profit (loss) aributable to ordinary shareholders (basic) , , , (,) (,) (,) Eects of dilutive potential ordinary shares - - - - - - Profit (loss) aributable to ordinary shareholders (diluted) , , , (,) (,) (,) 26 BASIC AND DILUTED EARNINGS PER SHARE Basic EPS is calculated by dividing the profit or loss for the year aributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit or loss aributable to ordinary equity holders of the parent adjusted for the eect of dilutive potential ordinary shares by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Fugro considers the following four categories of potential ordinary shares: convertible bonds, share options, restricted share units and performance shares. 26.1 Basic EPS The calculation of basic EPS has been based on the following profit (loss) aributable to ordinary shareholders and weighted average number of ordinary shares outstanding: (EUR x ,) 2020 Continuing operations Discon- tinued operations Total Continuing operations Discon- tinued operations Total Net income (loss) aributable to equity holders of the parent (euro) , , , (,) (,) (,) Reconciling items numerator basic EPS - - - - - - Profit (loss) aributable to ordinary shareholders (basic) , , , (,) (,) (,) FUGRO ANNUAL REPORT and day-to-day business of Suhaimi. Therefore this subsidiary, with a significant non-controlling interest, is fully consolidated into these financial statements. The shareholders of Suhaimi have certain customary rights on certain key decisions, such as decisions on the declaration and payment of dividend and any significant change to the scope of the business. These rights are considered as protective in nature and normally go beyond the normal scope of business. Such decisions do not aect Fugro’s ability to control the activities of Suhaimi. Summarised balance sheet (EUR x ,) Suhaimi As at 31 December 2020 Current Assets , , Liabilities (,) (,) Total current net assets , , Non-current Assets , , Liabilities (,) (,) Total non-current net assets , , Net assets , , NCI percentage % % Carrying amount of NCI , , (Number of shares) 2020 Weighted average number of ordinary shares (basic) ,, ,, Eects of conversion of convertible bonds - - Eects of share options on issue - - Eects of restricted shares on issue , - Eects of performance shares on issue , - Weighted average number of ordinary shares at 31 December (diluted) ,, ,, The convertible bonds, the share options, restricted shares and performance share on issue, could have an impact on the weighted average number of (diluted) ordinary shares. For convertible bonds and share options, the conversion to ordinary shares would not decrease earnings per share or increase loss per share and as such they have not been treated as dilutive. To calculate the EPS for discontinued operations (note ), the weighted average of ordinary shares for both basic and diluted EPS is per the tables above. 27 NON-CONTROLLING INTEREST The total non-controlling interest as at December is EUR , thousand (surplus), of which EUR , thousand (surplus) is aributable to Fugro-Suhaimi Ltd. The non-controlling interest of other subsidiaries is insignificant. During the course of the year EUR , thousand (: EUR , thousand) was paid as dividends to non-controlling interest shareholders, also mainly related to Fugro-Suhaimi Ltd (Suhaimi). Summarised financial information on subsidiaries with material non-controlling interests Set out below is the summarised financial information of Fugro-Suhaimi Ltd (Suhaimi) that has a material non-controlling interest to the Group. The non-controlling interest in Fugro-Suhaimi is , which also represents of the companies’ voting rights in the general meeting of shareholders. Fugro controls the operations and management of Suhaimi as it directs the relevant revenue generating activities of this company. Fugro also determines the strategy, policies FUGRO ANNUAL REPORT 28 FINANCIAL LIABILITIES The Group’s financial liabilities consist of loans and borrowings, lease liabilities, bank overdras, trade and other payables, other taxes and social security contributions. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly aributable transaction costs. Aer initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the eective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised. The eective interest rate amortisation is included as finance costs in the statement of comprehensive income. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the eective interest rate. The fair value of the liability portion of a convertible bond is initially determined using a market interest rate for an equivalent non-convertible bond at the issue date. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion, redemption, or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders’ equity (in a separate category ‘equity component of convertible bonds’), net of income tax eects and is not subsequently remeasured. This remaining equity component is transferred to retained earnings upon repurchase or repayment of convertible bonds. The Group has not designated any financial liability as at fair value through profit or loss. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially dierent terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The dierence in the respective carrying amounts is recognised in the statement of profit or loss. Financial assets and liabilities are oset and the net amount presented in the statement of financial position when, and only when, the Group has a currently enforceable legal right to oset the recognised amounts and intends either to sele on a net basis or to realise the asset and sele the liability simultaneously. Summarised income statement (EUR x ,) Suhaimi For period ended 31 December 2020 Revenue , , Profit/(loss) before income tax , , Income tax (expense)/income - - Post-tax profit/(loss) from continuing operations , , Other comprehensive income - - Total comprehensive income/(loss) , , Total comprehensive income/(loss) allocated to non-controlling interests , , Dividends paid to non-controlling interests , , Summarised cash flows (EUR x ,) Suhaimi For period ended 31 December 2020 Net cash generated from operating activities , , Net cash used in investing activities (,) (,) Net cash used in financing activities (,) (,) Net increase in cash and cash equivalents and bank overdras (,) Cash, cash equivalents and bank overdras at beginning of year , , Exchange gains/(losses) on cash and cash equivalents () Cash and cash equivalents and bank overdras at end of year , , The amounts above are before intercompany eliminations. FUGRO ANNUAL REPORT 28.1 Loans and borrowings (EUR x ,) 2020 Super senior revolving credit facility of EUR 250 million , - Super senior term loan of EUR 200 million , , Subordinated unsecured convertible bonds of EUR 190,000 (issued in 2016) - , Subordinated unsecured convertible bonds of EUR 100,000 (issued in 2017) , , Other loans and long-term borrowings , , Subtotal , , Less: current portion of loans and borrowings , , Balance at 31 December , , Terms and debt repayment schedule Terms and conditions of outstanding loans were as follows: (EUR x ,) 2020 Currency Nominal interest rate Year of maturity Face value Carrying value Face value Carrying value Super senior RCF of EUR 250 million EUR EURIBOR +.% - .% , , - - Super senior term loan of EUR 200 million EUR EURIBOR + .% – .% , , , , Subordinated unsecured convertible bonds of EUR 190 million (issued 2016) EUR .% - - , , Subordinated unsecured convertible bonds of EUR 100 million (issued 2017) EUR .% , , , , Other long-term loans Variable .% - .% - , , , , Balance at 31 December , , , , FUGRO ANNUAL REPORT Guarantees (liens) related to the super senior revolving credit facility and super senior term loan are EUR million (the drawn amount) as of December (: EUR million drawn amount). Under certain circumstances, the lenders may require mandatory prepayment of all amounts outstanding under the super senior RCF and the super senior term loan. Such circumstances include, amongst others, a change of control. In addition, the net proceeds of a sale of substantially all of the assets of the Group, the sale of Seabed Geosolutions or other asset dispositions (less any reasonable expenses and taxes related to such disposals) and insurance proceeds (subject to certain exceptions) are to be applied towards mandatory prepayment of the super senior term loan and super senior RCF. Consequently, the sale of assets and the related business of Seabed Geosolutions triggered a prepayment of the term loan of EUR million on July . Freely available cash of the Group should be used to prepay amounts outstanding under the super senior RCF or ancillary facilities if it exceeds EUR ,, at the end of a financial quarter. Capital expenditures of the Group are restricted until the super senior term loan has been repaid. As long as amounts under the super senior term loan are outstanding, the capital expenditure of the Group may not exceed an amount equal to the forecasted capital expenditure plus in any financial year. Dividend payments are restricted. Until mid- no dividends will be paid. Aer that date, dividends may only be paid if net leverage is equal to or less than .:. Covenants apply, amongst others, regarding the solvency ratio, net leverage and interest coverage. 28.2 Super senior RCF As at December , EUR . million under the super senior RCF was drawn (: nil). The super senior RCF represents a three year facility (of which two years remain at December ) subject to a one year extension option (all lenders’ consent). The company shall apply amounts borrowed under the super senior RCF towards general corporate and working capital purposes. This includes acquisitions permied under the SFA. In addition, amounts borrowed may be applied to repayment of the remaining amounts outstanding under the subordinated unsecured convertible bonds maturing in in connection with the holder put option. The initial interest is EURIBOR +. Senior Facility Agreement The super senior RCF and super senior term loan are part of a Senior Facility Agreement (SFA). The SFA was arranged by ING, Rabobank, ABN AMRO, HSBC, Barclays, Credit Suisse and BNP Paribas. The super senior RCF and super senior term loan rank pari passu with each other and the sale-and-leaseback facilities for two geotechnical vessels, bilateral guarantee facilities and (if applicable) hedge liabilities. The super senior RCF and super senior term loan are secured by a comprehensive security package that is shared with lenders of certain sale-and-leaseback facilities, certain bilateral guarantee facility providers and (if applicable) hedge counterparties. The security package is summarised as follows. Fugro N.V. and each of its subsidiaries that is a guarantor under the SFA guaranteed the obligations of each of the other subsidiaries under the SFA. In addition, certain Dutch and Curacao subsidiaries act as guarantor for the SFA and provided security over its bank accounts, movable assets, intellectual property rights and all its receivables (including but not limited to insurance receivables and intercompany receivables). One of these Dutch subsidiaries has also granted a mortgage over the owned buildings in Leidschendam and Nootdorp. The total carrying amount of the collateral as of December is as follows: Pledged assets (collateral) (EUR x ,) Carrying amount 31 December 2021 Carrying amount 31 December 2020 Property, plant and equipment , , Intangible assets , , Investments in equity-accounted investees , , Other investments , , Deferred tax assets , , Non-current assets , , Inventories , , Trade and other receivables , , Cash and cash equivalents , , Current assets , , FUGRO ANNUAL REPORT As at December , the carrying amount of the EUR million subordinated unsecured convertible bonds due amounts to EUR . million ( December : . million) with an eective interest expense (at .) of EUR . million in (: EUR . million). A EUR . million coupon of . has been paid in (: . million). The conversion price is EUR .. Unless previously redeemed, converted or purchased and cancelled, these bonds will be redeemed at their principal amount on or around November . Upon exercise of their conversion rights, these bonds will be convertible into ordinary shares at a conversion rate of ,. for each bond held, representing ordinary shares in the capital of Fugro. The initial conversion price was set at EUR .. The ordinary shares underlying the bonds corresponded to approximately . of the company’s issued share capital. Fugro has the option to convert all but not some of these outstanding bonds into ordinary shares at the then prevailing conversion price at any time since November , if the value of the ordinary shares underlying a bond exceeds EUR thousand for a specified period of time. Holders of the bonds have the option to force redemption of the principal amount plus interest (in cash) by Fugro on November or in the event of a change in control. Fugro has an early redemption option (clean-up call) if or less of the aggregate principal amount of the bonds remains outstanding. Fugro has an option to redeem all, but not some of the bonds in the event of certain changes in tax law. As a result of the aforementioned cash redemption option at the discretion of the bond holders, Fugro does not have an unconditional right to defer selement for at least twelve months aer the reporting period. Accordingly, the convertible bonds are presented as current liability as at December . The Group considers the bonds as a compound financial instrument containing a debt host (including closely related embedded liability derivatives) and an embedded equity derivative (conversion option). The subordinated convertible bonds are publicity traded on the Frankfurt stock exchange. The conversion price of the bonds is subject to standard anti-dilution adjustments such as in the event of share consolidations, share splits, capital distributions, rights issues and bonus issues and in the event of a change in control, a merger, or other events. and depending on leverage can vary between EURIBOR+. and EURIBOR+. as shown below: Leverage Margin >.: . ≤.: but >.: . ≤.: but >.: . ≤.: but >.: . ≤.: . The transaction costs of the super senior RCF of EUR . million are recorded as non-current assets and are amortised over the term. The current year amortisation amounts to EUR . million. 28.3 Term loan As at December , the carrying amount of the super senior term loan amounts to . million with an eective interest expense (at .) of EUR . million during (: carrying amount EUR . million and interest expense EUR . million). The super senior term loan has a three year term (of which two years remain as of December ) and an initial coupon of EURIBOR+. and will gradually increase in bi-annual steps in the second and third year towards EURIBOR+.. The transaction costs were included in the carrying amount of the super senior term loan. The sale of assets and the related business of Seabed Geosolutions triggered a partial prepayment of the term loan on July . The amount prepaid was EUR million, i.e. sales proceeds less transaction costs. 28.4 Subordinated unsecured convertible bonds Fugro repaid the remaining outstanding balance of the EUR million subordinated unsecured convertible bonds on the due date ( October ). The final amount repaid on this due date was EUR . million (principal and accrued interest). The total portion of the equity component pertaining to the convertible bonds repaid on October was transferred to retained earnings for an amount of EUR . million. FUGRO ANNUAL REPORT 28.5 Changes in liabilities arising from financing activities The table below sets out an analysis of the changes in liabilities arising from financing activities. (EUR x ,) Subordinated unsecured convertible bonds EUR 190,000 Subordinated unsecured convertible bonds EUR 100,000 Super senior RCF Super senior term loan Lease Liabilities Transaction with discontinued operations Other long- term loans Total Balance at 1 January 2021 , , - , , - , , Cash flow from financing activities provided by (used for) continued operations (,) - , (,) (,) , () (,) Cash flow from financing activities provided by (used for) discontinued operations - - - - - (,) - (,) Eect of movement in foreign exchange rates - - - - , - , Other changes * , , , , - () , Balance at 31 December 2021 - , , , , - , , * Other changes include interest payments, accrued interest, amortisation, and modification of leases. The cash flow from financing activities of EUR . million in represents the total net cash from financing activities in the consolidated statement of cash flows of EUR . million excluding dividends paid of EUR . million. The cash flow from financing activities provided by the discontinued operations of EUR . million excludes any other cash flow from financing activities used for discontinued operations. Financing cash flows between Fugro and Seabed Geosolutions have been eliminated against continuing operations. FUGRO ANNUAL REPORT In , the analysis of the changes in liabilities arising from financing activities was as follows: (EUR x ,) Incumbent RCF EUR 575 million Subordinated unsecured convertible bonds EUR 190,000 Subordinated unsecured convertible bonds EUR 100,000 Super senior RCF Super senior term loan Lease Liabilities Transaction with discontinued operations Other long-term loans Total Balance at 1 January , , , - - , - , Cash flow from financing activities provided by (used for) continued operations (,) (,) - - - (,) (,) , (,) Cash flow from financing activities provided by (used for) discontinued operations - - - - - - , - , Set-o drawn down term loan with incumbent RCF (,) - - - , - - - - Eect of movement in foreign exchange rates (,) - - - - (,) - () (,) Other changes * , , - , - , Balance at 31 December - , , - , , - , , * Other changes include interest payments, accrued interest, amortisation, and modification of leases. 28.6 Covenant requirements The senior facility agreement contains various armative and negative covenants and events of default. Fugro’s right to defer selement of non-current liabilities for at least twelve months aer the reporting period is subject to compliance with specified conditions within twelve months aer the reporting period. The super senior RCF, the super senior term loan and lease liability of the two geotechnical vessels shall become immediately due and payable in the event that a third party gains control over Fugro. In the event that the company breaches any of the covenants or an event of default becomes applicable, the lenders may require Fugro to immediately and fully prepay the super senior RCF and super senior term loan. Events of default include non-payment, non-compliance, misrepresentation, cessation of business, cross-default, insolvency events, creditors’ process, enforcement of security, illegality, material adverse change – including any event or circumstance which in the majority lenders’ reasonable opinion has a material adverse eect on the ability to perform or otherwise comply with the payment obligations under the agreements or on the business, operations, property, condition or prospects of the Group taken as a whole. 2020 Principal covenants Target Actual Headroom Target Actual Headroom Solvency ratio >=.% .% .% >=.% .% .% Net leverage =<.: . . =<.: . . Interest coverage >=.: . . >=.: . . Capital expenditure (EUR million) =< Forecasted capex+% . . =< Forecasted capex+% N/A N/A FUGRO ANNUAL REPORT 29 EMPLOYEE BENEFITS Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than twelve months aer the end of the period in which the employees render the service are discounted to their present value. Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The discount rate is the yield at the reporting date on AA credit-rated (high quality) corporate bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed by qualified independent actuaries using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realisable during the life of the plan, or on selement of the plan liabilities. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognised immediately in profit or loss. Employee contributions for which the amount is independent of the number of years of service are recognised as a reduction of the service costs in the period in which the related services are rendered. The covenants are defined as follows (all including the impact of IFRS ): ■ Solvency ratio: shareholders’ equity as a percentage of the balance sheet total. ■ Net leverage for purpose of covenant calculations: net debt divided by adjusted consolidated EBITDA for purpose of covenant calculations. The look-back period is twelve months. ■ Interest coverage: adjusted consolidated EBITDA for purpose of covenant calculations divided by consolidated interest expense. The look-back period is twelve months. ■ Capital expenditure: as long as amounts under the new super senior term loan are outstanding, the capital expenditure of the Group may not exceed an amount equal to the forecasted capital expenditure plus 20% in any financial year. In addition, dividend payments are restricted until mid-. Aer that date, dividends may only be paid if net leverage is equal to or less than .:. The covenant targets remain constant in the twelve months aer the reporting period and beyond until maturity. Fugro complied with the covenant requirements in the SFA as of December . Fugro expects to comply with its covenants in the twelve months aer the reporting period, with adequate headroom. 28.7 Other long-term loans The interest rate on mortgage loans and other long-term borrowings over one year amounts to . - . (: . - .). 28.8 Change of control provisions Upon a change of control, the various financiers may cancel their commitments and require Fugro to repay amounts borrowed under the super senior RCF, the super senior term loan and the unsecured subordinated convertible bonds. An amount of EUR . million was drawn from the bank facilities as at December ( December : EUR million). The sale and lease back arrangements for two vessels also contain certain change of control clauses. FUGRO ANNUAL REPORT ■ In the Netherlands, the Group provided a pension plan based on average salary. This plan qualified as a defined benefit scheme. The pension entitlements from this plan are insured with an insurance company that guarantees the accrued pension entitlements. Since 2018, this pension plan has been terminated and has been replaced by a new plan pension plan, qualified as a defined contribution scheme, that is applicable as of 2019. The accrued pension entitlements up to 2018 remained at the insurer and indexation is provided to these accrued pension entitlements for active participants. ■ In the United Kingdom (UK) the Group operates two defined benefit pension schemes. For Fugro Holdings (FH), the company operates a final salary defined benefit pension scheme. The scheme is an HMRC registered pension scheme and is subject to standard UK pensions and tax law. The Robertson Research International Group Pension Scheme (RRI) is a funded, defined benefit pension plan. The pension schemes have been closed in previous years for new participants, but include the on-going obligations to their members (both former and present employees). The pension schemes assets are held in separate Trustee-administered funds. The schemes includes indexation in line with RPI. The valuation of the RRI scheme resulted in a net defined benefit asset as per 31 December 2021. ■ In the United States of America (USA) the Group operates a 401K plan for its employees. The Group contributes towards the deposits of its employees in accordance with agreed rules and taking into account the regulations of the Internal Revenue Service (IRS), the US tax authority. This plan qualifies as a defined contribution plan. The defined benefit obligation and fair value of plan assets are specified as follows: (EUR x ,) 2021 RRI plan 2021 Other 2021 Total 2020 RRI plan 2020 Other 2020 Total Present value of funded obligations , , , , , , Fair value of plan assets (,) (,) (,) (,) (,) (,) Net defined benefit obligation (asset) (,) , () (,) , , When the benefits of a plan are changed or when a plan is curtailed, then resulting change in benefits that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the selement of a defined benefit plan when the selement occurs. Other long-term employee benefits The Group’s net obligation in respect of long-term employee benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any assets is deducted. At the reporting date, the discount rate is determined by reference to the yield on AA credit-rated corporate bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The actuarial calculations are performed using the projected unit credit method. Any actuarial gains or losses are recognised in profit or loss in the period in which they arise. (EUR x ,) 2020 Net defined benefit asset (,) (,) Total employee benefit asset (,) (,) Net defined benefit obligation , , Liability for long-service leave * , , Total employee benefit liabilities ** , , * The increase in is mainly due to a reclassification from current liabilities in connection with long-service leave balances. Comparative figures have not been re-presented, since the impact on the financial statements (EUR . million) was deemed immaterial. ** Included EUR , thousand for the disposal group held for sale in , which was divested in . The Group makes contributions to a number of pension plans, both defined benefit plans as well as defined contribution plans, that provide pension benefits for employees upon retirement in a number of countries. The retirement age is in line with the provisions in the dierent plans. The most important plans relate to plans in the Netherlands, United Kingdom and the United States. Details of these plans are as follows: FUGRO ANNUAL REPORT The movements in the present value of the funded obligations and fair value of plan assets consist of the following: 2020 (EUR x ,) Obligation Plan assets Net liability (asset) Obligation Plan assets Net liability (asset) Balance at 1 January , (,) , , (,) , Plan amendments and curtailments (past service cost) - - - () - () Interest expense/(income) , (,) , (,) Included in profit or loss (personnel expense) , (,) , (,) () Actuarial losses/(gains): (,) , (,) , (,) , ■ (Gain)/loss from change in demographic assumptions (,) - (,) (,) - (,) ■ (Gain)/loss from change in financial assumptions (,) , (,) , (,) , ■ Experience (gains)/losses , - , (,) - (,) Exchange rate dierences , (,) , (,) , (,) Included in other comprehensive income (,) (,) (,) , (,) , Paid by the employer - (,) (,) - (,) (,) Paid by plan participants - - - - - - Benefits paid by the plan (,) , - (,) , - Other (,) (,) (,) (,) (,) (,) Present value of the funded obligation at 31 December , (,) () , (,) , FUGRO ANNUAL REPORT The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: Impact on defined benefit obligation Change in assumption Increase in assumption Decrease in assumption Discount rate .% Decrease by .% Increase by .% Salary growth rate .% Increase by .% Decrease by .% Pension growth rate .% Increase by .% Decrease by .% Life expectancy year Increase by .% Decrease by .% The sensitivity analyses are based on a change in one assumption while holding all other assumptions constant, so that interdependencies between the assumptions are excluded. Risk exposure Through its defined benefit pension plans, the Group is exposed to various demographic and economic risks. Most of these risks come with the nature of a defined benefit plan and are therefore not country specific. The most significant risks relate to life expectancy, investment risk, interest rates and inflation. The laer plays a role in the assumed salary increase and especially for those group pension obligations which are linked to inflation, meaning higher inflation will lead to higher liabilities. The Group is actively managing risk related to its defined benefit plans to reduce these risks as much as possible. Specifically for inflation, in most cases caps on the level of inflationary increases are in place to protect the plan against extreme inflation. The majority of the plan’s assets are either unaected by (fixed interest bonds) or loosely correlated with (equities) inflation, meaning that an increase in inflation will also increase the deficit. Life expectancy risk is particularly significant in the UK plan, where inflationary increases result in higher sensitivity to changes in life expectancy. In the Netherlands this risk is limited as the insurer guarantees the payment of the accrued benefits. The following remeasurements were recognised directly in other comprehensive income: (EUR x ,) 2020 Cumulative amount at 1 January (,) (,) Remeasurements: , (,) ■ Recognised during the year , (,) ■ Eect of movement in exchange rates (,) , Cumulative amount at 31 December (,) (,) Refer to note with respect to the income tax impact of the actuarial gain of EUR ,thousand (: EUR , thousand loss). Actuarial assumptions Principal actuarial assumptions at the reporting date (expressed as a range of weighted averages): 2020 UK Netherlands UK Netherlands Discount rate at 31 December .% .% .% .% Future salary increases .% .% .% .% Future pension increases .% .% .% .% The financial eects of dierences between the actuarial assumptions and actuals for the pension liability and plan assets are included in the remeasurements. For the Netherlands, life expectancy assumptions are derived from the Projections Life Table AG from the Royal Dutch Actuarial Association. The mortality table is adjusted to tailor the mortality figures to the insured population by applying the experience factors from the ‘Centrum voor Verzekeringsstatistiek’: the so-called ES-P factors. For the United Kingdom, the mortality basis adopted is the standard table SPxA (Robertson Plan: of SPxA) with future improvements in line with the Continuous Mortality Investigation’s projection model with a long term improvement rate of . per annum for all members. FUGRO ANNUAL REPORT In the UK, the Trustees set the Scheme’s investment strategy, in consultation with the employer. The Robertson and UK Holdings plan include return seeking assets and bonds. The Robertson plan also includes matching assets to cover the pensioner liabilities. The employer is ultimately responsible for funding the accrued pensions and the pension increases. Apart from the Group wide risks, local risks are considered to be limited for the Netherlands as in the Netherlands the company terminated its defined benefit scheme in and the accrued pension entitlements were insured, limiting the risk for the Group to the indexation of the accrued entitlements. The insurance company guarantees all accrued entitlements. The insurance contract includes an account in which of the investments are used to match the liability on a funding basis and of the investments are used to invest in equity. The insurance company ultimately decides on investment policies and governance, since they run the downside risk. Major categories of plan assets Plan assets are comprised as follows: (EUR x ,) 2020 Quoted Unquoted Total % Quoted Unquoted Total % Equity instruments , - , % , - , % Debt instruments , - , % , - , % Government , - , % , - , % Corporate bonds (Investment grade) , - , % , - , % Corporate bonds (Non-investment grade) , - , % , - , % Insurance policies - , , % - , , % Property , - , % , - , % Cash and cash equivalents , - , , - , % Balance at 31 December , , , , , , % The expected contributions amount to EUR . million (: EUR . million). The weighted average duration of the defined benefit obligation is years (: years). As at December Netherlands United Kingdom Total weighted Duration of plan FUGRO ANNUAL REPORT A provision for restructuring cost is recognised when the Group (i) has a detailed formal plan for the restructuring identifying at least the business or part of a business concerned, the principal locations aected, the location, function, and approximate number of employees who will be compensated for terminating their services, the expenditures that will be undertaken, and when the plan will be implemented; and (ii) has raised a valid expectation in those aected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those aected by it. Asset retirement obligations are recognised in connection with lease contracts (vessels and property). These obligations are measured at the present value of expected costs to sele the obligation using estimated cash flows and are recognised as part of the costs of the relevant asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the asset retirement obligation. The unwinding of the discount is expensed as incurred and recognised in the statement of comprehensive income as a finance expense. 30 PROVISIONS A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to sele the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount is recognised as finance expenses. A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of performing under the contract. The expected net cost of performing under the contract is based on cash flow calculations discounted using a rate that reflects current market assessments of the time value of money. Before a provision is established, the Group recognises any impairment loss on the assets associated with and/or dedicated to that contract. (EUR x ,) 2020 Onerous contracts Legal claims Restructuring Asset retirement obligations Total Onerous contracts Legal claims Restructuring Asset retirement obligations Total Balance at 1 January , , , , , , , , , Provisions made during the year , , , - , , , Provisions used during the year () (,) (,) () (,) - (,) (,) () (,) Provisions reversed during the year () (,) () - (,) - () () - () Unwinding of discount - - - - - - Transfer from held for sale - - - , - - , Reclassification - , - - , - - - - - Eect of movements in foreign exchange rates () () () () () Balance at 31 December , , , , , , , , , , Non-current - , , , - , - , , Current , , , - , , , , - , FUGRO ANNUAL REPORT 32 FINANCIAL RISK MANAGEMENT 32.1 Overview The company’s risk management policy includes the long-term sustainable management of its business activities and where possible, the mitigation of the associated business risks. Based on the nature and relative significance of the risks related to the Group’s wide diversity of markets, clients and regions and its broad portfolio of activities the risks have been quantified to the extent possible. The Group has exposure to the following risks from its use of financial instruments ■ Credit risk ■ Liquidity risk ■ Market risk This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. This note presents information on a consolidated basis including both continued and discontinued operations. The Board of Management has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their role and obligations. The audit commiee oversees how management monitors compliance with the group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group. The audit commiee is assisted in its oversight role by internal audit. Both regular and ad hoc reviews of risk management controls and procedures are performed, the results of which are reported Fugro has accounted for certain tax indemnities and warranties in respect of the sale of the majority of the Geoscience business to CGG in for liabilities arising from tax exposures. This tax indemnity and warranty amounts to EUR . million as at December ( December : EUR . million). 31 TRADE AND OTHER PAYABLES Trade and other payables represent liabilities for services and goods provided to the group prior to the end of financial year which are unpaid. Trade and other payables are recognised initially at fair value net of any directly aributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the eective interest rate method. The contracts in progress for which progress billing exceeds costs incurred plus profits recognised to date less progress billings and recognised losses are presented as advance instalments to work in progress. (EUR x ,) 2020 Trade payables , , Advance instalments to work in progress , , Accrued expenses , , Employee related accruals , , Other liabilities , , Balance at 31 December , , Advance instalments to work in progress primarily represent advances received from customers for which revenue is recognised as services are performed to customers. From the advance instalments to work in progress, an amount of EUR , thousand has been recognised as revenue from continuing operations that was included in the closing balance as at December (: EUR , thousand as restated). Accrued expenses primarily represent project cost accruals for goods and services received but which are yet to be invoiced. FUGRO ANNUAL REPORT directly to the Board of Management. A summary of important observations is reported to the audit commiee. 32.2 Credit risk Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group’s receivables from customers and unbilled revenue on (completed) contracts. The Group considers the probability of default upon initial recognition of an asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. The Group applies the low credit risk simplification to long-term loans, deposits and other long-term receivables. The Board of Management reviews the outstanding trade receivables and unbilled revenue on (completed) contracts on an ongoing basis. Local management is requested to take additional precaution in working with certain clients. The Group uses a provision matrix to calculate ECLs for trade receivables and unbilled revenue on (completed) contracts. Generally, trade receivables are fully impaired if past due more than . year and are not subject to enforcement activity. The provision rates are based on days past due for customers. The Group considered various customer segments that have similar loss paerns (i.e., by geography, service/product type, industry, customer type and rating, and coverage from credit insurance where applicable). The ageing is based on invoice due date. The provision matrix is initially based on the Group’s historical observed default rates. The Group calibrates the matrix to adjust the historical credit loss experience with forward-looking information considering current market conditions at the reporting date, such as Covid-. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is an estimate. The sensitivity of the amount of ECLs to changes in circumstances and of forecast economic conditions is limited. The Group’s historical credit loss experience and forecast of economic conditions may not be representative of customer’s actual default in the future. The Group does not provide detailed information on (a) the estimation techniques and inputs used, (b) how the forecast economic conditions have been incorporated in the determination of ECL and (c) changes in estimation techniques and inputs used, because the impact is not significant. Some of the Group’s orders are awarded on the basis of long-term preferred supplier agreements. In the course of a year Fugro oen carries out multiple projects for the same client. Fugro typically has no single client that generates more than of its revenue in the year. On occasion one client may generate more than , which can happen in case of exceptionally large contracts where most of the revenue falls in the accounting year. Having a large number of clients and short project time spans mitigates Fugro’s credit risk as the individual amounts receivable from the same client are limited. New customers are analysed individually for creditworthiness before payment and delivery terms and conditions are oered. The Group’s review may include external ratings, where available, and in some cases bank references. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis or have to provide a bank guarantee. The majority of the Group’s clients has done business with the Group for many years and significant losses have only occurred incidentally in prior years. Clients that are known to have negative credit characteristics are individually monitored by the group controllers. If clients fail to pay timely the Group re-assesses the creditworthiness and stronger debt collection is started if deemed necessary. The Group closely monitors certain clients that need extra aention before a contract is closed. The Group’s carrying amount of cash and cash equivalents represents its maximum credit exposure on these assets. The cash and cash equivalents are held with bank and financial institution counterparties, which have ‘investment grade’ credit ratings. FUGRO ANNUAL REPORT As at December , Fugro holds trapped cash balances in Angola and Nigeria (as quantified in note Cash and cash equivalents), where exchange controls apply. The company expects that these exchange controls will become less when the oil and gas market conditions are expected to improve and when Angola and Nigeria will have increased inflow of USD in relation to their oil business. In addition, several actions have been explored to further lower this amount. The Group monitors cash flow on a regular basis and operates with a global cash pool. Consolidated cash flow information, including a projection for the year, is reported on a monthly basis to the Board of Management, ensuring that the Group has sucient cash on demand (or available lines of credit) to meet expected near term operational expenditures. Cash flow projections exclude the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Group maintains the following lines of credit: ■ A super senior RCF totalling EUR 250 million. At 31 December 2021, EUR 12.5 million has been drawn (2020: nil). These bank facilities have been secured until December 2023. ■ A super senior term loan facility totalling EUR 200 million. At 31 December 2021, the facility has been drawn with EUR 188 million (2020: fully drawn). These bank facilities have been secured until December 2023. ■ A variety of unsecured overdra facilities in various currencies totalling around EUR 54million of which EUR 1.8 million have been drawn at 31 December 2021 (31 December 2020: EUR 111 million with EUR 2.3 million drawn). The amount of such facilities, to the extent not otherwise permied under the SFA, that the Group may have outstanding is limited to EUR 15,000,000 in aggregate together with any other financial indebtedness of the Group that is not otherwise permied under the SFA. Credit risk exposure Carrying amount (EUR x ,) 2020 Long-term loans , , Deposits , , Other long-term receivables , , Unbilled revenue on (completed) projects , , Trade receivables , , Other receivables (excluding prepayments) , , Cash and cash equivalents , , Balance at 31 December , , The maximum exposure to credit risk at the reporting date is the carrying amount of each class of financial assets mentioned above. The group holds no collateral as security on the long-term loans, deposits, other long-term receivables, trade and other receivables and unbilled revenue on (completed) contracts. As such, the Group does not have financial assets for which no loss allowance is recognised because of collateral. The maximum exposure for trade receivables and unbilled revenue on (completed) contracts at the reporting date by geographic region is disclosed in the segment reporting note and equals the carrying amount. Cash and cash equivalents are held with large well known banks with adequate credit ratings only. 32.3 Liquidity risk Liquidity risk is the risk that the Group will encounter diculty in meeting the obligations associated with its financial liabilities that are seled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sucient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The global cash pool makes it possible for the company to use the cash surplus within the group to reduce the overdras at its main uncommied facilities. FUGRO ANNUAL REPORT The following are the contractual maturities of financial liabilities, including interest payments: (EUR x ,) Carrying amount Contractual cash flows 6 months or less 6 – 12 months 1 – 2 years 2 – 5 years More than 5 years Super senior revolving credit facility in EUR 250 million , , , - - - - Super senior term loan EUR 200 million , , , , , - - Subordinated unsecured convertible bonds in EUR 100,000 , , , , - - - Lease liabilities , , , , , , , Other loans and long-term borrowings , , , - - - - Trade and other payables , , , - - - - Bank overdra , , , - - - - Balance at 31 December , , , , , , , The interest included in the above table is based on the current amounts borrowed with current interest rates against the current exchange rate (if applicable). No assumptions are included for possible future changes in borrowings or interest payments. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly dierent amounts. FUGRO ANNUAL REPORT currency, even if the revenues arise from a dierent transaction than that in which the costs are incurred. As a result, only the unmatched amounts are subject to currency risk. To mitigate the impact of currency exchange rate fluctuations, the Group continually assesses the exposure to currency risks and if deemed necessary a portion of those risks is hedged by using derivative financial instruments. The principal derivative financial instruments used to cover foreign currency exposure are forward foreign currency exchange contracts. As of December , there are no material forward foreign currency exchange contracts outstanding (consistent with prior year). Interest on borrowings is denominated in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Group, primarily Euro, US dollar and British pound. This provides an economic hedge without derivatives being entered into and therefore hedge accounting is not applied in these circumstances. The Group is sensitive to translation dierences resulting from translation of its operations in non-Euro currencies to Euros. (EUR x ,) 2020 Carrying amount Contractual cash flows 6 months or less 6 – 12 months 1 – 2 years 2 – 5 years More than 5 years Super senior revolving credit facility in EUR 250 million - - - - - - - Super senior term loan EUR 200 million , , , , , - - Subordinated unsecured convertible bonds in EUR 190,000 , , , , - - - Subordinated unsecured convertible bonds in EUR 100,000 , , , , , , - Lease liabilities , , , , , , , Other loans and long-term borrowings , , , , Trade and other payables , , , - - - - Bank overdra , , , - - - - Balance at 31 December , , , , , , , Restated to include the finance lease erroneously not included in the prior year in the total contractual undiscounted cash flows. There is no impact on the primary statements. 32.4 Market risk Market risk includes changes in market prices, such as foreign exchange rates, interest rates and equity prices which will aect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. About ( for continuing operations) of the Group’s activities relate to the oil and gas industry. 32.4.1 Currency risk The global nature of the business of the Group exposes the operations and reported financial results and cash flows to the risks arising from fluctuations in exchange rates. The Group’s business is exposed to currency risk whenever it has revenues in a currency that is dierent from the currency in which it incurs the costs of generating those revenues. Cash inflows and outflows are oset if they are denominated in the same currency. This means that revenue generated in a particular currency balance out costs in the same FUGRO ANNUAL REPORT 32.4.2 Interest rate risk The Group’s liabilities bear both fixed and variable interests. The Group’s objective is to limit the eect of interest rate changes on the results by matching long term investment with long term (fixed or variable interest) financing as much as possible. Profile At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was: (EUR x ,) Carrying amount 2020 Fixed rate instruments Financial assets , , Financial liabilities (,) (,) Variable rate instruments Financial assets , , Financial liabilities (,) (,) Balance at 31 December (,) (,) Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not aect profit or loss. Sensitivity analysis A percent strengthening of the Euro against the mentioned currencies at December would have increased (decreased) total year-end equity and profit or loss for the year by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the reporting date. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasted sales and purchases. Eect in EUR x , Total equity at year-end Profit or (loss) aer tax for the year 31 December 2021 USD (,) , GBP (,) () AUD (,) NOK (,) () HKD (,) () 31 December 2020 USD , , GBP (,) AUD (,) , NOK (,) (,) HKD (,) (,) A percent weakening of the Euro against the above currencies at December would have had the equal but opposite eect on the amounts shown above, on the basis that all other variables remain constant. The total eect for in the table above on profit or loss is positive, with a minimal impact. FUGRO ANNUAL REPORT for the period aributable to owners of the company, divided by the total equity aributable to owners of the company for the year, is . (positive) in (: . negative). From time to time Fugro purchases its own shares. These shares are used to cover the long term incentives granted by Fugro. Purchase and sale decisions are made on a specific transaction basis by the Board of Management. Fugro does not have a defined share buy-back plan. There were no changes to the Group’s approach to capital management during the year. 33 FAIR VALUES Determination of fair values The fair value of equity and debt securities is determined by reference to their quoted closing bid price at the reporting date, or if unquoted, determined using a valuation technique. Valuation techniques employed include market multiples and discounted cash flow analysis using expected future cash flows and a market-related discount rate. The fair value of receivables is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. The fair value of forward exchange contracts is based on quoted market prices, if available. Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date, taking into consideration the Group’s own non-performance risk. Cash flow sensitivity analysis for variable rate instruments A change of basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. At December , it is estimated that a general increase (decrease) of basis points in interest rates would decrease (increase) the Group’s profit before income tax by approximately: (EUR x ,) Equity and profit or loss 100 bp increase 100 bp decrease 31 December 2021 Variable rate instruments () Cash flow sensitivity (net) () 31 December 2020 Variable rate instruments () Cash flow sensitivity (net) () 32.6 Capital management TThe Board of Management’s policy is to maintain a strong capital base in order to retain investor, creditor and market confidence and to sustain future development of the business. Capital consists of share capital, retained earnings and non-controlling interests of the Group. Important key performance indicators for the Board of Management are free cash flow, the return on capital as well as the level of dividends. The Board strives for a dividend pay-out ratio of to of net result. Subsequent to the refinancing in dividend payments are restricted. Until no dividends will be paid. Aer that date, dividends may only be paid if net leverage is equal to or less than times (refer to . for the covenant requirements). Targeted solvency is set at, at least .. The targeted solvency includes the impact of IFRS . The solvency at the end of was . (: .). The Group’s objective is to achieve a healthy return on shareholders’ equity. The result for the year was positively impacted as a result of strong cost control. As a result, the return, calculated as profit (loss) FUGRO ANNUAL REPORT The fair values of the subordinated unsecured convertible bonds are based on discounted cash flows using a current borrowing rate. They are classified as level fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk. Interest rates used for determining fair value The Group uses the government yield curve as per the reporting date plus an adequate constant credit spread to discount financial instruments. The interest rates used are as follows: (EUR x ,) 2020 Loans and borrowings .% - % .% - .% Fair value hierarchy The dierent fair value hierarchy levels have been defined as follows: ■ Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. ■ Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). ■ Level 3: inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). Fugro has equity securities of EUR , thousand as at December ( December : , thousand), which are categorised within Level . Fugro’s valuation processes The group’s finance department performs the valuations of financial assets required for financial reporting purposes, including Level fair values. The valuations are directly reported to the Chief Financial Ocer. Changes in Level and Level values are analysed at each reporting date. Financial assets and liabilities The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows: (EUR x ,) 2020 Carrying amount Fair value Carrying amount Fair value Financial assets Trade receivables and other receivables , , , , Cash and cash equivalents , , , , Deposits , , , , Long-term loans , , , , Other long-term receivables , , , , Equity securities , , , , Financial liabilities measured at amortised cost Super senior revolving credit facility in EUR 250 million (,) (,) - - Super senior term loan EUR 200 million (,) (,) (,) (,) Other long-term loans (,) (,) (,) (,) Subordinated unsecured convertible bonds EUR 190,000 - - (,) (,) Subordinated unsecured convertible bonds EUR 100,000 (,) (,) (,) (,) Bank overdra (,) (,) (,) (,) Trade and other payables (,) (,) (,) (,) Total , , (,) (,) Unrecognised gains/(losses) (,) (,) * Due to the short-term nature of the trade receivables and other receivables, their carrying amount is considered to be the same as their fair value. FUGRO ANNUAL REPORT 35 RELATED PARTIES The Group has a related party relationship with its subsidiaries, equity-accounted investees and key management personnel. Balances and transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions with key management personnel Fugro’s key management personnel (as defined in IAS ) consists of the people in the Board of Management, Executive Leadership Team and Supervisory Board. The Executive Leadership Team consists of the two members of Board of Management and seven senior managers. The Board of Management controls the Executive Leadership Team. The key management compensation, based on amounts recognised in the statement of comprehensive income, is as follows: (in EUR) Short-term employee benefits Post-employ- ment benefits Share-based payment (IFRS 2) Total 2021 Board of Management ,, , ,, ,, Senior managers ,, , , ,, Executive Leadership Team (subtotal) ,, , ,, ,, Supervisory Board , - - , Total ,, , ,, ,, (in EUR) Short-term employee benefits Post-employ- ment benefits Share-based payment (IFRS 2) Total 2020 Board of Management ,, , , ,, Senior managers ,, , , ,, Executive Leadership Team (subtotal) ,, , ,, ,, Supervisory Board , - - , Total ,, , ,, ,, 34 COMMITMENTS NOT INCLUDED IN THE STATEMENT OF FINANCIAL POSITION Bank guarantees Per December , Fugro’s banks have issued bank guarantees to clients for an amount of EUR million (: EUR million). Capital commitments At December , the Group has EUR . million material contractual obligations to purchase property, plant and equipment. Climate commitments On February , Fugro announced a target of net zero carbon scope and scope emissions by . Ahead of , Fugro is focussing on shiing the procurement of energy to renewable sources and making investments to decarbonise its vessels and equipment to reduce emissions until the measurement date of the target. For example, Fugro is leading a consortium ‘Methanol as Energy Step Towards Emission-free Dutch Shipping’ (MENENS) of partners in the Dutch maritime sector for the development of methanol as low-carbon shipping fuel. On December , MENENS has been awarded a grant from the Netherlands Enterprise Agency. Contingencies Some Group companies are, as a result of their normal business activities, involved either as plaintis or defendants in claims. Based on information presently available and management’s best estimate, it is not probable that the financial position of the Group will be significantly influenced by any of these maers. Should the actual outcome dier from the assumptions and estimates, the financial position of the Group would be impacted. Fugro N.V. and its Dutch operating companies form a fiscal unity for corporate tax. Each of the operating companies is severally liable for corporate tax to be paid by the fiscal unity. Parent company guarantees In principle Fugro does not provide parent company guarantees to its subsidiaries, unless commercial reasons exist. Fugro has filed declarations of joint and several liabilities for a number of subsidiaries at the Chamber of Commerce. Fugro has filed a list with the Chamber of Commerce which includes all financial interests of Fugro as well as a reference to each subsidiary for which such a declaration of liability has been provided. FUGRO ANNUAL REPORT The Dutch Civil Code disclosures with respect to remuneration of individual members of the Board of Management and Supervisory Board are included in the Remuneration report. Other transactions with key management personnel The Board of Management, certain senior managers and certain Supervisory Board members can acquire shares in Fugro on an arm’s length basis. These transactions are not compensation and as such no expense was recorded during the period. (in EUR) 2020 Number of shares acquired during the year Issue price paid Number of shares disposed of during the year Number of shares held at 31 December Number of shares acquired during the year Issue price paid Number of shares disposed of during the year Number of shares held at 31 December Board of Management , EUR . - , , EUR . – EUR . - , Senior managers - - - , , EUR . - , Executive Leadership Team (subtotal) , - - , , - - , Supervisory Board , EUR . – EUR . - , , EUR . – EUR . - , Total , - , , - , The individual shareholdings are less than . Other related parties The Group has not entered into any material transaction with other related parties. 36 SUBSEQUENT EVENTS There were no subsequent events. FUGRO ANNUAL REPORT Company % Oce, Country Fugro Oshore Survey (Shenzhen) Co. Ltd. Shenzhen, China Fugro Consultants International N.V. Willemstad, Curaçao Fugro Financial International N.V. Willemstad, Curaçao Fugro S.A.E. Cairo, Egypt Fugro Geoid S.A.S. Castries, France Fugro Holding France S.A.S. Nanterre, France Fugro Gabon SARL Port Gentil, Gabon Fugro Germany Land GmbH Berlin, Germany Fugro Germany Marine GmbH Bremen, Germany Fugro Ghana Limited Accra, Ghana Fugro Technical Services Ltd. Tuen Mun, Hong Kong Fugro Geotechnical Services Ltd. Fo Tan, Hong Kong Fugro (Hong Kong) Ltd. Wanchai, Hong Kong Fugro Holdings (Hong Kong) Ltd. Wanchai, Hong Kong Fugro Hydrographic Surveys Ltd. Wanchai, Hong Kong Fugro Geospatial Services (Hong Kong) Ltd. Wanchai, Hong Kong Fugro Marine Survey International Ltd. Wanchai, Hong Kong Fugro SEA Ltd. Wanchai, Hong Kong Fugro International (Hong Kong) Ltd. Wanchai, Hong Kong Fugro Satellite Positioning (Hong Kong) Ltd. Wanchai, Hong Kong Fugro Consult K Budapest, Hungary Fugro Geotech (India) Private Limited Navi Mumbai, India Fugro Survey (India) Private Limited Navi Mumbai, India PT Fugro Indonesia Jakarta Selatan, Indonesia Fugro-ETW LLC 50% Basra, Iraq FAZ Technology Ltd. Dublin, Ireland FAZ Research Ltd. Dublin, Ireland Fugro Italy S.p.A. Rome, Italy Fugro Japan Co., Ltd. Tokyo, Japan Fugro Malaysia Marine Sdn Bhd 30% Kuala Lumpur, Malaysia Fugro Mauritius Ltd. Quatre Bornes, Mauritius Fugro Mexico S.A. de C.V. Ciudad Del Carmen, Campeche, Mexico Fugro Mozambique Lda. Maputo, Mozambique 37 SUBSIDIARIES AND INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD OF FUGRO N.V. Unless stated otherwise, the direct or indirect interest of Fugro in the subsidiaries listed below is . Insignificant, but consolidated, subsidiaries have not been included. For entities where the direct or indirect interest of Fugro is less than , the Group consolidates financial information of such entities based on the definition of control. The subsidiaries listed below have been fully incorporated into the consolidated financial statements of Fugro, unless indicated otherwise. The information as required by sections : and : of the Dutch Civil Code has been filed at the trade registry of the Chamber of Commerce in The Hague. Company % Oce, Country Fugro Angola Limitada 49% Luanda, Angola Fugro Exploration Pty Ltd. Perth, Australia Fugro Holdings (Australia) Pty Ltd Perth, Australia Fugro Australia Land Pty Ltd. Perth, Australia Fugro Australia Marine Pty Ltd. Perth, Australia Fugro Properties (Australia) Pty Ltd Perth, Australia Fugro Austria GmbH Bruck an der Mur, Austria SOCAR-Fugro LLC 49% Baku, Azerbaijan Fugro Belgium SRL Brussels, Belgium Labomosan S.A. 66.5% Floree, Belgium Orex S.C. Wavre, Belgium Fugro In Situ Geotecnia Ltda. Pinhais, Brazil Fugro Brasil Levantamentos Ltda. Rio de Janeiro, Brazil Fugro Marine (B) Sdn. Bhd. 70% Kuala Belait, Brunei Darussalam Fugro Cameroun SA Douala, Cameroun Fugro Canada, Corp. St. John’s, Canada Fugro Chile S.A. Santiago, Chile Fugro Technical Services (Guangzhou) Ltd. Guangzhou, China Fugro Pacifica Qinhuangdao Co. Ltd. Qinhuangdao, China China Oshore Fugro GeoSolutions (Shenzhen) Co. Ltd. 50% Shekou, Shenzhen, China FUGRO ANNUAL REPORT Company % Oce, Country Fugro Satellite Positioning Pte Ltd. Singapore, Singapore Fugro Subsea Technologies Pte Ltd. Singapore, Singapore Fugro Singapore Marine Pte Ltd. Singapore, Singapore Eastern Equator Pte Ltd. Singapore, Singapore Eastern Mariner Pte Ltd. Singapore, Singapore Fugro Marine Personnel Pte Ltd. Singapore, Singapore Southern Evolution Pte Ltd. Singapore, Singapore Fugro Properties Pte Ltd. Singapore, Singapore Fugro Singapore Land Pte Ltd. Singapore, Singapore Fugro Survey Africa (Pty) Ltd. Cape Town, South Africa Fugro Geodetic AG Zug, Switzerland Fugro South America GmbH Zug, Switzerland Fugro IOVTEC Co. Ltd. 49% Taipei City, Taiwan Fugro Trinidad Ltd. Port of Spain, Trinidad Fugro Sial Ltd. Ankara, Turkey Fugro Middle East Dubai, United Arab Emirates Fugro GB (North) Marine Limited Aberdeen, United Kingdom Fugro Subsea Services Limited Aberdeen, United Kingdom Fugro GeoServices Limited Falmouth, United Kingdom Hush Cra Ltd 49% Suolk, United Kingdom Fugro GB Marine Limited Wallingford, United Kingdom Fugro Holdings Limited Wallingford, United Kingdom Fugro Properties Limited Wallingford, United Kingdom Global Marine Holdings LLC 23.6% Delaware, United States Fugro (USA) Holdings, Inc. Houston, United States Fugro Enterprise, Inc. Houston, United States Fugro Synergy, Inc. Houston, United States Fugro USA Land, Inc. Houston, United States Fugro USA Marine, Inc. Lafayee, United States * Joint arrangements classified as joint ventures or associates that are equity-accounted. Company % Oce, Country Fugro Financial Resources B.V. Leidschendam, The Netherlands Fugro NL Land B.V. Leidschendam, The Netherlands Fugro Innovation & Technology B.V. Leidschendam, The Netherlands Fugro Marine Services B.V. Leidschendam, The Netherlands Fugro Nederland B.V. Leidschendam, The Netherlands Fugro South America B.V. Leidschendam, The Netherlands Fugro Survey B.V. Leidschendam, The Netherlands Fugro Vastgoed B.V. Leidschendam, The Netherlands Seabed Geosolutions B.V. Leidschendam, The Netherlands Alutan Shipping B.V. Leidschendam, The Netherlands Arjuna Shipping B.V. Leidschendam, The Netherlands Erebus Shipping B.V. Leidschendam, The Netherlands Foster Shipping B.V. Leidschendam, The Netherlands Fugro Middle East B.V. Leidschendam, The Netherlands Katla Shipping B.V. Leidschendam, The Netherlands Mayon Shipping B.V. Leidschendam, The Netherlands Scenery Shipping B.V. Leidschendam, The Netherlands Semeru Shipping B.V. Leidschendam, The Netherlands Taranaki Shipping B.V. Leidschendam, The Netherlands Tongariro Shipping B.V. Leidschendam, The Netherlands Wavewalker B.V. 50%* Leidschendam, The Netherlands Bosavi Shipping B.V. Nootdorp, The Netherlands Hastveda Shipping B.V. Nootdorp, The Netherlands Fugro Netherlands Marine B.V. Nootdorp, The Netherlands Fugro New Zealand Ltd. New Plymouth, New Zealand Fugro Nigeria Ltd. Port Harcourt, Nigeria Fugro Norway AS Oslo, Norway Fugro Middle East & Partners LLC 70% Muscat, Oman Fugro Geodetic Ltd. Karachi, Pakistan Fugro Philippines Inc. Manila, Philippines Fugro Peninsular Services Co. W.L.L. 49% Doha, Qatar GEOINGSERVICE LLP Moscow, Russia Fugro-Suhaimi Ltd. 50% Dammam, Saudi Arabia Fugro Saudi Arabia Ltd. 83% Dammam, Saudi Arabia FUGRO ANNUAL REPORT Notes (EUR x ,) 2020 ASSETS Financial fixed assets , , Deferred tax assets , , Total non-current assets , , Trade and other receivables , , Cash and cash equivalents , Total current assets , , Total assets , , EQUITY Share capital , , Share premium , , Translation reserve (,) (,) Other reserves (,) (,) Retained earnings , , Unappropriated result , (,) Total equity , , Provisions Provisions , , LIABILITIES Loans and borrowings - , Total non-current liabilities , , Loans and borrowings , , Trade and other payables , , Other taxes and social security charges , , Total current liabilities , , Total liabilities , , Total equity and liabilities , , COMPANY BALANCE SHEET As at 31 December, before result appropriation FUGRO ANNUAL REPORT Notes (EUR x ,) 2020 Revenue , , Other income , - Personnel expenses (,) (,) Other expenses (,) (,) Results from operating activities (EBIT) (,) (,) Finance income , Finance expenses (,) (,) Net finance income/(expenses) (,) (,) Profit/(loss) before income tax (,) (,) Income tax gain/(expense) , , Share in results from participating interests, aer taxation , (,) Profit/(loss) for the period , (,) COMPANY INCOME STATEMENT For the year ended 31 December FUGRO ANNUAL REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS 38 BASIS OF PREPARATION For seing the principles for the recognition and measurement of assets and liabilities and determination of the result for its company financial statements, Fugro makes use of the option provided in Clause Section : of the Netherlands Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result (hereinaer referred to as principles for recognition and measurement) of the company financial statements of Fugro N.V. are the same as those applied for the consolidated IFRS-EU financial statements. Investments in subsidiaries are accounted for at net asset value which comprises the cost, excluding goodwill, of Fugro’s share in the net assets of the subsidiaries. Participating interests, over which significant influence is exercised, are stated on the basis of the equity method. Reference is made to the significant accounting policies in the notes to the consolidated financial statements. The share in the result of participating interests consists of the share of Fugro in the result of these participating interests. Results on transactions, where the transfer of assets and liabilities between Fugro and its participating interests, and mutually between participating interests themselves, are not incorporated as far as they can be deemed to be unrealised. Fugro N.V. is neither lessee nor lessor. 39 FINANCIAL FIXED ASSETS Subsidiaries (EUR x ,) 2020 Balance at 1 January , , Share in result of participating interests , (,) Capital increase/(decrease) () , Dividends received (,) (,) Currency exchange dierences , (,) Actuarial gains/(losses) , (,) Other , , Balance at 31 December , , 40 DEFERRED TAX ASSETS Due to improved results and profitability outlook deferred tax assets are recognised in . Carry forward withholding tax credits (EUR . million) remain unrecognised as the qualifying foreign income does not meet the recognition criterion. 41 TRADE AND OTHER RECEIVABLES (EUR x ,) 2020 Current tax assets , , Receivables from Group companies , , Other receivables , Balance at 31 December , , The Receivables from Group companies as at December included a cash-pool balance of Fugro N.V. amounting to EUR . million. The cash-pool balance as at December is EUR . million negative and included under Payables to Group companies (refer to note Trade and other payables). Accordingly, the Receivables from Group companies as at December relates to other receivables from subsidiaries. 42 EQUITY Reference is made to the equity movement schedule included in the consolidated financial statements and the corresponding disclosure note. The translation reserve qualifies as legal reserves (Dutch: ‘weelijke reserve’) in accordance with Part of Book of the Netherlands Civil Code. 43 PROVISIONS Reference is made to the provisions note in the consolidated financial statements. Fugro has accounted for certain tax indemnities and warranties under legal claims in respect of the sale of the majority of the Geoscience business to CGG in , for liabilities arising from tax exposures amounting to EUR . million as at December ( December : EUR . million). An amount of EUR . million ( December : EUR . million) relates to employee benefit obligations. The provisions are not expected to be seled within one year. FUGRO ANNUAL REPORT 48 PERSONNEL EXPENSES (EUR x ,) 2020 Wages and salaries , , Social security contributions , Equity-seled share-based payments , , Contributions to defined contribution plans () Expense related to defined benefit plans () Total , , The Dutch Civil Code disclosures with respect to remuneration of the Board of Management and Supervisory Board are included in the Remuneration report. The average number of employees within Fugro N.V. during the year was (: ), all based in the Netherlands consistent with prior year. 49 OTHER EXPENSES (EUR x ,) 2020 Indirect operating expenses Occupancy costs - Communication and oce equipment , , Restructuring costs () Marketing and advertising costs Professional services , , Total , , 44 LOANS AND BORROWINGS (EUR x ,) 2020 Subordinated unsecured convertible bonds EUR 190,000 - , Subordinated unsecured convertible bonds EUR 100,000 , , Balance at 31 December , , Reference is made to the financial liabilities note in the consolidated financial statements. The interest on loans and borrowings amounts to . - . per annum (: . - .). 45 TRADE AND OTHER PAYABLES (EUR x ,) 2020 Trade payables , Payables to Group companies , , Other payables , , Balance at 31 December , , 46 REVENUE Revenue relates to the services provided by Fugro N.V. to subsidiaries in respect of their management activities and responsibilities. 47 OTHER INCOME Other income relates to the cumulative foreign currency translation reserve of Seabed Geosolutions, which was recycled to profit and loss upon disposal during . FUGRO ANNUAL REPORT 51 INCOME TAX Fugro N.V. is head of the fiscal unity that exists for Dutch corporate income taxes. The eective tax rate in deviates compared to the Dutch statutory rate of , mainly due to deferred tax entries. 52 CONTINGENCIES Fiscal unity Fugro N.V. and the Dutch operating companies form a fiscal unity for corporate tax. Each of the operating companies is severally liable for corporate tax to be paid by the fiscal unity. Bank guarantees As per December , Fugro’s bank has issued bank guarantees to clients for an amount of EUR . million (: EUR . million). Other guarantees Fugro has filed declarations of joint and several liabilities for a number of subsidiaries at the Chamber of Commerce. Fugro has filed a list with the Chamber of Commerce, which includes all financial interests of the Group in subsidiaries as well as a reference to each subsidiary for which such a declaration of liability has been deposited. Other contingencies Reference is made to the note ‘commitments not included in the statement of financial position’ of the consolidated financial statements. Audit fees With reference to Section :a of the Netherlands Civil Code, the following fees for the financial year have been charged by EY to the company and its subsidiaries: (EUR x ,) 2020 Ernst & Young Account- ants LLP Other EY network Total EY Ernst & Young Account- ants LLP Other EY network Total EY Statutory audit of financial statements , , , , , , Other audit services - - - - - - Other assurance related services - Tax advisory services - - - - Total , , , , , , Audit and (non-)audit related fees for the respective years are charged to the income statement on an accrual basis. The fees paid for the above mentioned services, which are included in profit or loss of the consolidated financial statements are presented in other expenses, and evaluated on a regular basis. 50 NET FINANCE ( INCOME ) /EXPENSES (EUR x ,) 2020 Interest income on loans and receivables from Group companies () () Net foreign exchange gain - (,) Finance income () (,) Interest expense on financial liabilities measured at amortised cost , , Net foreign exchange loss - Finance expense , , Net finance (income)/expenses recognised in profit or loss , , FUGRO ANNUAL REPORT 53 RELATED PARTIES Reference is made to the related parties note of the consolidated financial statements, which includes the remuneration of the Board of Management and Supervisory Board. The members of the Supervisory Board have signed the financial statements pursuant to their statutory obligations under Section : sub Netherlands Civil Code. The members of the Board of Management have signed the financial statements pursuant to their statutory obligations under Section : sub Netherlands Civil Code and Section :c sub (c) Financial Markets Supervision Act. Fugro will not propose to the annual general meeting on April to declare a dividend for to shareholders. Leidschendam, February Board of Management M.R.F. Heine, Chairman Board of Management, Chief Executive Ocer B.P.E. Geelen, Chief Financial Ocer Supervisory Board Sj.S. Vollebregt, Chairman P.H.M. Hofsté, Vice Chair A.J. Campo A.H. Montijn R. Mobed M.J.C. de Jong FUGRO ANNUAL REPORT OTHER INFORMATION INDEPENDENT AUDITOR’S REPORT Basis for our opinion We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the Our responsibilities for the audit of the financial statements section of our report. We are independent of Fugro N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit firms supervision act), the “Verordening inzake de onaankelijkheid van accountants bij assurance-opdrachten” (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en beroepsregels accountants” (VGBA, Dutch Code of Ethics). We believe the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinion. INFORMATION IN SUPPORT OF OUR OPINION We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following information in support of our opinion and any findings were addressed in this context, and we do not provide a separate opinion or conclusion on these maers. Our understanding of the business Fugro is a geo-data specialist that provides globally earth and engineering data, information and advice required for the design, construction and maintenance of large land and marine infrastructure, industrial installations and buildings. Fugro’s purpose is to create a safe and liveable world by helping its clients design, build and operate their assets in a safe, sustainable and ecient manner. Fugro operates in countries and deploys a fleet of specialised assets and digital solutions to support its operations. We paid specific aention in our audit to a number of areas driven by the operations of the group and our risk assessment. We start by determining materiality and identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error in order to design audit procedures responsive to those risks and to obtain audit evidence that is sucient To: the shareholders and supervisory board of Fugro N.V. REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2021 INCLUDED IN THE ANNUAL REPORT OUR OPINION We have audited the financial statements of Fugro N.V., based in Leidschendam, the Netherlands (hereinaer: ‘Fugro’ or ‘the company’). The financial statements comprise the consolidated and the company financial statements. In our opinion: ■ the accompanying consolidated financial statements give a true and fair view of the financial position of Fugro N.V. as at 31 December 2021 and of its result and its cash flows for 2021 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code ■ the accompanying company financial statements give a true and fair view of the financial position of Fugro N.V. as at 31 December 2021 and of its result for 2021 in accordance with Part 9 of Book 2 of the Dutch Civil Code. The consolidated financial statements comprise: ■ the consolidated statement of financial position as at 31 December 2021 ■ the following statements for 2021: the consolidated statements of comprehensive income, changes in equity and cash flows ■ the notes comprising a summary of the significant accounting policies and other explanatory information. The company financial statements comprise: ■ the company balance sheet as at 31 December 2021 ■ the company income statement for 2021 ■ the notes comprising a summary of the accounting policies and other explanatory information. FUGRO ANNUAL REPORT Netherlands and performed analytical review procedures at entities without an assigned group audit scope. The procedures performed for entities with a group audit scope represent of revenue and of total assets. By performing the procedures mentioned above, together with additional procedures at group level, we have been able to obtain sucient and appropriate audit evidence about the group’s financial information to provide an opinion about the consolidated financial statements. Teaming and use of specialists We ensured that the audit teams both at group and at local entity level included the appropriate skills and competences which are needed for the audit of Fugro. We included in the audit specialists in the areas of IT, forensics, treasury, share based payments, income tax, pensions and business valuations. Our focus on climate risks and the energy transition Climate objectives will be high on the public agenda in the next decades. Issues such as CO reduction impact financial reporting, as these issues could entail risks for the business operation, the valuation of assets and provisions or the sustainability of the business model and access to financial markets for companies with a larger CO footprint. As part of our audit of the financial statements, we evaluated the extent to which climate- related risks and the possible eects of the energy transition are taken into account in estimates and significant assumptions as well as in the design of relevant internal control measures by Fugro. Furthermore, we read the report of the board of management and considered whether there is any material inconsistency between the non-financial information in the section environmental of the group performance chapter and in the section risk management of the governance chapter in the annual report and the financial statements. In this respect, we note that Fugro has an ambition to reach net zero emissions by . This ambition requires capital expenditures for the decarbonization of vessels and other equipment in the coming years. We describe the audit procedures performed with respect and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Materiality Materiality € 10.0 million (2020: € 10.0 million) Benchmark applied Approximately 0.7% of revenue (2020: approximately 0.7% of revenue) Explanation We have applied this benchmark based on our professional judgment and taking into account the users of the financial statements. Earnings based measures are not considered to be appropriate benchmarks, given their volatility over the years and we believe that revenues are a key indicator of the performance of the company. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons. We agreed with the supervisory board that misstatements in excess of . million which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds. Scope of the group audit Fugro N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements. Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items. All entities exceeding . of revenues are included within our group audit scope. We used the work of other EY member firms when auditing entities outside the Netherlands. We performed audit procedures ourselves at certain group entities located in the FUGRO ANNUAL REPORT in revenue recognition. For the risk related to management override of controls we have performed procedures to evaluate key accounting estimates for management bias in particular relating to important judgment areas and significant accounting estimates as disclosed in Note to the financial statements. We have also performed procedures to identify and address high-risk journal entries. This risk did however not require significant auditor’s aention in addition to the following fraud risks identified during our audit. Management bias related to estimates and assumptions underlying the valuation of goodwill Fraud risk In identifying and assessing fraud risks, we specifically considered whether judgments and assumptions underlying the valuation of goodwill indicate a management bias that may represent a risk of material misstatement due to fraud. Our audit approach We describe the audit procedures responsive to this fraud risk in the description of our audit approach for the key audit maer ‘Estimates with respect to the valuation of goodwill and vessels’. Presumed risks of fraud in revenue recognition Fraud risk When identifying and assessing fraud risks we presume that there are risks of fraud in revenue recognition. We evaluated that the method to measure progress and the estimation for actual cost incurred compared to estimated cost to completion for performance obligations that are satisfied over time, in particular give rise to such risks. Our audit approach We describe the audit procedures responsive to the presumed risk of fraud in revenue recognition in the description of our audit approach for the key audit maer ‘Revenue recognition, project accounting and valuation with respect to unbilled revenue on (completed) contracts‘. to forecasted cash-flows (which include planned capital expenditures) in our key audit maer “Estimates with respect to the valuation of goodwill and vessels”. Our focus on fraud and non-compliance with laws and regulations Our responsibility Although we are not responsible for preventing fraud or non-compliance, we and cannot be expected to detect non-compliance with all laws and regulations, it is our responsibility to obtain reasonable assurance that the financial statements, taken as a whole, are free from material misstatement, whether caused by fraud or error. Our audit response related to fraud risks We identify and assess the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the company and its environment and the components of the system of internal control, including the risk assessment process and the board of management’s process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as the outcomes. We refer to section risk management in the chapter governance of the report of the board of management for the board of management’s risk assessment. We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation of internal controls designed to mitigate fraud risks. As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption in close co-operation with our forensic specialists. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present. We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance. As in all of our audits, we addressed the risks related to management override of controls and when identifying and assessing fraud risks we presumed that there are risks of fraud FUGRO ANNUAL REPORT by the board of management to make the assessment and on management bias that could represent a risk. We evaluated forecasted cash flows, with a focus on whether the company will have sucient liquidity to continue to meet its obligations as they fall due. We assessed the assumptions used in the cash-flow forecast for consistency with the budget as approved by the board of management and the supervisory board. We challenged key assumptions used in the forecast in light of an announced lower CO footprint for the company and market developments including expected decreasing investment in fossil fuel projects in favour of renewable energy sources. We verified that the budget is translated appropriately into a liquidity and covenant forecast, that the covenant calculations are in accordance with the financing agreements, and that Fugro is in compliance with these covenant requirements. Also, we “stress-tested” the board of management’s forecast and assessed the likelihood of Fugro breaching the covenant requirements. Based on our procedures performed, we did not identify serious doubts on Fugro’s ability to continue as a going concern for the next months. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern. Our key audit maers Key audit maers are those maers that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key audit maers to the supervisory board. The key audit maers are not a comprehensive reflection of all maers discussed. The key audit maers ‘Availability of financing and compliance with debt covenant requirements’ and “Accounting for the Group’s interest in Seabed Geosolutions” which were included in our last year’s auditor’s report are not considered as key audit maers for this year as the company’s financial position and outlook improved and the interest in Seabed Geosolutions was disposed on June . We considered available information and made enquiries of relevant executives, directors (including internal audit, legal, compliance, human resources and regional directors) and the supervisory board. The fraud risks we identified, enquiries and other available information did not lead to specific indications for fraud or suspected fraud potentially materially impacting the view of the financial statements. Our audit response related to risks of non-compliance with laws and regulations We assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected to have a material eect on the financial statements from our general industry experience, through discussions with the board of management, reading minutes, inspection of internal audit and compliance reports and performing substantive tests of details of classes of transactions, account balances and disclosures. We also inspected lawyers’ leers and correspondence with regulatory authorities and remained alert to any indication of (suspected) non-compliance throughout the audit. Finally we obtained wrien representations that all known instances of non-compliance with laws and regulations have been disclosed to us. Our audit response related to going concern As disclosed in the management statements, the board of management made a specific assessment of the company’s ability to continue as a going concern and to continue its operations for at least the next months. We considered whether the board of management’s going concern assessment, based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, contains all events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw aention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. We performed the following procedures in order to identify and assess the risks of going concern and to conclude on the appropriateness of the board of management’s use of the going concern basis of accounting. We discussed and evaluated the specific assessment with the board of management, exercising professional judgment and maintaining professional scepticism, and specifically focusing on, among others, the process followed FUGRO ANNUAL REPORT Estimates with respect to the valuation of goodwill and vessels Our audit approach We verified that the accounting policy for impairments of (in)tangible assets applied by Fugro is in line with IAS 36 ‘Impairment of assets’ and that the methods for making estimates are appropriate and have been applied consistently. We obtained an understanding of Fugro’s internal controls, including control activities relevant to impairment tests for goodwill and vessels and evaluated the design of the controls over how the board of management made the estimates. Our audit procedures included an assessment of management’s evaluation of indicators of impairment for the carrying amounts of vessels. Our assessment of management’s VIU calculations included considering whether the board of management recognised suciently the impact that climate change and related actions will have on Fugro’s business model. For example, we challenged the board of management to what extent global carbon emission reduction targets require future changes to or further investments in the fleet of vessels. To this end, we verified that value in use calculations included (capex) cash outflows consistent with Fugro’s view on what future investments are required to achieve its business plans. We evaluated the budget 2022, the solidity of the budget preparation process and the reasonability of the budget at the level of individual entities as well as at group level. Furthermore, we evaluated management’s outlook in the explicit period, in particular around forecasted revenues, EBITDAs and capital expenditures, as well as the long term growth rate. We also performed an evaluation of the historical accuracy of the board of management’s estimates through retrospective review, evaluating and testing the assumptions, methodologies, and other data used by the company, for example by comparing them to external data and we assessed the mathematical accuracy and completeness of the impairment models. With the support of EY valuation experts, we assessed whether the discounting of expected future cash flows through the use of a discount rate, whilst highly judgemental, is performed based on an appropriate methodology. Our assessment of the VIUs also included sensitivity analyses. Estimates with respect to the valuation of goodwill and vessels Risk At 31 December 2021, the carrying amounts of goodwill and vessels (both owned and leased) amount to, respectively, € 269.5 million and € 366.4 million, and together amount to approximately 35% of total assets. As disclosed in Notes 17, 18 and 19, the board of management performed the annual impairment tests for goodwill and evaluated vessels with individually significant net book values for indicators of impairment. Impairment tests are complex and require significant management judgement and estimates with respect to expected future cash flows and the discount rate used to discount the cash flows. We consider the risk of management bias and determined this to be a key audit maer. As disclosed in note 34, Fugro has an ambition to reach net zero emissions by 2035. This ambition requires capital expenditures for the decarbonization of vessels and other equipment in the coming years. The recoverable amounts of groups of cash-generating units (CGUs) with allocated goodwill have been determined based on value in use calculations. Value in use (VIU) was determined by discounting the expected future cash flows from continuing use of the CGUs. Cash flows in the first year of the forecast are based on the budget 2022 as approved by the board of management and supervisory board. The cash flows for the following four years are derived from Fugro’s strategic plan and which are made explicit based on expected market developments and the expected share of the market that Fugro will be able to capture. A long term growth rate is assumed for the terminal value. The headroom on the carrying amount of CGUs is € 618.6 as disclosed in note 19 of the consolidated financial statements. These impairment tests resulted in a € 4.5 impairment reversal for a vessel and no impairment of goodwill. FUGRO ANNUAL REPORT Revenue recognition, project accounting and valuation with respect to unbilled revenue on (completed) contracts In addition, we performed substantive audit procedures relating to contractual terms and conditions, revenues and costs incurred, including local representatives’ fees, and disputes or potential disputes. For individually significant projects, we performed testing procedures, such as substantiating transactions with underlying documentation, including contracts and third party correspondence, to obtain evidence for the accuracy and recoverability of unbilled revenue on (completed) contracts. We made enquiries with project controllers, inspected contracts and underlying documentation, tested project progress, forecasts and appropriateness of the (planned) result and verified whether the project status has been appropriately reflected in the consolidated financial statements. We evaluated the adequacy of the disclosures included in note 8 to the consolidated financial statements. Key observations We conclude that Fugro appropriately recognised unbilled revenue on (completed) contracts as at 31 December 2021 and revenue for the year then ended. We concluded the disclosures in the consolidated financial statements are proportionate and in accordance with EU-IFRS. Estimates with respect to the valuation of goodwill and vessels We evaluated the adequacy of the disclosures to the consolidated financial statements. We evaluated whether the disclosures are in accordance with the requirements of EU-IFRS and whether significant judgments by the board of management are disclosed and particularly whether disclosures adequately convey the degree of estimation uncertainty, those assumptions to which the outcome of the impairment test is most sensitive and the range of possible outcomes. Key observations We conclude the assumptions relating to the impairment models to fall within acceptable ranges and we agree with the board of management’s conclusions. Furthermore, we concluded that the disclosures in the consolidated financial statements are proportionate and in accordance with EU-IFRS. Revenue recognition, project accounting and valuation with respect to unbilled revenue on (completed) contracts Risk The revenue recognition process, including determining the appropriate valuation with respect to unbilled revenue on (completed) contracts, involves management estimates. The valuation of unbilled revenue on (completed) contracts is aected by subjective elements including estimated costs to complete and projected revenue, whether impacted by additional / reduced services, project progress or (potential) disputes. We presumed that there are risks of fraud in revenue recognition and determined this to be a key audit maer. Our audit approach We verified that the accounting policy for revenue recognition applied by Fugro is in line with IFRS 15 ‘Revenue from Contracts with Customers’ and that the methods for making estimates are appropriate and have been applied consistently. We obtained an understanding of Fugro’s internal controls, including control activities with respect to project management, project accounting and the project results estimation process and evaluated the design of the controls over how the board of management made the estimates. FUGRO ANNUAL REPORT Estimates in respect of accounting for income taxes including valuation of deferred tax assets We also evaluated the adequacy of the disclosure to the consolidated financial statements. Key observations We concluded that the board of management’s judgements in respect of accounting for income taxes and the valuation of deferred tax assets are appropriate. We concluded that the disclosures in the consolidated financial statements are proportionate and in accordance with EU-IFRS. Estimates in respect of accounting for income taxes including valuation of deferred tax assets Risk The Group’s results on operations are subject to income taxes in various jurisdictions. Due to reported losses since 2014, Fugro has significant tax loss carry forwards available. For part of these tax loss carry forwards, deferred tax assets are recognised, as disclosed in Note 16 to the financial statements. The assessment of the recoverability of deferred tax assets involves a high degree of judgement and we determined this to be a key audit maer. As at 31 December 2021, recognised deferred tax assets amount to € 49.0 million (2020: € 35.6 million). Our audit approach We verified that the accounting policy for accounting for income taxes and valuation of deferred tax assets applied by Fugro is in line with IAS 12 ‘Income taxes’ and that the methods for making estimates are appropriate and have been applied consistently. We obtained an understanding of Fugro’s internal controls, including control activities with respect to accounting for income taxes and valuation of deferred tax assets and evaluated the design of the controls over how the board of management made the estimates. Our substantive audit procedures included amongst others an evaluation of the historical accuracy of the board management’s estimates through retrospective review, analyses of tax positions and the eective tax rate reconciliation. We involved specialists for the audit of the amounts recognised in the statement of comprehensive income and evaluation of judgmental (deferred) tax positions. For tax positions where the board of management’s assumptions are used to determine the probability that deferred tax assets recognised in the statement of financial position will be recovered through taxable income in future years and available tax planning strategies, we evaluated the 2022 financial forecast, the solidity of the financial forecast preparation process and the reasonability of the 2022 forecasts at the level of individual jurisdictions. Also, we evaluated the projected developments aer 2022 and reasonability of expectations and assumptions. FUGRO ANNUAL REPORT REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS AND ESEF Engagement We were engaged by the supervisory board as auditor of Fugro N.V. on December , as of the audit for the year and have operated as statutory auditor ever since that date. No prohibited non-audit services We have not provided prohibited non-audit services as referred to in Article () of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. European Single Electronic Reporting Format (ESEF) Fugro N.V. has prepared the annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) / with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinaer: the RTS on ESEF). In our opinion, the annual report, prepared in the XHTML format, including the partially marked-up consolidated financial statements, as included in the reporting package by Fugro, complies in all material respects with the RTS on ESEF. The board of management is responsible for preparing the annual report, including the financial statements, in accordance with the RTS on ESEF, whereby management combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF. Our procedures, taking into account Alert of the NBA (the Netherlands Institute of Chartered Accountants), included amongst others: ■ obtaining an understanding of the company’s financial reporting process, including the preparation of the reporting package ■ obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy files has been prepared in accordance with the technical specifications as included in the RTS on ESEF REPORT ON OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT The annual report contains other information in addition to the financial statements and our auditor’s report thereon. Based on the following procedures performed, we conclude that the other information: ■ Is consistent with the financial statements and does not contain material misstatements ■ Contains the information as required by Part 9 of Book 2 for the management report and the other information as required by Part 9 of Book 2 of the Dutch Civil Code and as required by Sections 2:135b and 2:145 sub section 2 of the Dutch Civil Code for the remuneration report. We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part of Book and Section :b sub-Section of the Dutch Civil Code and the Dutch Standard . The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements. The board of management is responsible for the preparation of the other information, including the management report in accordance with Part of Book of the Dutch Civil Code and other information required by Part of Book of the Dutch Civil Code. The board of management and the supervisory board are responsible for ensuring that the remuneration report is drawn up and published in accordance with Sections :b and : sub section of the Dutch Civil Code. FUGRO ANNUAL REPORT of users taken on the basis of these financial statements. The materiality aects the nature, timing and extent of our audit procedures and the evaluation of the eect of identified misstatements on our opinion. We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. The ‘Information in support of our opinion’ section above includes an informative summary of our responsibilities and the work performed as the basis for our opinion. Our audit further included among others: ■ Performing audit procedures responsive to the risks identified, and obtaining audit evidence that is sucient and appropriate to provide a basis for our opinion ■ Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eectiveness of the company’s internal control ■ Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of management ■ Evaluating the overall presentation, structure and content of the financial statements, including the disclosures ■ Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Communication We communicate with the supervisory board regarding, among other maers, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. In this respect we also submit an additional report to the audit commiee in accordance with Article of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report. We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other maers that may reasonably be thought to bear on our independence, and where applicable, related safeguards. ■ examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF. DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS Responsibilities of the board of management and the supervisory board for the financial statements The board of management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part of Book of the Dutch Civil Code. Furthermore, the board of management is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. As part of the preparation of the financial statements, the board of management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, the board of management should prepare the financial statements using the going concern basis of accounting unless the board of management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The board of management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements. The supervisory board is responsible for overseeing the company’s financial reporting process. Our responsibilities for the audit of the financial statements Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sucient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions FUGRO ANNUAL REPORT From the maers communicated with the supervisory board, we determine the key audit maers: those maers that were of most significance in the audit of the financial statements. We describe these maers in our auditor’s report unless law or regulation precludes public disclosure about the maer or when, in extremely rare circumstances, not communicating the maer is in the public interest. Amsterdam, February Ernst & Young Accountants LLP J.J. Vernooij FUGRO ANNUAL REPORT STATUTORY PROVISIONS REGARDING THE APPROPRIATION OF NET RESULT The provisions regarding the appropriation of profit are contained in article of the Articles of Association of Fugro and, as far as relevant, read as follows: . a. The profit shall, if sucient, be applied first in payment to the holders of protective preference shares of a percentage as specified below of the compulsory amount paid on these shares as at the commencement of the financial year for which the distribution is made. b. he percentage referred to above in subparagraph a. shall be equal to the average of the Euribor interest charged for loans with a term of one year – weighted by the number of days for which this interest was applicable – during the financial year for which the distribution is made, increased by at most four percentage points; this increase shall each time be fixed by the Board of Management for a period of five years, aer approval by the Supervisory Board. . a. Next, if possible, a dividend shall be paid on the financing preference shares of each series and on the convertible financing preference shares of each series, equal to a percentage calculated on the amount eectively paid on the financing preference shares of the respective series and the convertible financing preference shares of the respective series, including a share premium, if any, upon the first issue of the series in question, and which percentage shall be related to the average eective return on ‘state loans general with a term of – years’, calculated and determined in the manner as described hereinaer. b. The percentage of the dividend for the financing preference shares of each or for the convertible financing preference shares of each series, as the case may be, shall be calculated by taking the arithmetic mean of the average eective return on the aforesaid loans, as published by Bloomberg, or if Bloomberg does not publish this information, by Reuters, for the last five stock market trading days preceding the day of the first issue of financing preference shares of the respective series or the convertible financing preference shares of the respective series, as the case may be, or preceding the day on which the dividend percentage is adjusted, increased or decreased, if applicable, by a mark-up or mark-down set by the Board of Management upon issue and approved by the Supervisory Board of at most two percentage points, depending on the market conditions then obtaining, which mark-up or mark-down may dier for each series, or, if Reuters does not publish this information or if such state loan and information source that is or are most comparable thereto as to be determined by the board of Management and approved by the Supervisory Board. . If in any financial year the profit is insucient to make the distributions referred to above in paragraph of this article, then in subsequent financial years the provisions of paragraph shall not apply until the deficit has been made good and until the provisions of paragraph have been applied or until the Board of Management, with the approval of the Supervisory Board, resolves to charge an amount equal to the deficit to the freely distributable reserves, with the exception of the reserves which have been set aside as share premium upon the issue of financing preference shares or convertible financing preference shares. . If the first issue of financing preference shares or convertible financing preference shares of a series takes place during the course of a financial year, the dividend for that financial year on the respective series of financing preference shares or convertible financing preference shares shall be decreased proportionately up to the first day of such issue. . Aer application of paragraphs to no further distribution of shall be made on the protective preference shares, the financing preference shares or the convertible financing preference shares. . Of any profit remaining aer application of the paragraphs to such amount shall be allocated to the reserves by the Board of Management with the approval of the Supervisory Board as the Board of Management shall deem necessary. Insofar as the profit is not allocated to the reserves pursuant to the provisions of the preceding sentence, it shall be at the disposal of the annual general meeting either for allocation in whole or in part to the reserves or for distribution in whole or in part to the holders of ordinary shares pro rata to the aggregate amount of their ordinary shares. FUGRO ANNUAL REPORT ADDITIONAL INFORMATION FOUNDATION BOARDS Stichting Beschermingspreferente aandelen Fugro (‘Foundation Protective Preference Shares’) The Board of Foundation Protective Preference Shares, Leidschendam, The Netherlands, is composed as follows: Name Function Term J.C. de Mos Chairman Board member 2022 S.C.J.J. Kortmann Board member 2022 J.J. Nooitgedagt Board member 2025 C.P. Veerman Board member 2022 A. Van der Lof Board member 2023 The (Board of) Foundation Protective Preference Shares operates completely independent of Fugro. Within the framework of its refinancing, Fugro has abolished its two other former protective measures. The Foundation Continuity Fugro no longer functions as a protective measure. As per May , the certification of Fugro’s ordinary shares was terminated and as from that moment the Foundation Trust Oce no longer served as a trust oce as referred in the Dutch corporate governance code. The Foundation Trust Oce has been dissolved and ceased to exist as per February . For that reason, no report of the Foundation Trust Oce, as referred to in best practice provision .. of the Dutch corporate governance code has been prepared. For the period in until the decertification on May , all the Foundation Trust Oce’s activities were related to the administration of ordinary shares against which certificates have been issued. During this period, the board of the Foundation Trust Oce (the “Foundation Trust Oce Board”) met two times, which meetings mainly related to the decertification. The Foundation Trust Oce Board extensively discussed the new anticipated corporate governance structure of Fugro, including the intention to terminate the certification of ordinary shares and the reinforcement of the sole remaining protective measure through the Foundation Protective Preference Shares. It was also discussed whether it would be necessary or useful to convene a meeting of holders of certificates. The Foundation Trust Oce Board decided that such was not the case. Both meetings of the Foundation Trust Oce Board were aended by the chairman of the Supervisory Board and the CEO of Fugro. In view of the envisaged decertification, the Foundation Trust Oce Board also obtained advice from external legal advisors. The annual general meeting of Fugro, at which also the amendment of the articles of association of Fugro which included the possibility for Fugro to eect the decertification, was aended by the chairman of the Foundation. In , the Board of the Trust Oce comprised: Name Function Mr. M.C. van Gelder Chairman Mr. R. Willems Board member Mr. D.F.M.M. Zaman Board member Mrs. A.P.M. van der Veer-Vergeer Board member Mr. Van Gelder was amongst others chairman of the Board of Management and Chief Executive Ocer of Mediq N.V. He presently serves, amongst others, as supervisory board member of VastNed Retail. Mr. Willems was in a year career with Royal Dutch Shell. He presently serves in the board of the Atlantic commiee. Mr. Zaman was notary and partner at Loyens & Loe from until . He was professor Notarial Corporate Law at Utrecht University from until and is since professor Notarial Corporate Law at Leiden University. Mrs. Van der Veer was amongst others Executive Board member Achmea Bank Holding and she presently serves, amongst others, as chair of the Supervisory Board of Arcadis NL and is vice chair of the supervisory board of DeGiro. Mrs. Van der Veer also chairs of the Dutch Monitoring Commiee Accountancy. In the total costs of the Foundation Trust Oce amounted to EUR ,. including the total remuneration of the members of the Foundation Trust Oce Board of EUR ,.- (excluding VAT). FUGRO ANNUAL REPORT FIVE-YEAR HISTORICAL REVIEW Selected financial data (x EUR ,) 2020 2019 2018 2018 2017 Revenue ,, ,, ,, ,, ,, ,, Net revenue own services , , , , , , Results from operating activities (EBIT) * , , , , , (,) Net finance income/(expense) (,) (,) (,) (,) (,) (,) Net result from continuing operations , (,) (,) (,) (,) (, Net result (including discontinued operations) , (,) (,) (,) (,) (,) Cash flow operating activities aer investing activities * , , , (,) (,) (,) Cash flow operating activities aer investing incl. discontinued operations * , , , (,) (,) (,) Property, plant and equipment , , , , , , Capital expenditures , , , , , , Capital expenditures (including discontinued operations) , , , , , , Cash and cash equivalents , , , , , , Total assets ,, ,, ,, ,, ,, ,, Loans and borrowings 4 , , , , , , Equity aributable to owners of the company , , , , , , Net debt – excluding lease liabilities under IFRS 16 * , , , , , , Capital employed * 5 ,, , ,, ,, ,, ,, Key ratios (in %) Results from operating activities (EBIT)/revenue . . . . . (.) Net result from continuing operations/revenue . (.) (.) (.) (.) (.) Return on capital employed * 5 . . . . . (.) Total equity/total assets . . . . . . * Non-IFRS performance measure. Reference is made to the reconciliation of non-IFRS performance measures and glossary. Continuing operations only, unless otherwise stated. Continuing operations only, excluding Seabed Geosolutions classified as discontinued operations. Including Seabed Geosolutions. Total of current and non-current balances. , and numbers calculated based on revised definition. See reconciliation of non-IFRS performance measures and glossary. FUGRO ANNUAL REPORT SELECTED NON-FINANCIAL DATA 2020 2019 2018 2017 People, diversity, talent management 1 Number of full-time equivalent (FTE) employees (at year end) , , , , , Gender diversity ■ Female % % % % % ■ Male % % % % % Gender diversity management ■ Female % % % % % ■ Male % % % % % Lost time injury frequency (x million hours) . . . . . Total recordable case frequency (x million hours) . . . . . Fugro academy statistics 1 ■ Number of enrolments , , , , , ■ Number of completed courses , , , , , Innovation 1 Granted patents Environmental performance Vessel CO 2 emissions (kilotonnes per operational day) ■ Owned vessels 2 . . . . . ■ Chartered vessels . . . . NA ■ Owned and chartered vessels . . . . NA Vessel CO 2 emissions (kilotonnes) ■ Owned vessels 2 ■ Chartered vessels NA ■ Owned and chartered vessels NA Continuing operations only, unless otherwise stated. The CO emission intensity for , and , as well as the absolute vessel emissions have been restated. Refer to Sustainability reporting principles for more information. NA = not available FUGRO ANNUAL REPORT RECONCILIATION OF NON-IFRS PERFORMANCE MEASURES Certain parts of this annual report contain non-IFRS financial measures and ratios and non-financial operating data, which are not recognised measures of financial performance or liquidity under IFRS. These are commonly referred to as non-IFRS financial measures. The Group uses items such as, capital employed, working capital, revenue – comparable growth, days of revenue outstanding, net debt, EBIT, Adjusted EBIT, Adjusted EBIT margin, EBITDA, Adjusted EBITDA and free cash flow as internal measures of performance to benchmark and compare against budget, the prior year and its latest internal forecasts. These measures have not been audited or reviewed by the company’s external auditor. Furthermore, these measures may not be indicative of the company’s historical operating results, nor are such measures meant to be predictive of the company’s future results. The presentation of the non-IFRS measures and non-financial operating data in this report should not be construed as an implication that the Group’s future results will be unaected by exceptional or non-recurring items. The Group presents non-IFRS financial measures and non-financial operating data in this report because it believes that these measures will assist stakeholders to understand its financial position and results of operations. The Group believes these non-IFRS measures and non-financial operating data are useful and commonly used supplemental measures of financial performance, liquidity or financial position in addition to gross profit, operating profit and other measures under IFRS. By providing additional insight into non-IFRS based measures and non-financial operating data, the Group believes that the users of this information may be beer able to understand the operational performance and trend development of the company. However, not all companies calculate non-IFRS financial measures and non-financial operating data in the same manner or on a consistent basis. As a result, these measures and ratios may not be comparable to measures used by other companies under the same or similar names. Accordingly, undue reliance should not be placed on the non-IFRS financial measures and non-financial operating data contained in this Annual Report and they should not be considered in isolation or as a substitute for operating profit, profit for the year, cash flow or other financial measures computed in accordance with IFRS-EU. Revenue – comparable growth The Group presents revenue – comparable growth as a supplemental non-IFRS financial measure, as the Group believes that, given the large amount of countries where it is operating, the presentation of revenue - comparable growth is a relevant measure for investors to evaluate the performance of the Group’s business activities over time. The Group believes that revenue – comparable growth is a useful non-IFRS financial measure, as it removes the distorting impact of foreign exchange movements and thus gives investors a view of the underlying performance of the Group. The Group defines revenue- comparable growth as revenue growth compared to the comparable period from the prior year, calculated by translating the revenue for the more recent period at the exchange rates of the prior year’s comparable period. 2020 Compa- rable growth Currency eects Nominal growth Compa - rable growth Currency eects Nominal growth Europe-Africa .% .% .% (.)% (.)% (.)% Americas .% (.%) .% (.)% (.)% (.)% Asia Pacific .% (.%) .% (.)% (.)% (.)% Middle East & India (.%) (.%) (.%) (.)% (.)% (.)% Total .% (.%) .% (.)% (.)% (.)% 2020 Compa- rable growth Currency eects Nominal growth Compa- rable growth Currency eects Nominal growth Marine .% .% .% (.)% (.)% (.)% Land .% (.%) .% (.)% (.)% (.)% Total .% (.%) .% (.)% (.)% (.)% Restated for the reclassification of nearshore infrastructure services from Land to Marine, following changes in internal management reporting. The reclassification impact is EUR . million for . FUGRO ANNUAL REPORT EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA The Group presents EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA, as supplemental non-IFRS financial measures, as the Group believes these are meaningful measures to evaluate the performance of its business activities over time. The Group understands that these measures are used by analysts, rating agencies and investors in assessing the Group’s performance. In the case of EBITDA, the Group believes that it makes the underlying performance of its geographical regions and businesses more visible by factoring out depreciation, amortisation and impairment losses. The Group believes this increases visibility as to performance on a neutral basis, by correcting for the impact of dierent tax regimes and capital structures. In the case of Adjusted EBIT and Adjusted EBITDA, the Group believes that these measures make the underlying performance of its geographical regions and businesses more apparent by factoring out onerous contract charges, restructuring costs, certain advisor and other costs or gains and, in the case of Adjusted EBIT, impairment losses. The Group believes adjusting for these items which are not directly related to the operational performance of the Group and its geographical regions and businesses increases comparability and enables the users to beer understand the underlying performance of the Group. (EUR x ,) E-A AM APAC MEI Total 2020 2020 2020 2020 2020 Results from operating activities before net financial expenses and taxation (EBIT) , , , (,) (,) (,) , , Onerous contract charges 1 - - - - - - - - - - Restructuring costs 2 (,) (,) () (,) () (,) () (,) (,) (,) Certain adviser and other (costs)/gains 3 - () - - () (,) - - () (,) Impairment losses () () (,) (,) - (,) () (,) Adjusted EBIT , , , (,) , , (,) , , , Depreciation (,) (,) (,) (,) (,) (,) (,) (,) (,) (,) Amortisation () () () () () () () () () (,) Adjusted EBITDA , , , , , , , , , , A provision for onerous contract charges is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting the Group’s obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of performing under the contract. The expected net cost of performing under the contract is based on cash flow calculations discounted using a rate that reflects current market assessments of the time value of money. Before a provision is established, the Group recognises any impairment loss on the assets associated with and/or dedicated to that contract. While specific in nature, costs related to onerous contracts may reoccur in the future. A provision for restructuring costs is recognised when the Group (i) has a detailed formal plan for the restructuring identifying the business or part of a business concerned, the principal locations aected, the location, function, and approximate number of employees who will be compensated for terminating their services, the expenditures that will be undertaken, and when the plan will be implemented; and (ii) has a valid expectation that the Group will carry out the restructuring, evidenced by having made a start with the implementation of that plan or by having announced its main features to those employees aected by it. While specific in nature, costs related to restructuring may reoccur in the future. Certain adviser and other costs (to the extent not capitalised as transaction costs on loans and borrowings) or gains reflects certain adviser and other costs or gains, which include other large charges or gains that the Group has adjusted for, such as material legal selement claims, large bad debt write-downs and other large one-o non-recurring items. The costs primarily comprises the legal fees related to the arbitration with Tasik Toba Subsea as regarding the Southern Star vessel. FUGRO ANNUAL REPORT Working capital and DRO The Group presents working capital and working capital as a of last months revenue as supplemental non-IFRS financial measures, as the Group believes these are meaningful measures to evaluate the Group’s ability to maintain a balance between growth, profitability and liquidity. Working capital is broadly analysed and reviewed by analysts and investors in assessing the Group’s performance. Both measures serve as a metric for how eciently the Group is operating and how financially stable it is in the short term. It is an important measure of the Group’s ability to pay o short-term expenses and/or debts. The Group further discloses days of revenue outstanding, as it believes it is a meaningful measure of the eectiveness of the Group’s credit and collection eorts in allowing credit to customers, as well as its ability to collect from them. (EUR x ,) Marine Land Total 2020 2020 2020 Results from operating activities before net financial expenses and taxation (EBIT) , , , , , , Onerous contract charges 1 - - - - - - Restructuring costs 2 () (,) () (,) (,) (,) Certain adviser and other (costs)/gains 3 () (,) - () () (,) Impairment losses (,) () () () (,) Adjusted EBIT , , , , , , Depreciation (,) (,) (,) (,) (,) (,) Amortisation () (,) () () () (,) Adjusted EBITDA , , , , , , A provision for onerous contract charges is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting the Group’s obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of performing under the contract. The expected net cost of performing under the contract is based on cash flow calculations discounted using a rate that reflects current market assessments of the time value of money. Before a provision is established, the Group recognises any impairment loss on the assets associated with and/or dedicated to that contract. While specific in nature, costs related to onerous contracts may reoccur in the future. A provision for restructuring costs is recognised when the Group (i) has a detailed formal plan for the restructuring identifying the business or part of a business concerned, the principal locations aected, the location, function, and approximate number of employees who will be compensated for terminating their services, the expenditures that will be undertaken, and when the plan will be implemented; and (ii) has a valid expectation that the Group will carry out the restructuring, evidenced by having made a start with the implementation of that plan or by having announced its main features to those employees aected by it. While specific in nature, costs related to restructuring may reoccur in the future. Certain adviser and other costs (to the extent not capitalised as transaction costs on loans and borrowings) or gains reflects certain adviser and other costs or gains, which include other large charges or gains that the Group has adjusted for, such as material legal selement claims, large bad debt write-downs and other large one-o non-recurring items. The costs primarily comprises the legal fees related to the arbitration with Tasik Toba Subsea as regarding the Southern Star vessel. Restated for the reclassification of nearshore infrastructure services from Land to Marine, following changes in internal management reporting. The reclassification impact is EUR . million for at EBITDA and EBIT level. The Group defines working capital as the sum of inventories, trade and other receivables and trade and other payables. And the Group defines days of revenue outstanding as trade receivables plus unbilled revenue on projects minus advances of instalments related to work in progress expressed as a number of days. The number of days is calculated using the exhaust method that is considering revenue recognised from the date of reporting backward until the receivable quantity is exhausted. FUGRO ANNUAL REPORT (EUR x ,) 2020 Non-current loans and borrowings , , Current loans and borrowings , , Bank overdra , , Cash and cash equivalents (,) (,) Lease liabilities , , Net debt , , Net debt (excluding lease liabilities) , , Equity , , Capital employed ,, , Return on capital employed and NOPAT The Group presents capital employed as it understands that this measure is used by analysts, rating agencies and investors in assessing the Group’s performance, in particular on capital eciency, by determining the return on capital employed (ROCE). ROCE is used by the Group as a measure of the Group’s profitability and capital eciency. The group defines return on capital employed as NOPAT of the last months as a percentage of a three points average adjusted capital employed. The three points consist of the last three reporting periods. ROCE, as used by the Group is based on adjusted capital employed. Capital employed is adjusted for non-cash impairment losses (post tax). Adjusted capital employed is calculated at the end of a reporting period (full or half year). The Group believes adjusting for non-cash impairment losses which are not directly related to the operational performance of the Group and its geographical regions and businesses increases comparability and enables the users to beer understand the underlying performance of the Group. The calculation of adjusted capital employed is not adjusted for onerous contract charges, restructuring costs and certain adviser and other costs or gains as well as the theoretical tax impact of those specific items. (EUR x ,) 2020 Working Capital , , Eliminate liabilities comprised in working capital: ■ Trade and other payables , , Include assets not comprised in working capital: ■ Non-current assets ,, ,, ■ Current tax assets , , ■ Cash and cash equivalents , , ■ Assets classified as held for sale , , Total Assets ,, ,, (EUR x ,) 2020 Revenue ,, ,, Working capital as % of last 12 month revenue .% .% Days of revenue outstanding Net debt and capital employed The Group presents net debt and capital employed as it understands that these measures are used by banks, analysts, rating agencies and investors in assessing the Group’s performance. These measures are used by the Group’s management to evaluate the Group’s financial strength and funding requirements. The Group defines capital employed as total equity plus loans and borrowings, excluding lease liabilities and bank overdras, minus cash and cash equivalents. Capital employed includes held for sale balances and is calculated at the end of the (full or half year) reporting period. The Group defines net debt as the sum of loans and borrowings and bank overdra minus cash and cash equivalents. The definition of capital employed includes balances that are classified as held for sale. FUGRO ANNUAL REPORT The Group uses NOPAT solely for the purposes of calculating the ROCE, for which the Group believes is the best measure for profitability when measuring capital eciency. The Group defines NOPAT as the sum of adjusted EBIT, the theoretical tax expense over adjusted EBIT applying the domestic weighted average tax rate, and the share of profit/ (loss) of equity accounted investees (net of income tax). NOPAT includes discontinued operations. (EUR x ,) 2020 December 2020 June 2021 December 2021 Average December 2019 June 2020 December 2020 Average Capital employed , ,, ,, , ,, , , , Adjustment for impairment losses - , , , - , , , ■ of which continuing operations - , , - , , , ■ of which discontinued operations - , , , - , , , Potential tax impact - () - () - - - - Adjusted Capital employed , ,, ,, , ,, ,, , ,, (EUR x ,) 2020 Adjusted EBIT , , ■ of which continuing operations , , ■ of which discontinued operations , , Share of profit/(loss) of equity-accounted investees (net of income tax) , , ■ of which continuing operations , , ■ of which discontinued operations - Potential tax impact (,) (,) NOPAT , , (EUR x ,) 2020 Average Adjusted Capital employed , ,, NOPAT , , ROCE (%) .% .% FUGRO ANNUAL REPORT Taxonomy-Capex Capital expenditures considered for the Group’s disclosures on the EU Taxonomy, referred to as Taxonomy-Capex, comprise additions to property, plant and equipment, additions to intangible assets and additions to right-of-use assets. Taxonomy-Capex is the denominator in the calculation of the percentage of additions to property, plant and equipment, additions to intangible assets and additions to right-of-use assets that qualify as Taxonomy-eligible. (EUR x ,) Note 2021 Additions to property, plant and equipment , Additions to intangible assets (excluding goodwill) , Additions to right-of-use assets , Taxonomy-Capex , FUGRO ANNUAL REPORT GLOSSARY Business/technical terms AUV (autonomous underwater vehicle) Unmanned submersible launched from a ‘mother-vessel’ but not connected to it via a cable. Propulsion and control are autonomous and use pre-defined mission protocols. Bathymetry Study of underwater depth of lake or ocean floors. Underwater equivalent of topography. CPT/ cone penetration test(ing) Pushing a steel cone-tipped probe into the soil, measuring resistance, in order to identify soil composition. Digital twin A virtual representation that serves as the real-time digital counterpart of a physical object or process. Geochemical The geology and chemistry concerned with the chemical composition of, and chemical reactions taking place within, the Earth’s crust. Geohazard Geological state that may lead to widespread damage or risk e.g., landslides, earthquakes, tsunamis. Geo-data Information related to the Earth’s surface, subsurface and the structures built on it. Geo-intelligence Acquisition and analysis of data on topography and the subsurface, soil composition, spatial reference, meteorological and environmental conditions, and the related advice. Geophysical survey Mapping of subterranean soil characteristics using non-invasive techniques such as sound. Geotechnical investigation Determination of subterranean soil characteristics using invasive techniques such as probing, drilling and sampling. Geoscience Range of scientific disciplines (geology, geophysics, petroleum engineering, bio stratification, geochemistry, etc.) related to the study of rocks, fossils and fluids. Geospatial Information on the position of something with respect to the things around it. Hydrography Science that measures and describes physical features of water and the adjacent land areas. Jack-up platform Self-elevating platform; capable of raising its hull over the surface of the sea thanks to its movable legs. (Q)HSSE (Quality,) health, safety, security and environment. LiDAR Measuring system based on laser technology that can make extremely accurate recordings. LNG Liquefied natural gas. Metocean Refers to combined wind, wave and climate conditions at a certain location oshore. Multibeam echosounder Type of sonar that is used to map the seabed. Like other sonar systems, multibeam systems emit sound waves in a fan shape beneath a ship’s hull. The amount of time it takes for the sound waves to bounce o the seabed and return to a receiver is used to determine water depth. Ocean boom node (OBN) Seismic imaging through individual nodes placed on the seabed. OHSAS British standard for occupational health and safety management systems. It is widely seen as the world’s most recognised occupational health and safety management systems standard. Remote operations centre Using cloud based solutions, surveyors work onshore, reducing health and safety exposure, and accelerating delivery and insights for the client. ROV (remotely operated vehicle) Unmanned submersible launched from a vessel and equipped with measuring and manipulation equipment. A cable to the mother-vessel provides power, video and data communication. USV (uncrewed surface vessel) Uncrewed data acquisition platform for hydrographic and asset inspection services applications. USVs are cost-eective to build and safer and more ecient to operate, consuming up to less fuel than regular, crewed vessels. UXO Unexploded ordnance; unexploded bombs and other explosive remnants of war. FUGRO ANNUAL REPORT Adjusted EBITDA Reported result from operating activities before net financial expenses, taxation, depreciation, amortisation, and impairment losses, adjusted for the following items: ■ Onerous contract charges ■ Restructuring costs ■ Certain adviser and other costs or gains Adjusted consolidated EBITDA for purpose of covenant calculations EBITDA, adjusted for the following items: ■ Exclusion of (i) onerous contract charges, (ii) restructuring costs, (iii) certain adviser and other costs or gains, (iv) impairment charge trade receivables, (v) profit/(loss) on disposal of property, plant and equipment and (vi) profit/(loss) from businesses disposed of for the period for which they formed part of the Group. Covenants are calculated on a post-IFRS 16 basis. ■ Inclusion of (viii) pre-acquisition profit/loss from businesses acquired. ■ The aforementioned items are capped at EUR 35 million (from 2021 onwards EUR 15 million). Free cash flow Cash flows from operating activities aer investing activities. Unless otherwise stated, free cash flow includes discontinued operations. Free cash flow aer lease payments Cash flows from operating activities aer investing activities, less payments of lease liabilities (as presented in cash flows from financing activities in the consolidated statement of cash flows). Unless otherwise stated, free cash flow aer lease payments includes discontinued operations. Consolidated interest expense Interest expense, plus all amortisation of financial indebtedness discount and expense less interest income for the entire group. Days of revenue outstanding (DRO) Trade receivables plus unbilled revenue on projects minus advances of instalments related to work in progress expressed as a number of days. The number of days is calculated using the exhaust method that is considering revenue recognised from the date of reporting backward until the receivable quantity is exhausted. Dividend yield Dividend as a percentage of the (average) share price. EBIT Reported result from operating activities before net financial expenses and taxation. Adjusted EBIT Reported result from operating activities before net financial expenses and taxation, adjusted for the following items: ■ Impairment losses ■ Onerous contract charges ■ Restructuring costs ■ Certain adviser and other costs or gains Adjusted EBIT margin Adjusted EBIT as a percentage of revenue for the relevant period. EBITDA Reported result from operating activities before net financial expenses, taxation, depreciation, amortisation, and impairment losses. Non-IFRS financial measures Backlog The amount of revenue related to signed contracts and work that can reasonably be expected based on framework contracts and outstanding tenders and proposals of which a good chance of success is expected (>) weighted with the likelihood of winning this work. In calculating the backlog of Seabed Geosolutions, only signed contracts are taken into account. Backlog – comparable growth Is defined as backlog growth compared to the comparable period from the prior year, calculated by translating the backlog for the more recent period at the exchange rates of the prior year’s comparable period. Capital employed Total equity plus loans and borrowings and bank overdras, minus cash and cash equivalents. Capital employed includes the relevant balances that are classified as held for sale and is calculated at the end of the (full or half year) reporting period. Adjusted capital employed Capital employed adjusted for impairment losses (post-tax) in the current year of property, plant and equipment, right of use assets, goodwill and other intangible assets. Capital expenditure Capital expenditures on property, plant and equipment. Cash flows from operating activities aer investing activities Cash flows provided by operating activities minus cash flows used for investing activities. FUGRO ANNUAL REPORT Operating cash flows before changes in working capital Cash flows provided by operating activities excluding the impact of movements in working capital during the period. Pay-out ratio Proposed dividend, multiplied by the number of shares entitled to dividend, divided by one thousand, divided by the net result. Revenue - comparable growth Reported revenue growth compared to the comparable period from the prior year, calculated by translating the revenue from the more recent period at the exchange rates of the prior year’s comparable period. Return on capital employed NOPAT over the last twelve months as a percentage of a three points average adjusted capital employed. Solvency Shareholders’ equity as a percentage of the balance sheet total. Taxonomy-Capex capital expenditures considered for the Group’s disclosures on the EU Taxonomy, referred to as Taxonomy-Capex, comprising additions to property, plant and equipment, additions to intangible assets and additions to right-of-use assets. Working capital The sum of inventories, trade and other receivables and trade and other payables. Interest coverage Adjusted consolidated EBITDA for purpose of covenant calculations divided by Consolidated interest expense. Net debt The sum of loans and borrowings and bank overdras minus cash and cash equivalents. Net interest charges Interest payable on loans and borrowings, less interest income received (net financial expenses). Net leverage for purpose of covenant calculations Net debt divided by adjusted consolidated EBITDA for purpose of covenant calculations. Net profit margin Profit as a percentage of revenue. Net result Profit or loss for the period, aributable to the owners of the company. Net revenue own service (revenue less third party costs) Net revenue own service comprises all revenue minus costs incurred with third parties related to the deployment of resources (in addition to the resources deployed by the Group) and other third party cost such as short-term lease or low-value lease expenses and other expenses required for the execution of various projects. NOPAT the sum of adjusted EBIT, the theoretical tax expense over adjusted EBIT applying the domestic weighted average tax rate, and the share of profit/(loss) of equity accounted investees (net of income tax). NOPAT includes discontinued operations. Through integrated acquisition and analysis of Geo-data and related advice, we unlock insights to help our clients design, build and operate their assets in a safe, sustainable and e cient manner. Population growth and urbanisation combined with the need for decarbonisation are driving increased spending on renewable energy, electricity networks and infrastructure in general. In addition, even with a successful transition to green energy, climate change is expected to lead to sea level rise and extreme weather, necessitating a ention for coastal zone management and fl ood protection. As a result, our purpose to create a safe and liveable world is becoming ever more relevant: Geo-data is essential for the safe and sustainable development and operation of our client’s assets. With our leading market positions, global footprint, versatile asset base, specialist workforce, innovative digital solutions and resilient operating model, we are well positioned to benefi t from these opportunities, and thus further diversify across multiple markets. You can fi nd relevant examples of Fugro’s solutions in the areas of energy transition, climate change adaptation and sustainable infrastructure throughout this report. Cautionary statement This annual report may contain forward-looking statements. Forward-looking statements are statements that are not historical facts, including (but not limited to) statements expressing or implying Fugro’s beliefs, expectations, intentions, forecasts, estimates, targets, projections or predictions (and the assumptions underlying them). Forward- looking statements necessarily involve known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual future results and situations may therefore di er materially from those expressed or implied in any forward-looking statements. Such di erences may be caused by various factors including, but not limited to, developments in the oil and gas industry and related markets, currency risks and unexpected operational setbacks. Any forward-looking statements contained in this announcement are based on information currently available to Fugro’s management. Fugro assumes no obligation to make a public announcement in each case where there are changes in that information or if there are otherwise changes or developments in respect of the forward-looking statements in this report. In this annual report, Fugro N.V. is also referred to as ‘the company’ or ‘Fugro’. Fugro N.V. and its subsidiary companies are together referred to as ‘the Group’. Site investigation services for o shore wind developments Creating Digital Twins’ of clients’ assets Solutions for fl ood protection C OLOPH O N F ugro N.V. V eurse Achterweg 10 2 264 SG Leidschendam T he Netherlands i [email protected] Realisation Domani B.V., The Hague Photography and images Fugro (employees) Michel Campfens Karen Kaper Sophie Ruigrok Fugro has endeavoured to fulfil all legal requirements related to copyright. Anyone who, despite this, is of the opinion that other copyright regulations could be applicable should contact Fugro. Annual Report 2021 Unlocking insights from Geo-data, for a safe and liveable world ■ Fugro Annual Report 2021 7245000R8GNBSDTSZ3962021-01-012021-12-317245000R8GNBSDTSZ3962020-01-012020-12-317245000R8GNBSDTSZ3962021-12-317245000R8GNBSDTSZ3962020-12-317245000R8GNBSDTSZ3962020-12-31ifrs-full:IssuedCapitalMember7245000R8GNBSDTSZ3962021-01-012021-12-31ifrs-full:IssuedCapitalMember7245000R8GNBSDTSZ3962021-12-31ifrs-full:IssuedCapitalMember7245000R8GNBSDTSZ3962020-12-31ifrs-full:SharePremiumMember7245000R8GNBSDTSZ3962021-01-012021-12-31ifrs-full:SharePremiumMember7245000R8GNBSDTSZ3962021-12-31ifrs-full:SharePremiumMember7245000R8GNBSDTSZ3962020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245000R8GNBSDTSZ3962021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245000R8GNBSDTSZ3962021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245000R8GNBSDTSZ3962020-12-31ifrs-full:TreasurySharesMember7245000R8GNBSDTSZ3962021-01-012021-12-31ifrs-full:TreasurySharesMember7245000R8GNBSDTSZ3962021-12-31ifrs-full:TreasurySharesMember7245000R8GNBSDTSZ3962020-12-31ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember7245000R8GNBSDTSZ3962021-01-012021-12-31ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember7245000R8GNBSDTSZ3962021-12-31ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember7245000R8GNBSDTSZ3962020-12-31FUG:RetainedEarningsExcludingProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962021-01-012021-12-31FUG:RetainedEarningsExcludingProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962021-12-31FUG:RetainedEarningsExcludingProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962020-12-31FUG:RetainedEarningsProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962021-01-012021-12-31FUG:RetainedEarningsProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962021-12-31FUG:RetainedEarningsProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember7245000R8GNBSDTSZ3962021-01-012021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember7245000R8GNBSDTSZ3962021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember7245000R8GNBSDTSZ3962020-12-31ifrs-full:NoncontrollingInterestsMember7245000R8GNBSDTSZ3962021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember7245000R8GNBSDTSZ3962021-12-31ifrs-full:NoncontrollingInterestsMember7245000R8GNBSDTSZ3962019-12-31ifrs-full:IssuedCapitalMember7245000R8GNBSDTSZ3962020-01-012020-12-31ifrs-full:IssuedCapitalMember7245000R8GNBSDTSZ3962019-12-31ifrs-full:SharePremiumMember7245000R8GNBSDTSZ3962020-01-012020-12-31ifrs-full:SharePremiumMember7245000R8GNBSDTSZ3962019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245000R8GNBSDTSZ3962020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245000R8GNBSDTSZ3962019-12-31ifrs-full:TreasurySharesMember7245000R8GNBSDTSZ3962020-01-012020-12-31ifrs-full:TreasurySharesMember7245000R8GNBSDTSZ3962019-12-31ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember7245000R8GNBSDTSZ3962020-01-012020-12-31ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember7245000R8GNBSDTSZ3962019-12-31FUG:RetainedEarningsExcludingProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962020-01-012020-12-31FUG:RetainedEarningsExcludingProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962019-12-31FUG:RetainedEarningsProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962020-01-012020-12-31FUG:RetainedEarningsProfitLossForReportingPeriodMember7245000R8GNBSDTSZ3962019-12-31ifrs-full:EquityAttributableToOwnersOfParentMember7245000R8GNBSDTSZ3962020-01-012020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember7245000R8GNBSDTSZ3962019-12-31ifrs-full:NoncontrollingInterestsMember7245000R8GNBSDTSZ3962020-01-012020-12-31ifrs-full:NoncontrollingInterestsMember7245000R8GNBSDTSZ3962019-12-31iso4217:EURiso4217:EURxbrli:shares
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