Earnings Release • Sep 11, 2023
Earnings Release
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Leidschendam, the Netherlands, 27 July 2023
| Key figures (x EUR million) | ||||
|---|---|---|---|---|
| Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | |
| Revenue | 552.5 | 467.7 | 1,018.3 | 833.0 |
| comparable growth1 | 21.5% | 12.8% | 24.1% | 17.2% |
| EBITDA2 | 101.7 | 70.6 | 160.4 | 97.5 |
| EBIT2 | 65.0 | 40.7 | 90.3 | 38.0 |
| EBIT margin2 | 11.8% | 8.7% | 8.9% | 4.6% |
| Net result | 71.7 | 29.4 | ||
| Cash flow from operating activities after investing (free cash flow)3 |
(5.4) | (67.6) | 10.2 | (74.8) |
| Backlog next 12 months | 1,303.2 | 1,104.7 | 1,303.2 | 1,104.7 |
| comparable growth1 | 21.3% | 21.7% | 21.3% | 21.7% |
Corrected for currency effect
Adjusted for specific items with a total impact of EUR 2.5 million on EBIT in H1 2023
Including discontinued operations
Mark Heine, CEO: "I am very pleased to report a strong set of results. All regions contributed to significant higher margins and cash generation, in particular the Americas and Europe-Africa. Overall, better contracting conditions, increasing asset utilisation and better operational performance led to a significant improvement in particular in the marine site characterisation business.
Across the globe, we are benefitting from high client demand for climate change adaptation and energy transition solutions, in particular for offshore wind developments. We are continuing on our trajectory of further diversification into future proof markets. At the same time, as expected, revenue in oil & gas is growing due to the need for energy security.
On the back of this set of results, the strength of our markets and our unique positioning, we are confident that we will deliver on our mid-term targets this year. To remain successful in capturing the market opportunities and secure controlled growth, we continue to invest in our people and asset base. At our capital markets day on 14 November 2023, we will update the market on our strategy and future targets."
First half-year revenue was up by 24.1% on a currency comparable basis, based on double digit growth in all regions. The increase in marine amounted to 30.9%, mainly driven by site characterisations for offshore wind farms and increased activity levels in the oil & gas markets. Vessel utilisation was 73% compared to 67% in the comparable period last year. Revenue in land increased by 8.6%, supported by nearshore activities for offshore wind and LNG developments.
Overall, as a result of more mature energy transition roadmaps in an increasing number of countries, renewables grew by 60%. Renewed interest in traditional energy sources resulted in a 36% growth in the oil and particularly gas market. The 11% decline in infrastructure revenue was primarily caused by reduced land revenue in the Middle East and business rationalisations in Europe-Africa. As Fugro's revenue in the water market is still limited, the sales development may vary.
Fugro's EBIT margin improved strongly, to 8.9% from 4.6% a year ago. As a result of top-line growth and operational efficiencies, all regions reported better margins, mainly the Americas and Europe-Africa. Overall, in particular the marine site characterisation margin was significantly higher compared to last year as a result of better contracting conditions, increasing vessel utilisation and better operational performance. The marine asset integrity margin increased as well. Results in Land business were slightly lower, caused by slippage of a large project and downtime of a jack-up platform in the Middle East.
Free cash flow increased by EUR 85.0 million, mainly as a result of EUR 59.4 million higher operating cash flow before working capital thanks to higher profitability. In addition, thanks to strict working capital management, working capital as a percentage of 12-months revenue declined to 14.1% compared to 15.7% a year ago, while days of revenue outstanding declined to a relatively low level of 82. Capital expenditure was EUR 71.8 million, including the delivery of the first of the two geotechnical vessels planned for this year. Net debt amounted to EUR 266.3 million compared to EUR 207.4 million at year-end 2022 due to an increase in leases. Net leverage amounted to 1.0x compared to 0.9x at year-end 2022, and 2.0x a year ago.
The 12-month backlog increased by 21.3%, supported by the marine business lines in all regions. The land backlog declined, mainly as a result of business rationalisations in Europe-Africa.
| (x EUR million) | Business lines - Key figures excluding specific items | H1 2023 | H1 2022 |
|---|---|---|---|
| Marine | Revenue comparable growth1 |
748.4 30.9% |
581.8 18.4% |
| EBITDA | 133.7 | 70.4 | |
| EBIT | 74.6 | 21.7 | |
| EBIT margin | 10.0% | 3.8% | |
| Backlog next 12 months comparable growth1 |
1,001.2 32.0% |
779.6 27.3% |
|
| Land | Revenue comparable growth1 |
269.9 8.6% |
251.2 14.5% |
| EBITDA | 26.7 | 27.1 | |
| EBIT | 15.7 | 16.3 | |
| EBIT margin | 5.8% | 6.4% | |
| Backlog next 12 months comparable growth1 |
302.0 (4.4%) |
325.1 10.0% |
Fugro expects ongoing growth especially in the energy markets, in particular renewables, resulting in strong revenue growth for the full year. The EBIT margin and return on capital employed are anticipated to be within the mid-term target range of 8-12% and 10-15% respectively, and free cash flow is anticipated to be positive. As previously indicated, capex is estimated at EUR 200-225 million, including the acquisition of two geotechnical vessels, and investments in Fugro's uncrewed vessel strategy and net zero roadmap.
| Key figures excluding specific items (x EUR million) | H1 2023 | H1 2022 | comparable growth1 |
|---|---|---|---|
| Revenue | 443.5 | 357.3 | 27.4% |
| EBIT | 52.2 | 26.7 | |
| EBIT margin | 11.8% | 7.5% | |
| Backlog next 12 months | 530.7 | 510.4 | 6.0% |
| 1. Corrected for currency effect |
| Key figures excluding specific items (x EUR million) | H1 2023 | H1 2022 | comparable growth1 |
|---|---|---|---|
| Revenue | 257.9 | 216.6 | 17.7% |
| EBIT | 21.3 | (0.8) | |
| EBIT margin | 8.3% | (0.4%) | |
| Backlog next 12 months | 368.7 | 288.1 | 30.2% |
| 1. Corrected for currency effect |
| Key figures excluding specific items (x EUR million) | H1 2023 | H1 2022 | comparable growth1 |
|---|---|---|---|
| Revenue | 202.8 | 155.1 | 34.3% |
| EBIT | 15.7 | 11.3 | |
| EBIT margin | 7.8% | 7.3% | |
| Backlog next 12 months | 246.6 | 198.1 | 31.3% |
| 1. Corrected for currency effect |
| Key figures excluding specific items (x EUR million) | H1 2023 | H1 2022 | comparable growth1 |
|---|---|---|---|
| Revenue | 114.1 | 104.0 | 10.9% |
| EBIT | 1.1 | 0.8 | |
| EBIT margin | 1.0% | 0.8% | |
| Backlog next 12 months | 157.2 | 108.1 | 51.3% |
| 1. Corrected for currency effect |
Ron Mobed, who first joined Fugro's Supervisory Board in April 2020, has been appointed vice-chairman of Fugro's Supervisory Board. In this capacity, he succeeds Petri Hofsté, who left Fugro's Supervisory Board in April 2023, after having served two successive four-year terms.
| 26 October 2023 | Publication third quarter 2023 trading update |
|---|---|
| 14 November 2023 | Capital markets day |
| 29 February 2024 | Publication full-year 2023 results |
| Media | Investors |
|---|---|
| Serge van de Ven | Catrien van Buttingha Wichers |
| [email protected] | [email protected] |
| +31 70 31 11129 | +31 70 31 15335 |
| +31 6 30942428 | +31 6 1095 4159 |
Fugro is the world's leading Geo-data specialist, collecting and analysing comprehensive information about the Earth and the structures built upon it. Adopting an integrated approach that incorporates acquisition and analysis of Geo-data and related advice, Fugro provides solutions. With expertise in site characterisation and asset integrity, clients are supported in the safe, sustainable and efficient design, construction and operation of their assets throughout the full life cycle.
Employing approximately 10000 talented people in 57 countries, Fugro serves clients around the globe, predominantly in the energy and infrastructure industries, both offshore and onshore. In 2022, revenue amounted to EUR 1.8 billion. Fugro is listed on Euronext Amsterdam.
This release contains information that qualifies, or may qualify as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This announcement 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 or predictions (and the assumptions underlying them). Forward-looking statements necessarily involve risks and uncertainties. The actual future results and situations may therefore differ materially from those expressed or implied in any forward-looking statements. Such differences may be caused by various factors (including, but not limited to, developments in the oil & 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 in each case make a public announcement if there are changes in that information or if there are otherwise changes or developments in respect of the forward-looking statements in this announcement.
| (x EUR million) | H1 2023 | H1 2022 |
|---|---|---|
| Adjusted EBITDA | 160.4 | 97.5 |
| Depreciation & amortisation | (70.1) | (59.5) |
| Adjusted EBIT | 90.3 | 38.0 |
| Specific items on EBIT | 2.5 | (3.8) |
| EBIT | 92.8 | 34.2 |
| Net finance income/ (costs) | (31.5) | 2.4 |
| Share of profit/ (loss) in equity accounted investees | 14.5 | 7.1 |
| Income tax gain/ (expense) | (4.6) | (12.3) |
| (Gain)/ loss on non-controlling interests from continuing operations | (2.3) | (2.0) |
| Net result from continuing operations | 68.9 | 29.4 |
| Result from discontinued operations | 2.8 | - |
| Net result including discontinued operations | 71.7 | 29.4 |
In the period under review, specific items were mainly composed of a reversal of previous impairment on the Fugro Synergy vessel and a divestment loss on Fugro's Russian activities (after having suspended and subsequently ceased all operations in the country in 2022).
| (x EUR million) | H1 2023 | H1 2022 |
|---|---|---|
| Finance income | 3.3 | 1.1 |
| Finance expenses | (16.8) | (17.3) |
| Exchange rate variances | (18.0) | 18.6 |
| Net finance income (costs) | (31.5) | 2.4 |
Finance expenses were in line with the comparable period last year. Finance expenses reduced marginally with EUR 0.5 million, resulting from lower interest charges secured from the refinancing in July 2022 and lower interest on the convertible bond due to the partial buy- back in the second half of 2022, offset by higher variable interest rates (EURIBOR) and an increase in leases, mainly vessel related. The exchange rate variances mainly related to the devaluation of the US dollar and related currencies, compared to an appreciation of the US dollar in the comparable period last year.
The share of profit of equity-accounted investees of EUR 14.5 million mainly comprises the result of joint ventures, including China Offshore Fugro Geosolutions and Global Marine Group; the latter includes a EUR 9.7 million gain on the disposal of Fugro's remaining interest.
The income tax expense of EUR 4.6 million for the period comprises a current tax expense of EUR 16.0 million, largely offset by a deferred income tax gain of EUR 11.4 million, driven by the recognition and utilisation of previously unrecognised tax losses.
The EUR 2.3 million gain attributable to non-controlling interests mainly consists of the profit of a subsidiary in the Middle East.
| (x EUR million) | H1 2023 | 1 H1 2022 |
|---|---|---|
| Working capital | 274.7 | 249.9 |
| Working capital as % of last 12 months revenue | 14.1% | 15.4% |
| Inventories | 37.4 | 39.1 |
| Trade and other receivables | 673.5 | 622.1 |
| Trade and other payables | (436.2) | (411.3) |
| Days revenue outstanding (DRO) | 82 | 89 |
Working capital as a percentage of 12-months rolling revenue was 14.1% at the end of June, below 15.4% a year ago, as a result of strict working capital management. In absolute terms, working capital was up, which is due to the year-on-year revenue growth.
| (x EUR million) | H1 2023 | H1 2022 |
|---|---|---|
| Maintenance capex | 24.6 | 47.5 |
| Transformation and expansion capex | 47.2 | 19.5 |
| Capex | 71.8 | 67.0 |
Capital expenditure increased slightly, mainly due to the delivery of the first of the two geotechnical vessels planned for this year. Maintenance capex was below last year, when a relatively large number of vessels was in scheduled periodical maintenance.
| (x EUR million) | H1 2023 | H1 2022 |
|---|---|---|
| Cash flow from operating activities | 71.1 | (8.6) |
| Cash flow from investing activities | (58.2) | (60.7) |
| Cash flow from operating activities after investing | 12.9 | (69.3) |
| Cash flow from financing activities | (25.7) | 64.5 |
| Net cash provided by/ (used for) continuing operations | (12.8) | (4.8) |
| Net cash provided by/ (used for) discontinued operations | (2.7) | (5.3) |
Cash flow from operating activities improved from last year, mainly due to a higher EBITDA and better working capital performance. Cash flow from investing activities mainly relates to capital expenditures. Cash flow from financing activities was an outflow of EUR 25.7 million, mainly relating to lease payments.
In the period under review, Fugro has not identified other risk categories or key risks than mentioned in the annual report 2022.
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. The Board of Management holds ultimate responsibility for risk management within the company. The Executive Leadership Team, which includes the members of the Board of Management, identifies and analyses the risks and opportunities associated with the strategy and activities of Fugro, establishes the risk appetite and measures that are put in place in order to manage the risks.
In its annual report 2022, Fugro extensively describes the company's risk management process, including its appetite, direction and monitoring of the various key risks that could adversely affect its business or financial position, as well as its reputation and performance. Amongst others, this includes the risks and opportunities related to climate change mitigation and adaption.
As the company is subject to external circumstances, and considering the current highly volatile geopolitical and macro-economic environment and resulting inflationary and supply chain pressures, there is a risk that this is not properly addressed during the execution of the strategy. The risk management process is therefore monitored closely by the Executive Leadership Team, and several risk management activities are in place to manage risks. Additional risks not known to the company, or currently believed not to be material, may occur and could later turn out to have material impact on its business, financial objectives or capital resources. In order to monitor and address risks a proactive approach in risk management is in place. A comprehensive assessment to address Fugro's strategic, operational, financial and compliance risks is continuously ongoing in all levels within the company.
Certain parts of this 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 internal measures of performance to benchmark and compare against budget, the prior year comparative period and its latest internal forecasts.
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. 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 better 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 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.
A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures for the six-month period ended 30 June 2023 and the prior year comparative period is contained in this document (see pages 30-32).
Pursuant to section 5:25d, paragraph 2 sub c of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht)
The Board of Management hereby declares that, to the best of their knowledge, the consolidated interim financial statements in this half-year report 2023 have been prepared in accordance with IAS 34 'Interim Financial Reporting' and give a true and fair view of the assets, liabilities, financial position and the result of Fugro N.V. and its consolidated companies included in the consolidation. A as a whole, the interim management report in this half-year report 2023 gives a fair view of the information required pursuant to section 5:25d, subsections 8 and 9 of the Dutch Financial Markets Supervision Act.
Leidschendam, 26 July 2023
M.R.F. Heine, Chairman Board of Management/Chief Executive Officer B.P.E. Geelen, Chief Financial Officer
| Consolidated statement of comprehensive income | 12 |
|---|---|
| Consolidated statement of financial position | 14 |
| Consolidated statement of changes in equity | 15 |
| Consolidated statement of cash flows | 17 |
| Selected explanatory notes | 19 |
| Independent auditor's review report | 28 |
| For the six-month period ended 30 June | |||
|---|---|---|---|
| Notes | (x EUR million) Unaudited |
2023 | 2022 |
| Continuing operations | |||
| 5, 6 | Revenue | 1,018.3 | 833.0 |
| Third party costs | (383.8) | (338.7) | |
| Net revenue own services1 | 634.5 | 494.3 | |
| 7 | Other income | 3.1 | 10.5 |
| Personnel expenses | (373.7) | (319.8) | |
| Depreciation | (69.8) | (59.2) | |
| Amortisation | (0.3) | (0.3) | |
| 10, 12 | Impairment reversal / (charge) | 3.9 | (2.4) |
| 8 | Other expenses | (104.9) | (88.9) |
| Results from operating activities (EBIT1 ) |
92.8 | 34.2 | |
| Finance income | 3.3 | 19.8 | |
| Finance expenses | (34.8) | (17.4) | |
| Net finance income/(expenses) | (31.5) | 2.4 | |
| 10 | Share of profit/(loss) of equity-accounted investees (net of income tax) | 14.5 | 7.1 |
| Profit/(loss) before income tax | 75.8 | 43.7 | |
| 11 | Income tax (expense)/gain | (4.6) | (12.3) |
| Profit/(loss) for the period from continuing operations | 71.2 | 31.4 | |
| 10 | Profit/(loss) for the period from discontinued operations | 2.8 | - |
| Profit/(loss) for the period | 74.0 | 31.4 | |
| Attributable to: | |||
| Owners of the company (net result) | 71.7 | 29.4 | |
| Non-controlling interests | 2.3 | 2.0 | |
| Earnings per share (Euro) | |||
| Basic earnings per share | 0.66 | 0.29 | |
| Basic earnings per share from continuing operations | 0.64 | 0.29 | |
| Diluted earnings per share | 0.66 | 0.29 | |
| Diluted earnings per share from continuing operations | 0.64 | 0.29 | |
| Profit/(loss) for the period | 74.0 | 31.4 | |
| Defined benefit plan actuarial gains/(losses) (net of income tax) | (1.4) | 16.9 | |
| Total items that will not be reclassified to profit or loss | (1.4) | 16.9 | |
| Foreign currency translation differences of foreign operations | (0.9) | 28.3 | |
| Foreign currency translation differences of equity-accounted investees | (8.0) | 0.4 | |
| Total items that will be reclassified subsequently to profit or loss | (8.9) | 28.7 | |
| Other comprehensive income/(loss) for the period | (10.3) | 45.6 | |
| Total comprehensive income/(loss) for the period | 63.7 | 77.0 |
| Owners of the company | 61.8 | 74.6 |
|---|---|---|
| Non-controlling interests | 1.9 | 2.4 |
| Total comprehensive income/(loss) attributable to owners of the company arising from: |
||
| Continuing operations | 59.0 | 74.6 |
| Discontinued operations | 2.8 | - |
1 Non-IFRS performance measure. Reference is made to the non-IFRS performance reconciliations and the glossary of the annual report 2022.
| Consolidated statement of financial position | |||
|---|---|---|---|
| Notes | (x EUR million) Unaudited |
30 June 2023 |
31 December 2022 Restated (*) |
| Assets | |||
| 12 | Property, plant and equipment | 573.2 | 560.1 |
| 13 | Right-of-use assets | 239.5 | 196.9 |
| 14 | Intangible assets including goodwill | 288.9 | 292.7 |
| Investments in equity-accounted investees | 48.2 | 46.5 | |
| 15, 19 | Other investments | 38.8 | 35.3 |
| 11 | Deferred tax assets | 76.2 | 58.7 |
| Total non-current assets | 1,264.8 | 1,190.2 | |
| Inventories | 37.5 | 35.1 | |
| 16 | Trade and other receivables | 673.5 | 598.1 |
| 11 | Current tax assets | 7.5 | 7.6 |
| 16 | Cash and cash equivalents | 188.9 | 209.1 |
| 907.4 | 849.9 | ||
| 10 | Assets classified as held for sale | 5.7 | 10.7 |
| Total current assets | 913.1 | 860.6 | |
| Total assets | 2,177.9 | 2,050.8 | |
| Equity | |||
| Total equity attributable to owners of the company | 1,113.9 | 1,048.3 | |
| Non-controlling interests | 10.3 | 11.3 | |
| Total equity | 1,124.2 | 1,059.6 | |
| Liabilities | |||
| 17 | Loans and borrowings | 242.1 | 241.7 |
| 13 | Lease liabilities | 133.6 | 99.9 |
| 19 | Employee benefits | 36.7 | 36.9 |
| 18 | Provisions | 11.7 | 16.6 |
| 11 | Deferred tax liabilities | 5.9 | 1.5 |
| Total non-current liabilities | 430.0 | 396.6 | |
| 16 | Bank overdraft | 0.5 | 2.1 |
| 17 | Loans and borrowings | - | 3.8 |
| 13 | Lease liabilities | 78.9 | 69.1 |
| 16 | Trade and other payables | 436.4 | 410.8 |
| 18 | Provisions | 5.9 | 10.8 |
| Current tax liabilities | 38.9 | 37.1 | |
| Other taxes and social security charges | 63.1 | 60.9 | |
| Total current liabilities | 623.7 | 594.6 | |
| Total liabilities | 1,053.7 | 991.2 | |
| Total equity and liabilities | 2,177.9 | 2,050.8 |
(*) Reference is made to note 2.
For the six-month period ended 30 June
| Notes | (x EUR million) Unaudited |
Share capital |
Share premium |
Translation reserve |
Reserve for own shares |
Equity component of convertible bonds |
Retained earnings |
Unappro priated result |
Total | Non controlling interest |
Total equity |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2023 |
5.7 | 878.1 | (84.2) | (139.9) | 5.0 | 309.5 | 74.1 | 1,048.3 | 11.3 | 1,059.6 | |
| Profit or (loss) | - | - | - | - | - | - | 71.7 | 71.7 | 2.3 | 74.0 | |
| 8, 19 | Other comprehensive income | - | - | (8.5) | - | - | (1.4) | - | (9.9) | (0.4) | (10.3) |
| Total comprehensive income/(loss) for the period |
- | - | (8.5) | - | - | (1.4) | 71.7 | 61.8 | 1.9 | 63.7 | |
| 20 | Share-based payments | - | - | - | - | - | 3.8 | - | 3.8 | - | 3.8 |
| Delivery of treasury shares for share-based payment plans |
- | - | - | 32.0 | - | (32.0) | - | - | - | - | |
| Addition to / (reduction of) reserves |
- | - | - | - | - | 74.1 | (74.1) | - | - | - | |
| Dividends to shareholders | - | - | - | - | - | - | - | - | (2.9) | (2.9) | |
| Total contributions by and distributions to owners |
- | - | - | 32.0 | - | 45.9 | (74.1) | 3.8 | (2.9) | 0.9 | |
| Balance at 30 June 2023 | 5.7 | 878.1 | (92.7) | (107.9) | 5.0 | 354.0 | 71.7 | 1,113.9 | 10.3 | 1,124.2 |
| Notes | (x EUR million) Unaudited |
Share capital |
Share premium |
Translation reserve |
Reserve for own shares |
Equity component of convertible bonds |
Retained earnings |
Unappro priated result |
Total | Non controlling interest |
Total equity |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2022 as previously reported |
5.2 | 762.5 | (95.0) | (149.3) | 11.8 | 244.9 | 71.1 | 851.2 | 10.4 | 861.6 | |
| 2, 11, 16 |
Restatement of prior period errors |
- | - | - | - | - | (6.7) | - | (6.7) | - | (6.7) |
| Restated balance at 1 January 2022 |
5.2 | 762.5 | (95.0) | (149.3) | 11.8 | 238.2 | 71.1 | 844.5 | 10.4 | 854.9 | |
| Profit or (loss) | - | - | - | - | - | - | 29.4 | 29.4 | 2.0 | 31.4 | |
| Other comprehensive income | - | - | 28.3 | - | - | 16.9 | - | 45.2 | 0.4 | 45.6 | |
| Total comprehensive income/(loss) for the period |
- | - | 28.3 | - | - | 16.9 | 29.4 | 74.6 | 2.4 | 77.0 | |
| 20 | Share-based payments | - | - | - | - | - | 3.2 | - | 3.2 | - | 3.2 |
| Delivery of treasury shares for share-based payment plans |
- | - | - | 7.4 | - | (7.4) | - | - | - | - | |
| Addition to/ (reduction of) reserves |
- | - | - | - | - | 71.1 | (71.1) | - | - | - | |
| Dividends to shareholders | - | - | - | - | - | - | - | - | (0.6) | (0.6) | |
| Total contributions by and distributions to owners |
- | - | - | 7.4 | - | 66.9 | (71.1) | 3.2 | (0.6) | 2.6 | |
| Restated balance at 30 June 2022 |
5.2 | 762.5 | (66.7) | (141.9) | 11.8 | 322.0 | 29.4 | 922.3 | 12.2 | 934.5 |
For the six-month period ended 30 June
| Notes | (x EUR million) Unaudited |
2023 | 2022 |
|---|---|---|---|
| Continuing operations | |||
| Cash flows from operating activities | |||
| Profit/(loss) for the period | 71.2 | 31.4 | |
| Adjustments for: | |||
| Depreciation and amortisation | 70.1 | 59.5 | |
| 10, 12 | Impairment (reversal) / charge | (3.9) | 2.4 |
| Impairment of other investments | 1.0 | - | |
| 10 | Share of (profit)/loss of equity-accounted investees (net of income tax) | (14.5) | (7.1) |
| 12 | Net gain on sale of property, plant and equipment | (0.9) | (1.4) |
| 20 | Equity-settled share-based payments | 3.8 | 3.2 |
| 8 | Net loss on sale of business | 2.5 | - |
| Change in provisions and employee benefits | (9.4) | (7.0) | |
| 11 | Income tax expense/(gain) | 4.6 | 12.3 |
| Income tax paid | (13.0) | (6.9) | |
| Finance income and expense | 31.5 | (2.4) | |
| Interest paid | (12.1) | (12.4) | |
| Operating cash flows before changes in working capital1 | 131.0 | 71.6 | |
| Decrease (increase) in working capital: | |||
| • Decrease/(increase) in inventories | (3.1) | (8.7) | |
| • Decrease/(increase) in trade and other receivables | (116.6) | (90.6) | |
| • Increase/(decrease) in trade and other payables | 59.9 | 19.1 | |
| Net cash generated from operating activities | 71.1 | (8.6) | |
| Cash flows from investing activities | |||
| 12 | Capital expenditures on property, plant and equipment | (71.8) | (65.2) |
| Acquisition of and other additions to intangible assets | (0.2) | (1.2) | |
| Proceeds from sale of property, plant and equipment | 2.9 | 1.9 | |
| 8 | Proceeds from sale of business, net of cash sold | (0.4) | - |
| Disposal of intangible assets | - | 0.7 | |
| 10 | Dividends received | 13.5 | 7.1 |
| Acquisitions, net of cash acquired | - | (0.6) | |
| Repayment of long-term loans and receivables | 1.1 | 0.6 | |
| Additions to other investments | (3.3) | (4.0) | |
| Net cash (used in)/from investing activities | (58.2) | (60.7) | |
| Cash flows from operating activities after investing activities1 | 12.9 | (69.3) |
| Cash flows from financing activities | ||
|---|---|---|
| Proceeds from the issue of long-term loans | 0.2 | 104.5 |
| Transaction costs on long-term loans | (0.2) | |
| Repayment of borrowings | (3.8) | (23.6) |
| Dividends paid | (2.9) | (0.6) |
| Payments of lease liability | (19.0) | (15.8) |
| Net cash from/(used in) financing activities | (25.7) | 64.5 |
| Net cash provided by/(used for) continuing operations | (12.8) | (4.8) |
| Discontinued operations | ||
| Cash flows from operating activities | (2.7) | (5.5) |
| Cash flows from investing activities | - | |
| Cash flows from financing activities | - | |
| Net cash provided by/(used for) discontinued operations | (2.7) | (5.5) |
| Total net cash provided by/(used for) operations | (15.5) | (10.3) |
| Effect of exchange rate fluctuations on cash held | (3.1) | 10.7 |
| Cash and cash equivalents at 1 January | 207.0 | 147.1 |
| Cash and cash equivalents at 30 June | 188.4 | 147.5 |
| Presentation in the statement of financial position | ||
| Cash and cash equivalents | 188.9 | 149.9 |
| Bank overdraft | (0.5) | (2.4) |
1 Non-IFRS performance measure. Reference is made to the non-IFRS performance reconciliations and the glossary of the annual report 2022.
Fugro N.V., hereinafter referred to as 'Fugro', 'the group', or 'the company', has its corporate seat and principal office at Leidschendam the Netherlands and is listed on the Euronext Amsterdam stock exchange.
The group condensed consolidated interim financial statements (hereinafter: interim financial statements) as at and for the six-month period ended 30 June 2023 have been prepared in accordance with IAS 34, ´Interim Financial Reporting´. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of Fugro N.V. as at and for the year ended 31 December 2022, which have been prepared in accordance with IFRS as endorsed by the European Union. The annual report 2022 (including the consolidated financial statements 2022) is available at www.fugro.com. The Board of Management and Supervisory Board authorised these interim financial statements for issue on 26 July 2023. The interim financial statements have been reviewed, not audited.
The material accounting policies in these interim financial statements are the same as those applied by the group in its consolidated financial statements as at and for the year ended 31 December 2022, unless stated otherwise.
In May 2023, the Group identified prior period overstatements of current tax assets (EUR 1.3 million), trade and other receivables (EUR 5.4 million) and property, plant and equipment (EUR 0.1 million) in one entity which were intentionally not adjusted to their correct amount by a local financial controller. Following further investigation by Group management, this accounting irregularity was determined to be an isolated occurrence in a single entity and remedial action has been initiated. The group has retrospectively corrected the prior period errors as of 1 January 2022, by restating each of these financial statement line items affected and equity (retained earnings) for the total amount of EUR 6.7 million. The comparative figures in the statement of financial position and related notes have been adjusted accordingly. The consolidated statements of comprehensive income and cash flows were not impacted.
Certain new accounting standards and interpretations have been published that are not yet effective for these interim financial statements and have not been early adopted by the group. These new standards are either not material for Fugro and/or not applicable. Several amendments and interpretations apply for the first time as of 1 January 2023, but these do not have a material impact on these interim financial statements.
The group's estimates, judgements, uncertainties and assumptions regarding the future were disclosed in the basis of preparation of the annual consolidated financial statements 2022. This assessment included impairment of assets, deferred tax, employee benefits, provisions, climate-related matters and macro-economic environment following geo-political events. In preparing these interim financial statements, management has updated these judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The nature, amount
and impact of any changes in estimates of amounts reported in the 2022 annual financial statements are disclosed in the notes below.
Information about reportable segments for the six months ended 30 June, unless stated otherwise
| (x EUR million) | E-A | AM | APAC | MEI | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Segment revenue | 458.8 | 381.4 | 260.9 | 221.8 | 209.5 | 166.7 | 118.8 | 115.9 | 1,048.0 | 885.8 |
| Of which inter-segment revenue |
15.2 | 24.1 | 3.0 | 5.2 | 6.8 | 11.6 | 4.7 | 11.9 | 29.7 | 52.8 |
| Revenue | 443.6 | 357.3 | 257.9 | 216.6 | 202.7 | 155.1 | 114.1 | 104.0 | 1,018.3 | 833.0 |
| Impairment reversal/(charge) | 4.6 | (0.5) | (0.7) | (0.3) | - | (1.5) | - | (0.1) | 3.9 | (2.4) |
| Result from operating activities (EBIT) |
54.2 | 25.7 | 21.8 | (1.7) | 15.7 | 9.5 | 1.1 | 0.7 | 92.8 | 34.2 |
| Reportable segment profit/(loss) before income tax |
43.9 | 33.9 | 18.6 | (2.3) | 17.3 | 12.8 | (4.0) | (0.7) | 75.8 | 43.7 |
| Non – current assets: | ||||||||||
| 30 June 2023 and 31 December 2022 |
619.2 | 596.6 | 258.6 | 206.6 | 242.5 | 241.2 | 141.4 | 145.9 | 1,261.7 | 1,190.3 |
Revenue by businesses and market segment
| Six months ended 30 June 2023 |
Six months ended 30 June 2022 (*) |
|||||
|---|---|---|---|---|---|---|
| (x EUR million) | Marine | Land | Total | Marine | Land | Total |
| Oil and gas | 391.8 | 30.7 | 422.5 | 304.6 | 22.9 | 327.5 |
| Renewables | 298.7 | 26.9 | 325.6 | 181.6 | 27.0 | 208.6 |
| Infrastructure | 37.5 | 200.6 | 238.1 | 63.7 | 193.8 | 257.5 |
| Water | 20.6 | 11.5 | 32.1 | 31.9 | 7.5 | 39.4 |
| Total | 748.6 | 269.7 | 1,018.3 | 581.8 | 251.2 | 833.0 |
| Of which: | ||||||
| Site characterisation | 480.6 | 219.7 | 700.3 | 350.4 | 205.1 | 555.5 |
| Asset integrity | 268.0 | 50.0 | 318.0 | 231.4 | 46.1 | 277.5 |
(*) Restated for the reclassification of services from Land site characterisation to Marine site characterisation, and for the reclassification of services from Land asset integrity to Land site characterisation following changes in internal management reporting in 2023. The reclassification impact is EUR 2.8 million and EUR 6.1 million respectively for the first six months of 2022.
| (x EUR million) | Six months ended 30 June 2023 |
Six months ended 30 June 2022 |
|---|---|---|
| Government grants | 1.6 | 2.2 |
| Gain on sale of property, plant and equipment | 0.9 | 1.5 |
| Sundry income | 0.6 | 6.8 |
| Total | 3.1 | 10.5 |
Included in other expenses is a loss on disposal of EUR 2.5 million from the sale of Fugro's business in Russia. This disposal was completed in the second quarter of 2023 after obtaining all required regulatory approvals.
Fugro previously suspended and subsequently ceased all operations in Russia in 2022, as first announced on 8 March 2022. The loss on disposal includes EUR 1.1 million (loss) of cumulative foreign currency translation reserves relating to the Russian operations which on disposal was recycled to profit and loss.
Adverse weather conditions are generally experienced during the winter months. Accordingly, Fugro's revenue in the months November up to and including February is generally lower than in the remainder of the year in most jurisdictions (ignoring current market developments).
Seabed Geosolutions had been presented as a disposal group held for sale and a discontinued operation until its divestment on 28 June 2021. There is no material impact from discontinued operations in these interim financial statements. The cash flow from discontinued operations in H1 2023 relates to restructuring payments and settlement of working capital positions in connection with Seabed Geosolutions.
The profit from discontinued operations is related to the release of the provision for tax indemnities and warranties connected to the sale of majority of the Geoscience business to CGG in 2013.
Assets held for sale at 30 June 2023 of EUR 5.7 million (31 December 2022: EUR 10.7 million) includes property, plant and equipment for a total carrying amount of EUR 5.7 million (31 December 2022: EUR 2.9 million). The balance fully relates to two office buildings in the Americas region. The classification as held for sale of one of the buildings in the first half of 2023 triggered an impairment loss of EUR 0.7 million.
As disclosed in subsequent events note 38 of the consolidated financial statements 2022, Fugro completed the divestment of its non-core interest in the Global Marine Group (GMG) on 7 March 2023. GMG was previously presented as non-current asset held for sale. The divestment resulted in a gain on disposal of EUR 2.4 million, which was presented in 'share of profit of equity-accounted investees' in profit and loss. The divestment of GMG qualifies as a full disposal of the remaining activities of GMG. Accordingly, the cumulative exchange gains of EUR 7.3 million were reclassified from the 'translation reserve' in equity to the 'share of profit of equityaccounted investees' in profit and loss. The proceeds received amounted to EUR 9.9 million which was presented as cash flow from investing activities (dividends received) in the consolidated statement of cash flows.
| (x EUR million) | Six months ended 30 June 2023 |
Six months ended 30 June 2022 |
|---|---|---|
| Current income tax (expense)/gain | (16.0) | (10.4) |
| Deferred income tax (expense)/gain | 11.4 | (1.9) |
| Total income tax (expense)/gain | (4.6) | (12.3) |
A prior period overstatement of current tax assets (EUR 1.3 million) was corrected retrospectively as of 1 January 2022 (reference is made to note 2). Deferred tax assets for previously unrecognised net operating loss carryforwards have been recognised during the first half of 2023 for the amount of EUR 14.9 million in connection with an improved profitability outlook, in the Americas (EUR 12.1 million) and Asia Pacific (EUR 2.8 million)
regions. In addition, EUR 6.9 million of previously unrecognised tax losses and temporary differences have been utilised during the first half of 2023, mainly in the Americas region.
Acquisitions and disposals
| (x EUR million) | Six months ended 30 June 2023 |
Six months ended 30 June 2022 |
|---|---|---|
| Acquisitions cost value | 71.8 | 67.0 |
| Carrying amount of assets disposed | 0.3 | 0.5 |
| Net gain on disposals presented in other income | 0.9 | 1.5 |
Acquisitions include an amount of EUR 22.7 million in fixed assets under construction, relating to the purchase of a platform supply vessel which will be repurposed to a geotechnical vessel. A EUR 4.6 million reversal of impairment loss was accounted for in the first half of 2023, following the improved business outlook for the Fugro Synergy. The recoverable amount of the vessel was determined based on a value in use calculation.
| (x EUR million) | Six months ended 30 June 2023 |
Six months ended 30 June 2022 |
|---|---|---|
| Right-of-use assets | ||
| Depreciation for the period | 20.0 | 16.1 |
| Additions for the period | 55.6 | 40.7 |
| Amounts recognised in profit and loss during the period | ||
| Interest expense on lease liabilities | 4.1 | 3.1 |
| Variable lease payments not included in measurement of lease liabilities | 10.5 | 5.5 |
| Low-value asset expense | 6.3 | 8.1 |
| Expenses relating to short-term leases | 60.9 | 61.6 |
Refer to note 24 Subsequent events for the geotechnical vessels Fugro Voyager and Fugro Scout. Additions in the first half of 2023 relate, among others, to new vessels leases in the Americas and Europe Africa regions.
| (x EUR million) | 30 June 2023 |
31 December 2022 |
|---|---|---|
| Less than one year | 79.7 | 78.4 |
| One to five years | 96.4 | 74.5 |
| More than five years | 84.1 | 79.3 |
| Total undiscounted lease liabilities | 260.2 | 232.2 |
| (x EUR million) | Goodwill | E&E (Finder/Theia) |
Software | Other | Total |
|---|---|---|---|---|---|
| Carrying amount at 1 January 2023 | 272.4 | 17.0 | 0.9 | 2.4 | 292.7 |
| Changes in carrying amount: | |||||
| Purchase of intangibles assets | - | - | - | - | - |
| Other additions | - | 0.2 | - | - | 0.2 |
| Amortisation | - | - | (0.1) | (0.2) | (0.3) |
| Impairment | - | - | - | - | - |
| Disposals | - | - | - | - | - |
| Effects of movements in foreign currency exchange rates |
(2.7) | (0.8) | (0.1) | (0.1) | (3.7) |
| Total changes | (2.7) | (0.6) | (0.2) | (0.3) | (3.8) |
| Carrying amount at 30 June 2023 | 269.7 | 16.4 | 0.7 | 2.1 | 288.9 |
| (x EUR million) | 30 June 2023 |
31 December 2022 |
|---|---|---|
| Equity securities | 1.1 | 1.1 |
| Long-term loans | 3.5 | 4.5 |
| Deposits | 2.2 | 3.2 |
| Net defined benefit asset (refer to note 19) | 25.8 | 21.3 |
| Other long-term assets | 6.2 | 5.2 |
| Balance | 38.8 | 35.3 |
Long-term loans comprise a loan due from Wavewalker B.V. for which EUR 1.0 million impairment is recognised as the expected credit loss.
| (x EUR million) | 30 June 2023 |
31 December 2022 |
|---|---|---|
| Trade receivables | 302.4 | 291.2 |
| Other receivables (*) | 96.6 | 92.3 |
| Unbilled revenue on (completed) contracts (*) | 274.5 | 214.6 |
| Trade and other receivables | 673.5 | 598.1 |
| Trade payables | 101.8 | 110.1 |
| Advance instalments to work in progress | 70.6 | 71.5 |
| Other payables | 264.0 | 229.2 |
| Trade and other payables | 436.4 | 410.8 |
| Cash and cash equivalents | 188.9 | 209.1 |
| Bank overdraft | (0.5) | (2.1) |
| Net cash and cash equivalents | 188.4 | 207.0 |
(*) A prior period overstatement of unbilled revenue on (completed) contracts (EUR 2.1 million) and other receivables (EUR 3.3 million) was corrected retrospectively as of 1 January 2022 (reference is made to note 2). The comparative figures in the table above have been adjusted accordingly for the same amounts.
The cash and cash equivalents disclosed above include EUR 5.9 million (31 December 2022: EUR 9.4 million) of Angolan Kwanza's and EUR 4.0 million (31 December 2022: EUR 6.9 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.
| (x EUR million) | 30 June 2023 |
31 December 2022 |
|---|---|---|
| Super senior term loan of EUR 200 million | 199.8 | 200.2 |
| Subordinated unsecured convertible bonds of EUR 100 million | 41.0 | 40.3 |
| Other loans and long-term borrowings | 1.3 | 4.9 |
| Sub-total | 242.1 | 245.4 |
| Less: current portion of loans and borrowings | - | (3.7) |
| Balance | 242.1 | 241.7 |
On 12 May 2023, Fugro requested to exercise its one-year extension option of the term loan and revolving credit facility, extending the maturity date from 5 August 2025 to 5 August 2026. All lenders consented on 7 June 2023. Transaction costs of EUR 0.2 million were included in the carrying amount of the term loan and are recognised in P&L in accordance with the effective interest rate method over the extended term. Transaction costs of EUR 0.2 million relating to the RCF were recorded as current assets and are amortised over the extended term.
Fugro obtained approval on 7 June 2023 from the lenders to increase the maximum amount of cash collateral or deposits granted as (quasi-) security from EUR 150 million to EUR 200 million. This is to accommodate anticipated increases in guarantee facility requirements as a result of the Group's estimated revenue growth and the increased prevalence of large-sized projects over the next three years.
| 30 June 2023 |
31 December 2022 Restated |
|||||
|---|---|---|---|---|---|---|
| Principal covenants | Target | Actual | Headroom | Target | Actual | Headroom |
| Solvency ratio | >=33.33% | 51.1% | 17.77% | >=33.33% | 51.0% | 17.67% |
| Net leverage | =<3.25:1 | 0.95 | 2.30 | =<3.25:1 | 0.93 | 2.32 |
| Interest coverage | >=2.50:1 | 9.66 | 7.16 | >=2.50:1 | 7.05 | 4.5 |
Fugro's principal covenant testing is as follows:
Fugro's right to defer settlement of non-current liabilities for at least twelve months after the reporting period is subject to compliance with specified conditions within twelve months after the reporting period. In the event that the company breaches any of the covenants or an event of default becomes applicable, lenders may require Fugro to immediately and fully prepay the relevant liabilities including related liabilities subject to cross-default and/or cross acceleration clauses. The carrying amount of such relevant liabilities subject to covenants within twelve months after the reporting period is therefore EUR 199.8 million. Fugro complied with these principal covenants and expects to comply in the twelve months after the reporting period, with adequate headroom.
Total
| (x EUR million) | Onerous contracts |
Legal claims |
Restructuring Asset retirement | obligations | |
|---|---|---|---|---|---|
| Balance at 1 January 2023 | 6.5 | 15.7 | 0.9 | 4.3 | 27.4 |
| Provisions made during the period | 0.4 | 2.1 | 0.1 | 1.6 | 4.2 |
| Provisions used during the period | (4.7) | (0.2) | (0.3) | - | (5.2) |
Effect of movements in foreign
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 2013 for liabilities arising from tax exposures. In the H1 2023, an amount of EUR 2.8 million has been released as these exposures will not further materialise. The corresponding gain has been classified as profit for the period from discontinued operations in the consolidated statement of comprehensive income as the cost for this provision was previously presented accordingly. Furthermore, an amount of EUR 4.5 million shall be paid in H2 2023 and has therefore been transferred to the trade and other payables.
Provisions reversed during the period (1.2) (2.9) - - (4.1) Unwinding of discount - - - 0.1 0.1 Transfer to trade and other payables - (4.5) - - (4.5)
exchange rates - 0.1 (0.3) (0.1) (0.3)
Balance at 30 June 2023 1.0 10.3 0.4 5.9 17.6 Non-current - 5.8 - 5.9 11.7 Current 1.0 4.5 0.4 - 5.9
The year-end 2022 actuarial valuations were extrapolated for interim reporting purposes as at 30 June 2023. There were no material differences in actuarial assumptions apart from the respective discount rates. As at 30 June 2023, the net defined benefit asset amounts to EUR 25.8 million (31 December 2022: EUR 21.3 million) and the net defined benefit obligation amounts to EUR 7.3 million (31 December 2022: EUR 8.3 million). The actuarial loss net of tax recognised in other comprehensive income amounts to EUR 1.4 million (2022: EUR 16.9 million gain).
During H1 2023, total of 302,675 (H1 2022: 383,537) RSU's were granted in April 2023 at a weighted average grant date fair value of EUR 11.69. In addition, in the six-month period ended 30 June 2023, Fugro granted 411,750 (H1 2022: 435,750) performance shares to its employees and members of the Board of Management at a weighted average grant date fair value of EUR 10.54, respectively EUR 10.40. The IFRS 2 expense for the sixmonth period ended 30 June 2023 amounted to EUR 3.8 million (first six months of 2022: EUR 3.2 million).
The key management compensation, based on amounts recognised in the statement of comprehensive income, is as follows:
| (in EUR) | Short-term employee benefits |
Post employment benefits |
Severance | Share-based Payment (IFRS 2 expense) |
Total six months ended 2023 |
|---|---|---|---|---|---|
| Board of Management | 1,101,616 | 25,586 | - | 762,643 | 1,889,845 |
| Senior managers | 1,841,803 | 86,563 | - | 843,833 | 2,772,199 |
| Executive Leadership Team (sub-total) |
2,943,419 | 112,149 | - | 1,606,476 | 4,662,044 |
| Supervisory Board | 240,833 | - | - | - | 240,833 |
| Total | 3,184,252 | 112,149 | - | 1,606,476 | 4,902,877 |
| (in EUR) | Short-term employee benefits |
Post employment benefits |
Severance | Share-based Payment (IFRS 2 expense) |
Total six months ended 2022 |
|---|---|---|---|---|---|
| Board of Management | 1,068,699 | 23,435 | - | 468,560 | 1,560,694 |
| Senior managers | 1,813,779 | 81,098 | 95,538 | 344,436 | 2,334,851 |
| Executive Leadership Team (sub-total) |
2,882,478 | 104,533 | 95,538 | 812,996 | 3,895,545 |
| Supervisory Board | 209,500 | - | - | - | 209,500 |
| Total | 3,091,978 | 104,533 | 95,538 | 812,996 | 4,105,045 |
| (x EUR million) | 30 June 2023 |
31 December 2022 |
|---|---|---|
| Bank guarantees | 104.7 | 96.9 |
| Capital commitments (PPE) | 25.6 | 5.5 |
The group has various lease contracts that have not yet commenced as at 30 June 2023. The future lease payments for the non-cancellable lease contracts are approximately EUR 47.4 million.
The group's finance department performs the valuations of financial assets and liabilities required for financial reporting purposes. The key inputs to the valuations are directly reported to the Chief Financial Officer. Changes in fair values in level 2 and level 3 are analysed at each reporting date. The carrying amount of the financial assets and liabilities is a reasonable approximation of fair value except for the following as reported in the table below as at 30 June 2023:
| Valuation of financial assets and liabilities (x EUR million) | Carrying | Fair value | Unrecognised |
|---|---|---|---|
| amount | (Level 3) | gains/(losses) | |
| Subordinated unsecured convertible bonds | 41.0 | 40.8 | (0.2) |
Fugro may use forward foreign currency exchange contracts to hedge certain foreign exchange exposures (refer to note 34.4.1 of the annual financial statements 2022). Consistent with prior years, Fugro does not apply hedge accounting and accounts for such financial instruments at fair value through profit and loss.
As announced in the condensed consolidated interim financial statements for the six-month period ended 30 June 2022, to secure continued availability of the two Geotechnical vessels Fugro Scout and Fugro Voyager, Fugro exercised its purchase options on 28 February 2022, with an expected delivery date of 14 July 2023. As also previously announced in the 2022 annual financial statements, Fugro has been investigating financing alternatives and structures with the lessor. Fugro considers entering into new lease agreements with the current owner for the two vessels in the second half of 2023. Until the contemplated new lease agreements are in place, Fugro and the owner of the vessels agreed on a deferral of the purchase option's delivery date of the two vessels from 14 July 2023 to no later than 29 September 2023.
To: the supervisory board and shareholders of Fugro N.V.
We have reviewed the condensed consolidated interim financial statements included in the accompanying halfyear report of Fugro N.V., based in Leidschendam, for the period from 1 January 2023 to 30 June 2023.
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements of Fugro N.V. for the period from 1 January 2023 to 30 June 2023, is not prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.
The condensed consolidated interim financial statements comprise::
We conducted our review in accordance with Dutch law, including the Dutch Standard 2410, "Het beoordelen van tussentijdse financiële informatie door de accountant van de entiteit" (Review of interim financial information performed by the independent auditor of the entity). A review of interim financial information in accordance with the Dutch Standard 2410 is a limited assurance engagement. Our responsibilities under this standard are further described in the Our responsibilities for the review of the condensed consolidated interim financial statements section of our report.
We are independent of Fugro N.V. in accordance with the Verordening inzake de onafhankelijkheid 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 assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Management is responsible for the preparation and presentation of the condensed consolidated interim financial statements in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. Furthermore, management is responsible for such internal control as it determines is necessary to enable the preparation of the condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.
The supervisory board is responsible for overseeing the financial reporting process.
Our responsibilities for the review of the condensed consolidated interim financial statements
Our responsibility is to plan and perform the review in a manner that allows us to obtain sufficient and appropriate assurance evidence for our conclusion.
The level of assurance obtained in a review engagement is substantially less than the level of assurance obtained in an audit conducted in accordance with the Dutch Standards on Auditing. Accordingly, we do not express an audit opinion.
We have exercised professional judgement and have maintained professional skepticism throughout the review, in accordance with Dutch Standard 2410.
Our review included among others :
The Hague, 26 July 2023
Ernst & Young Accountants LLP
R.H. de Boer
The Group presents revenue – comparable growth as a supplemental non-IFRS financial measure, as the Group believes that, given the large number 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.
| H1 2023 | H1 2022 | |||||
|---|---|---|---|---|---|---|
| Comparable growth |
Currency effects |
Nominal growth |
Comparable growth |
Currency effects |
Nominal growth |
|
| Europe-Africa | 27.4% | -3.3% | 24.1% | 10.8% | 0.9% | 11.7% |
| Americas | 17.7% | 1.3% | 19.0% | 30.0% | 14.2% | 44.2% |
| Asia Pacific | 34.3% | -3.6% | 30.7% | 4.2% | 6.7% | 10.9% |
| Middle East & India | 10.9% | -1.1% | 9.8% | 48.4% | 15.5% | 63.9% |
| Total | 24.1% | -1.9% | 22.2% | 17.2% | 6.5% | 23.7% |
| H1 2023 | H1 2022 | |||||
|---|---|---|---|---|---|---|
| Comparable growth |
Currency effects |
Nominal growth |
Comparable growth |
Currency effects |
Nominal growth |
|
| Marine | 30.9% | -2.2% | 28.6% | 17.8% | 6.1% | 23.9% |
| Land | 8.6% | -1.2% | 7.4% | 15.9% | 7.4% | 23.3% |
| Total | 24.1% | -1.9% | 22.2% | 17.20% | 6.5% | 23.70% |
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 different 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 better understand the underlying performance of the Group.
| (EUR x million) | E-A | AM | APAC | MEI | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| H1 2023 |
H1 2022 |
H1 2023 |
H1 2022 |
H1 2023 |
H1 2022 |
H1 2023 |
H1 2022 |
H1 2023 |
H1 2022 |
|
| Results from operating activities before net financial expenses and taxation (EBIT) |
54.2 | 25.7 | 21.8 | (1.7) | 15.7 | 9.5 | 1.1 | 0.7 | 92.8 | 34.2 |
| Onerous contract charges(1) |
- | - | (1.2) | - | - | - | - | - | (1.2) | - |
| Restructuring costs(2) | 0.1 | 0.6 | - | 0.5 | - | 0.3 | - | - | 0.1 | 1.4 |
| Certain adviser and other (costs) / gains(3) |
2.5 | - | - | - | - | - | - | - | 2.5 | - |
| Impairment (reversal) / charges |
(4.6) | 0.5 | 0.7 | 0.3 | - | 1.5 | - | 0.1 | (3.9) | 2.4 |
| Adjusted EBIT | 52.2 | 26.8 | 21.3 | (0.9) | 15.7 | 11.3 | 1.1 | 0.8 | 90.3 | 38.0 |
| Depreciation | 36.9 | 29.4 | 15.8 | 12.7 | 12.4 | 11.5 | 4.7 | 5.6 | 69.8 | 59.2 |
| Amortisation | 0.2 | 0.1 | - | 0.1 | 0.1 | 0.1 | - | - | 0.3 | 0.3 |
| Adjusted EBITDA | 89.3 | 56.3 | 37.1 | 11.9 | 28.2 | 22.9 | 5.8 | 6.4 | 160.4 | 97.5 |
| (EUR x million) | Marine | Land | Total | |||
|---|---|---|---|---|---|---|
| H1 2023 | H1 2022 | H1 2023 | H1 2022 | H1 2023 | H1 2022 | |
| Results from operating activities before | ||||||
| net financial expenses and taxation | 77.9 | 18.6 | 14.9 | 15.6 | 92.8 | 34.2 |
| (EBIT) | ||||||
| Onerous contract charges(1) | (1.2) | - | - | - | (1.2) | - |
| Restructuring costs(2) | 0.1 | 0.9 | 0 | 0.5 | 0.1 | 1.4 |
| Certain adviser and other (costs) / gains(3) | 1.9 | - | 0.6 | - | 2.5 | - |
| Impairment losses | (4.1) | 2.2 | 0.2 | 0.2 | (3.9) | 2.4 |
| Adjusted EBIT | 74.6 | 21.7 | 15.7 | 16.3 | 90.3 | 38.0 |
| Depreciation | 58.9 | 48.6 | 10.9 | 10.6 | 69.8 | 59.2 |
| Amortisation | 0.2 | 0.1 | 0.1 | 0.2 | 0.3 | 0.3 |
| Adjusted EBITDA | 133.7 | 70.4 | 26.7 | 27.1 | 160.4 | 97.5 |
(1) 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 dedic ated to that contract. While specific in nature, costs related to onerous contracts may reoccur in the future.
(2) A provision for restructuring costs is recognised when the Group (i) has a detailed formal plan for the restructuring identif ying the business or part of a business concerned, the principal locations affected, 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 affected by it. While specific in nature, costs related to restructuring may reoccur in the future.
(3) Certain adviser and other costs (to the extent not capitalised as transaction costs on loans and borrowings) or gains reflect s certain adviser and other costs or gains, which include other large charges or gains that the Group has adjusted for, such as material legal settlement claims, large bad debt write-downs and other large one-off non-recurring items.
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 overdrafts, 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 overdraft minus cash and cash equivalents. The definition of capital employed includes balances that are classified as held for sale.
| 30 June | 31 December | |
|---|---|---|
| (EUR x million) | 2023 | 2022 |
| Non-current loans and borrowings | 242.1 | 241.7 |
| Current loans and borrowings | - | 3.8 |
| Bank overdraft | 0.5 | 2.1 |
| Cash and cash equivalents | (188.9) | (209.1) |
| Lease liabilities | 212.5 | 168.9 |
| Net debt | 266.2 | 207.3 |
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