growth through leadership
TRANSCRIPT
Growth through Leadership Capital Markets Day Presentation
London, September 23, 2013
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This presentation 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 and gas industry and related markets, the currency risks, contract risks and unexpected operational setbacks). Any forward-looking statements contained in this presentation 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 presentation.
About this document
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Catrien van Buttingha Growth through Leadership Fugro Strategic Update - September 23, 2013
Welcome & Logistics
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Safety instructions for this auditorium Welcome and logistics
Alarm signals
Continuous audible alarm bells Evacuate immediately via the nearest useable Fire Exit route
Emergency exit routes
GREEN directional signs (with walking man depicted on them) Do not run and do not use the lifts
Assembly Exchange Square (Fat Lady Statue)
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Break
10.00 10.05 11.00 12.30 13.00 13.30 14.15 14.30
Time Topic
Welcome and logistics Introduction and key messages Fugro today Changing environment Strategic overview
Highlights per division Geotech Subsea Survey Geoscience
Lunch Team Fugro Financial value creation Recap and key takeaways Q&A
Catrien van Buttingha Paul van Riel Scott Rainey Steve Thomson Mark Heine Steve Thomson Paul van Riel André Jonkman Paul van Riel
Presenter
Break
Agenda Welcome and logistics
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Paul van Riel Growth through Leadership Fugro Strategic Update - September 23, 2013
Introduction & key messages
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Continue what we are doing
Do it better and more profitably
Grow faster organically
Deliver as one team
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What we will cover today Introduction
Introduction and key messages
Reasons for strategic review: Health check of Fugro and our businesses Changing business environment Lay the ground work for future success
Highlight new strategy
Highlights for each of our divisions
How we are evolving as Team Fugro
Financial performance
Deep dives
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Fugro today Fugro today
Eight drivers of
our success
Our historic results
Key questions
Our business
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Click to edit Our business
Analysis
Interpretation
Reports & Advice
Inspection
Repair & Maintenance
Reporting & Analysis
Construction support
Data acquisition
De-risk investment decisions
Create value
on the seabed
Project preparation
Fugro today
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Click to edit Our divisions
Subsea Geoscience
Survey Geotechnical
Today, the majority of contracts are awarded by division
But share of multi-divisional contracts is quickly increasing
This capability to leverage synergy between the divisions is a unique differentiator
Fugro today
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The eight drivers of our success
Innovation & Technology People
Global Coverage
Organic Growth plus M&A
Market Leadership
Multi-Market Exposure
Delivery Excellence
Standards
Fugro today
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Market leadership
Market leadership...
McClelland merger to secure position in offshore geotech Acquisition of J.E. Chance
Divestment of onshore environmental
testing Thales Geosolutions acquisition to secure
leadership in offshore survey Divestment of majority of Geoscience
Investment in Seabed Geosolutions
Market leader in offshore geotechnical and survey Leading position in selected niches
– Onshore geotech – Niche onshore survey markets – Seabed geophysical data collection – Subsea IRM
...through visionary decisions
Fugro today
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Standards: Safety
Our approach Our performance
Strong, active safety leadership – Commitment throughout all levels of
management
Certified in accordance with OHSAS 18001, ISO9001 and ISO14001 or equivalent standards in all key operational subsidiaries
Standards complemented with strong drive to make it part of behavior
External recognition such as RoSPA Awards in 2011 and 2012
2012 benchmark (OGP Contractors)
2012 benchmark (OGP Contractors)
2012 2011 2010 2009 2008
Total recordable case frequency
Lost time injury frequency
Million exposure hours
Fugro today
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Multi-market exposure: The markets we serve
Oil & Gas
Mining
Sustainable Energy Building & Infrastructure
Public Sector Other Sectors
Fugro today
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Click to edit Multi-market exposure: Covering full E&P activity chain
Exploration & Appraisal
Field Development Production Abandonment &
Decommissioning
Survey
Geotechnical
Subsea
Offshore site investigation Engineering and consulting
Construction support Geophysical surveys Positioning signals Positioning services MetOcean
Drill support IRM
Construction support & installation Special projects
Tooling & engineering
Geoscience
Seabed Geosolutions MultiClient
Fugro today
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Click to edit Truly global coverage Fugro today
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Click to edit Our historic results
€2.2B
€3.0B
1.Includes MCL (except for 2012); Also includes continued Geoscience business which will be part of Seabed from 2013FY onwards
Revenue Survey
Revenue discontinued business
Revenue Geotech
Revenue Subsea
Revenue Geoscience1
EBIT margin incl. divested Geoscience activities
2012 MCL
€44
€3 12%
8%
€0.2B
End-of-year share price
2004 2012 2010 2008 2006 1998 1996 1994 1992 2002 2000
EBIT margin excl. divested Geoscience activities and MCL
Fugro today
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Key questions
What is the growth potential in existing divisions?
What is the future of Subsea?
How can we improve profitability and returns?
Can we finance our plans?
Is our move to a regional model working?
Can the organization support another doubling of revenue?
How to deal with rapidly changing external business environment?
Fugro today
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Changing business environment Changing environment
Client behavior and project types
Market outlook & implications
Stakeholder expectations
Societal expectations
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Expectations: What we hear from our clients
Consistency and collaboration
Combine our services in One Fugro
Strengthen our global consistency
Our performance and people
Exceptionally positive
Invest in the next generation
Our differentiation
Continue to lead through innovation
Concern our lead is becoming less pronounced
Changing environment
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Click to edit Expectations: What we hear from our investors
See more of the management team
Improve divisional clarity
Strengthen IR
Our Team & Communication
Elevate prominence of capital efficiency Performance
Metrics
Understand Subsea & Geoscience plans
Disciplined M&A
Your Expectations
Changing environment
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Markets: Outlook
Continued growth Accelerating underlying
decline of existing fields Structurally higher oil
prices Shift to shale gas and
shale oil Shift to deeper water
Substantial investments continue Dip in EU due to
austerity regimes Asia continues to invest
Will continue to
outgrow oil and gas
Steady overall growth Cyclical, but not
synchronized globally Increasing sophistication
in emerging economies Shift to asset management
in mature economies Economic power shifting
east and south, slow recovery in west
Changing environment
Oil & Gas Renewables Infrastructure
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Markets: Implications for Fugro
In increasingly complex projects For the development of
new energy sources To leverage opportunities
in infrastructure markets
To support global clients To hedge against
regional cycles
To mitigate potential disruptive risks
Global scale remains a competitive advantage
A balanced portfolio is important
Technology & innovation are key
Changing environment
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Client characteristics
Our clients are getting bigger and more global
Increasingly dealing with NOCs and governments
Client Behavior
Increasingly demanding client expectations
Payment behavior is deteriorating
Risk is increasingly pushed towards suppliers and contractors
Project characteristics
Contract size, complexity and duration is increasing
Timing of large contracts is uncertain
Increasing use of frame agreements
Increasing requirements to work in JVs
Changing clients, projects and behaviors Changing environment
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Changing societal views
Increasing expectations towards corporations
Impact on our business
Safety
Governance and compliance
Audit requirements
Emissions and environment
Tax
Labor conditions
Quality standards
More codes, rules, laws and regulations
More and deeper audit requirements
Cost of business going up
Challenge to maintain profitability yet meet
expectations
Changing environment
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Click to edit Summary: Internal and external context Strategic overview
A changing business portfolio – Geoscience divestment – Seabed Geosolutions investment
Weak performance – Subsea Services – Seabed Geosolutions
Need to prepare the organization for growth
Fugro today A changing environment
Changing nature of clients and projects
A shifting energy mix
Economic power shifting East and South, slow recovery in the West
Changing demands of clients and shareholders
Increasing expectations on our corporate citizenship
Comprehensive strategic review
Take advantage of continued strong growth opportunities
Set up Fugro so we can continue to double our business
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Strategic overview
Growth through Leadership
Strategy summary
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Our vision and mission Strategic overview
We create value by acquiring and interpreting earth and engineering data and by supporting our clients with the design, construction, installation, repair and maintenance of their infrastructure. We work predominantly in energy and infrastructure markets offshore and onshore. Fugro strives to be the preferred partner of its clients by safely and consistently delivering quality solutions with teams of employees that apply world class, innovative and often proprietary technology and that perform to the highest standards of professionalism and integrity. Our aim is to lead in every market in which we operate, thus generating growth and superior profits and returns for our shareholders.
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Our values Strategic overview
Delivery Excellence
Communication
Laws, standards and norms
Respectful Behavior Team Work
Client Focus Leadership
Safety No surprises
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Safety first, each of us is entitled to stop unsafe work
Each of us watches out for our safety and that of others
We are aware and trained in the safety requirements of our job and always work accordingly
Each of us knows our direct reports work safely
We investigate safety incidents so we can learn from them and improve
We keep ourselves fit for the job
Strategic overview
No surprises
Values example: Safety
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Values support our CSR program
Providing a safe, secure and healthy working environment
Diversity; maximizing local involvement
Ensuring ongoing personal development of our employees, through:
– Partnership for Growth – Fugro Academy
Providing support for various social initiatives
Contribution to the renewables and sustainable infrastructure markets
Reducing the Environmental Impact of our own operations
Implementation of Environmental Management Systems (ISO14001 certified or equivalent)
Strategic overview
People and Society Environment
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Eight strategic drivers remain core Strategic overview
Innovation & Technology People
Global Coverage
Organic Growth plus M&A
Market Leadership
Multi-Market Exposure
Delivery Excellence
Standards
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Click to edit Growth through Leadership
Strategic overview
What: Focused portfolio
Accelerate growth in Survey
Refocus Subsea Services on profitability
Maintain leadership in Offshore Geotech & grow selected
positions in Onshore
Grow Seabed Geosolutions and improve profitability
Growth through Leadership
Better leverage our scale
Increase performance discipline
How: Team Fugro
Accelerate innovation
Improve collaboration
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Fugro revenue (€B)
• Continued businesses excl. MultiClient Library
2016 2012
€2.2B €3.3-3.7B
Strategic overview
>10% Average year-on-year revenue growth
Our growth ambition
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Click to edit Free cash flow used to fuel growth Strategic overview
Growth mix Use of cash
Organic
M&A Step up in CAPEX for organic growth
Bolt on M&A
Room on balance sheet for special large
acquisitions
Dividend
More focus on organic growth
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Financial targets 2016
1.Excluding discontinued business and MCL; 2. ROCE = NOPAT (Net Operating Profit After Tax) / full year average Capital Employed (= total Assets – current Liabilities)
Revenue1
>10% Average year-on-
year revenue growth
Strategic overview
2016 2012
€2.2B
2016 2012
12%
Around 15%
2016 2012
12%
Around 14%
€3.3-3.7B
ROCE1,2 (%) EBIT1 (%) New New
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Key takeaways Strategic overview
Fugro Strategy: "Growth through Leadership" Manage a portfolio founded on leadership and performance Maintain leadership in offshore Geotech Refocus Subsea Services on profitability
Accelerate growth in Survey and selectively in onshore Geotech Grow Seabed Geosolutions and improve profitability
Supported by a strengthened 'Team Fugro' Better leverage our scale
Improve collaboration Accelerate innovation
Increase performance discipline
Delivering sustained profitable growth Average annual growth rate of >10% Focus on organic growth, supported by own cash flow
EBIT margins of around 15% by 2016 ROCE around 14% by 2016