Boskalis_Annual Report_2017

ANNUAL REPORT 2017 – BOSKALIS 13

EXPAND The Expand pillar of our strategy applies to all three Boskalis divisions with an emphasis on Offshore Energy. While the short-term outlook for certain areas of the market remains challenging, we are confdent that the tough market conditions will also create opportunities. Existing players may run into diffculties, creating opportunities that we can beneft from. There are various ways in which we can grow the business, and we will consider our options as and when opportunities arise. Ways of expanding include: ‚ ‚ building new assets, although this will only be considered for unique assets that cannot be purchased second-hand, or buying existing assets in the market; ‚ ‚ bolt-on acquisitions of players that hold an interesting market position and preferably bring a combination of assets and know-how; ‚ ‚ consolidation, an area where we are keen to play an active role. Consolidation would be focused on markets where we already hold a strong position. This category tends to be difficult to influence, and is the most opportunity-driven of the three. Dredging & Inland Infra Dredging & Inland Infra, the traditional core activity of the company, is focused on market segments with structural growth. The rate at which the market is expected to grow is modest, but the industry characteristics are compelling. Boskalis holds an important share of this heavily consolidated market and has a very strong global presence, putting it in a good position to take advantage of forthcoming prospects. To position itself for these opportunities, Boskalis will make investments to maintain and where appropriate expand its market position. Results: In July 2017 the new mega cutter suction dredger Helios was commissioned and following a maiden project in the Port of Rotterdam, the vessel will be working on a large port development project in Duqm, Oman in 2018. The sister vessel to the Helios was ordered in the second half of 2017 with delivery planned for 2020. Towage & Salvage Towage is dependent on the rate of growth of seaborne trade and the number of vessel movements through ports. Over the last few years, the emphasis of Boskalis has been on the establishment of regional joint ventures, with the focus on an effcient cost and capital structure. With all the towage activities now having been transferred to these joint ventures, the next step will be the further expansion of our geographic footprint. Opportunities may be pursued by and through one of the regional joint ventures or by Boskalis directly. Such opportunities did not result in new developments in 2017. The volume of work for Salvage is by its nature unpredictable. Nevertheless, Boskalis leverages its global footprint and permanent presence in ports around the world to grow its Emergency Response business. Furthermore we use our own assets and apply our expertise in both engineering and contract and risk management to secure wreck removal contracts.

Offshore Energy division, further alignment of the structure is required. Specifcally, in the course of 2018 Boskalis will form three clusters within the Offshore Energy division: a cluster for the Installation & Intervention activities, a Subsea cluster including Inspection, Repair and Maintenance (IRM) activities and cable laying services and a third cluster for the Transport & Marine Services activities. Boskalis Way of Working In 2017 Boskalis rolled out its new integrated quality management system: the Boskalis Way of Working (WoW). The overriding objective of our WoW system is to give our staff the best possible support in achieving operational excellence when concluding and executing commercial contracts. Operational excellence in this context means achieving compliance with the internal and external control requirements imposed on our primary project process with the minimum waste of time and effort. WoW reduces the complexity of our systems and operational processes, and helps us to understand client requirements better. The management system is compliant with the international OHSAS 18001, ISO 14001 and the new ISO 9001 standards and is assessed and certifed by an independent external auditor. The implementation of WoW commenced mid-2017 and is being applied on all new projects around the world. Rightsizing the company In light of the deteriorated market conditions, Boskalis announced early 2016 the need to look at the size and composition of the fleet, staffng levels in the crewing and operational pool and the cost of the head offce. A fleet rationalization study was conducted in the frst half of 2016 resulting in the decision to take 24 vessels out of service over a two year period. As per the end of 2017 this program was completed. In order to maintain a cost-effcient business proposition we announced that we would be looking at ways of making our crewing model more flexible and variable without compromising safety and quality. In 2017 a more flexible crew-planning model was developed resulting in a consolidation of the number of crewing agencies Boskalis uses. This model increases the flexibility to deploy crews across a pool of vessels and the plan will be implemented in 2018. where possible but to also take the organization’s growth ambitions into consideration. Boskalis is targeting total cost savings of approximately EUR 30 million, resulting in the loss of around 230 jobs and this will be fully implemented by the end of 2019. The reduction is being absorbed through attrition and redeployment where possible, but also included compulsory redundancies. As per the end of 2017, more than 160 jobs had been discontinued and approximately EUR 15 million of the cost reduction was realized. A head offce cost reduction program was carried out in the frst half of 2017. The objective of this program was to reduce costs Efficiency