Boskalis Annual Report 2018

ANNUAL REPORT 2018 – BOSKALIS 15

IN CONCLUSION Boskalis entered the 2017-2019 business plan period on a very solid basis, with a net debt-free balance sheet. Despite the challenging market outlook our operating model, based on our own assets, means that we will continue to generate a healthy cash flow. In addition we have a strong global client base, highly committed and passionate employees and a state-of-the-art, versatile fleet. While we expect the operating environment to remain challenging during the remainder of the current business plan period, we want to use this period to strengthen the company and invest counter- cyclically – sowing the seeds so we can reap the benefts in the future. In the course of 2018, we took a number of these steps and looking ahead we will continue to invest prudently in the business. Total capital expenditure over the business plan period is projected at around EUR 250 million per annum, roughly in line with depreciation. This amount excludes any asset acquisitions, bolt-on acquisitions or consolidation opportunities that may arise. A healthy balance sheet is essential in our line of business. We believe a net debt/EBITDA ratio in a range of 1 to 1.5 through the cycle to be appropriate for our mix of activities. We expect to remain below this range during this business plan period, both as a matter of prudence and in order to have the flexibility to expand if opportunities present themselves. We remain committed to our shareholders and recognize the importance of a healthy dividend. Our policy is to distribute 40% to 50% of the net proft from ordinary operations as dividend but we also strive to achieve a stable development of the dividend in the longer term, taking into account both the company’s desired balance sheet structure and the interests of shareholders. These considerations have led to the proposal to the Annual General Meeting of Shareholders to pay a cash dividend of EUR 0.50 per ordinary share, resulting in a pay-out ratio of 79%.

year further design and engineering work was carried out for a conversion of a possible second crane vessel. A frm decision on the conversion of another vessel into a crane vessel and its exact specifcations will be addressed in the business plan for the period 2020-2022. The position held by Boskalis in the offshore wind park cabling market through its Cables & Flexibles business unit was further expanded through a string of project wins and the announcement on the intended acquisition of Bohlen & Doyen’s offshore cable- laying business. This acquisition will further strengthen our position in the German market and add assets which are well-suited for the growing cable repair and replacement market. Transport Boskalis has a global leading position in heavy marine transport and is also active in long-distance ocean towage. Boskalis is committed to serving the high end of the market where contracts are frequently long-term by nature, requiring extensive engineering know-how, generally related to oil and gas production. In this market we offer a unique proposition with our open-stern Type 0 and I vessels. Our scale is also unparalleled in terms of number of transport assets and the combination of heavy marine transport with long-distance towage. Following the successful transport of a box-shaped FPSO in 2018 we also see new opportunities for increased volume in the market. The market served by the smaller, frequently closed-stern heavy marine transport vessels has been under pressure for some time and late 2017, Boskalis announced that it was going to review its position in this market. This segment has rapidly become a commodity transport market, often not oil and gas-related and structurally confronted with (Asian) overcapacity. These developments prompted Boskalis to exit this market segment and to take the eleven closed-stern heavy transport vessels out of service.