- Oil and gas market stabilising after challenging 2017; growth in other markets

Highlights full year
Year-on-year revenue decline of 15.7% or 13.2% on a currency comparable basis with low-single digit decline in the fourth quarter. Revenue from non-oil and gas markets increased by 9.4%.
EBIT margin (excluding exceptional items) decreased to -2.1% mainly due to low utilisation APAC, incidental operational issues and price pressure in the Marine division, and lower activity levels at Seabed Geosolutions. The margin of the Land division improved. EBIT margin for the group was higher in the second half than in the first half year.
Net cash from operations was EUR 24.4 million and net investments were EUR 74.9 million, resulting in cash flow of -EUR 50.5 million. In the second half year, cash flow was EUR 15.6 million positive.
Net debt/EBITDA of 1.9, well below covenant requirement of maximum 3.0.
Backlog for the next 12 months is down 7.3% on a currency and portfolio comparable basis compared to a year ago, and up by 9.1% compared to the third quarter of 2017.
Outlook 2018: As the oil and gas market is stabilising and other markets are growing, Fugro expects stabilising revenue, an improved EBIT margin and a positive cash flow from operating activities after investments

Key figures (x EUR million) Full year 2017 Full year 2016
Revenue 1,497.4 1,775.9
currency comparable growth (13.2%) (22.7%)
EBITDA (excluding exceptional items ) 100.8 189.5
EBIT (excluding exceptional items ) (32.1) 8.5
EBIT margin (excluding exceptional items ) (2.1%) 0.5%
Net result (159.9) (308.9)
Backlog next 12 months 927.8 1,169.6
currency comparable growth (7.3%) (11.6%)
Cash flow from operating activities after investments (50.5) 186.1
Net debt/EBITDA 1.9 1.1

1 Revenue growth corrected for currency effect; 2017 backlog growth corrected for currency effect and for portfolio changes related to
the marine construction & installation activities
2 Onerous contract provisions, restructuring cost, impairment losses, and other exceptional items totalling EUR 19.6 million compared
to EUR 227.2 million in 2016

Paul van Riel, CEO: “The year 2017 was the fourth of an exceptionally deep downturn in offshore oil and gas services, our largest market, and we continued to adjust our capacity and costs to market reality. With an organic 9% revenue increase we were successful in growing in our other markets.

We made good progress with our strategic agenda. We successfully regrouped our survey, geotechnical and subsea activities in two divisions, Land and Marine, and built a more client centric organisation. We have improved our capabilities to deliver integrated service solutions to clients and are now able to better leverage internal synergies. In the fourth quarter we achieved our objective of divesting the non-core marine construction and installation activities.

The number of final investment decisions in our offshore oil and gas market is increasing, which is an early indicator of rising activity levels. Our other markets are expected to grow further as the world economy is strong and our solutions are required to support the energy transition and sustainable urbanisation. Based on these developments we expect our results to improve after a particularly challenging 2017.”

Cost reduction and performance improvement measures
At the publication of the first half year results, a set of measures with an annualised contribution to EBITDA of EUR 50 to 70 million was announced. This programme is on track. The most significant measures that
have been implemented are:
? Divestment of the marine cable laying and trenching business
? Early termination of long-term charter agreements of two remaining construction and installation vessels
? Significant improvement in the charter terms and conditions of two inspection, repair and maintenance
vessels
? Retirement of two old owned vessels in the fourth quarter
? Headcount reduction of 308 employees in the second half year to 10,044 at year-end.
Part of the financial benefit of these measures has been realised in the second half of 2017, though the largest part will contribute to 2018 EBITDA improvement.

Strategy
Since the launch of the Building on Strength strategy in 2014, Fugro has been transformed from a group of locally managed operating companies to an integrated, more efficient organisation. As per 2017, the
company is managed through two main divisions, Marine and Land. Both offer integrated services to clients from site characterisation and asset integrity business lines which are uniformly set up across the divisions and regions. Client reactions have been positive to Fugro’s improved capabilities to deliver large, integrated, multi-disciplinary projects.
In 2017, Fugro achieved its strategic objective of divesting the installation and construction part of the subsea market. On 30 November, Fugro divested its marine cable laying and trenching assets to Global Marine Holdings, a leading global supplier of subsea cable installation and maintenance services, in return for a 23.6% shareholding. Fugro now participates in a more diversified business in which cable installation services are complemented with long-term telecom cable and windfarm maintenance services and sales of subsea telecom systems. In addition, the long-term charter agreements of the two remaining installation and construction vessels were terminated early.
A key strategic driver for Fugro is to work across different markets, as this improves resilience. In 2017, non-oil and gas revenue increased to 43% of total revenue because of growth in building & infrastructure, renewables, power and nautical markets, and a decline in oil and gas revenue. Fugro targets a balanced
market exposure through continued growth in non-oil and gas markets, supported by population growth, urbanisation in coastal areas, energy transition and mitigation of the impact of climate change. At the same
time, the company will continue to benefit from its activities in oil and gas which is expected to remain the key source of energy for the coming decades next to the increasing share of renewables to meet global energy demand.

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And
Reappointments Board of Management and Supervisory Board

The Supervisory Board has decided to nominate Paul Verhagen for reappointment to the Board of Management at the annual general meeting (AGM) on 26 April 2018. Paul Verhagen is due to step down from the Board of Management at the end of the AGM when his first four-year term expires. He is Fugro’s Chief Financial Officer.

Furthermore, the Supervisory Board has decided to nominate Antonio Campo and Douglas Wall for reappointment to the Supervisory Board at the upcoming AGM. Both Mr. Campo and Mr. Wall are due to step down from the Supervisory Board at the end of the AGM when their first four-year term expires.
Regulated information
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