Fugro presents updated strategy and Fugro nominates Paul Verhagen as new CFO

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Algemeen advies 23/09/2013 07:38
Today in London, Fugro presents the outcomes of its strategy update. CEO Paul van Riel and the other members of the Executive Committee will outline Fugro's plans for continued growth and enhanced performance. The updated strategy "Growth through Leadership” builds on Fugro’s historic success in segments of the energy and infrastructure markets, based on high value, technology-intensive offerings to its clients. The strategy review incorporates feedback from clients, shareholders and a group of more than 200 Fugro senior managers and key staff.

Paul van Riel, CEO: ‘The key goal we have set ourselves is to deliver sustained, profitable growth with strong returns. The strategic review has reinforced the importance of market leadership in our portfolio to achieve this goal. Therefore we will expand our activities in the Geotechnical and Survey divisions where we are market leader, restore profitability in the Subsea division by focusing on our core competencies, and grow profitably in the promising Seabed Geosolutions business that we started in February 2013. This plan requires substantial investments, not only in our vessel fleet, but also in technology development.

In addition, we need to strengthen “Team Fugro” so we can better leverage our global scale, improve collaboration in the regions and across divisions and accelerate innovation. We also need to further increase performance discipline. This last point includes both delivery excellence towards our clients and steering of the company by clear performance metrics with a focus on ROCE and profit margin. Client interviews undertaken as part of the strategy process have made clear that clients are exceptionally positive about our staff. As part of our strategy, we shall increase our emphasis on staff development and grow the number of employees needed to support our growth ambitions. I am confident that by executing on our strategy we can meet our goal to deliver sustained, profitable growth with strong returns.’

Targets to deliver sustained profitable growth
Fugro has set clear financial targets to be achieved up to and including 2016:

Revenues: average annual growth of more than 10%, resulting in 2016 revenues of EUR 3.3 - 3.7 billion, compared to 2012 revenues of EUR 2.2 billion (both excluding multi-client sales). This growth will be predominantly organic, supplemented by bolt-on acquisitions. Potential larger acquisition opportunities will be evaluated on a case by case basis. They will have to fit in the strategy and support the financial targets.
EBIT margin around 15% in 2016, up from 12% in 2012 (both excluding multi-client sales).
Return on capital employed (ROCE)[1] around 14% in 2016, up from 12% in 2012.
Earnings per share: average increase of more than 10% per year.
The dividend pay-out ratio will be maintained at 35 to 55% per year. The leverage ratio defined as net debt over EBITDA should remain less than 2.

Capex is expected to amount to an average of around EUR 325 million per year, mostly for replacement and expansion of the vessel fleet and includes around EUR 100 million for maintenance. In addition EUR 100 million per year is expected for bolt-on acquisitions and R&D. In total, investments will amount to an average of EUR 400 - 450 million per year. The majority of the capex investments will support organic growth in the geotechnical and survey divisions. It is expected that investments and dividends can be paid from the operational cash flow. The investment program excludes potential larger acquisitions.

To prevent dilution resulting from the current optional dividend (cash or shares), starting with the 2013 dividend, it will be proposed to the Annual General Meeting to change the dividend distribution. The proposal will be to pay dividends fully in cash, unless this has serious adverse tax implications for shareholders. In the case of adverse tax implications the optional dividend will be maintained, combined with share repurchases to offset dilution.


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[1]ROCE defined as NOPAT (net operating profit after tax) over capital employed (total assets minus total liabilities). Excluding multi client profits and assets.



and Fugro nominates Paul Verhagen as new CFO
The Supervisory Board of Fugro N.V. has nominated Paul Verhagen for appointment as member of the Board of Management. For that purpose, an Extraordinary General Meeting of Shareholders will be held on 27 November 2013. It is the intention that Paul Verhagen will join the Board of Management starting 1 January 2014. After a transition period he will succeed the current Chief Financial Officer, André Jonkman, who will step down at the Annual General Meeting of Shareholders on 6 May 2014, as was already announced on 8 March 2013.

Paul Verhagen (47) currently works for Philips as Executive Vice President and CFO of Philips Lighting, a division with 2012 sales of EUR 8.4 billion.In the past 23 years, he held various financial management positions at Philips in the Netherlands, Hong Kong, USA, China and Taiwan. He has been active in various global CFO positions since 2005 and as such he has extensive experience in all aspects of financial management of a large multinational corporation, also in B-to-B markets, in a capital intensive industry with rapid technology driven changes. Paul Verhagen holds a MSc in Business Administration from University Brabant in Tilburg and graduated from the post Master program for Registered Controller at the University of Maastricht. He is a Dutch citizen.



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