Fugro N.V. (FUR) Earnings Call Transcript & Summary

Good morning, and welcome to the Fugro Quarter 3 Trading Update 2020 Call. This session will be recorded [Operator Instructions]. I now hand over to the Director, Investor Relations.

Good morning, everybody. This is Catrien van Buttingha from Investor Relations, Fugro. We are here for the third quarter analyst call and webcast. I'm here with Mark Heine, CEO; Paul Verhagen, CFO. They have a presentation first, which will last, I guess, in total, about 15, maybe 20 minutes. After that, there will be ample time to answer your questions. I would like to hand over to Mark now.

Yes, good morning to everybody. Welcome for being here. Yes, we will have a short presentation. I will start off, and then Paul will finish or will go into the refinancing in a bit more detail on the financial elements of the presentation. So maybe we can start with the first slide, Slide #2. Fugro presents an improved quarter 3 adjusted EBIT result in turbulent times. We have been able to react quickly and continue most of our operations. And the quick response to the COVID situation especially focused on cost savings, and obviously, also, the execution of projects helped us to have a decent and pretty good third quarter result on the EBIT level. Revenue, obviously, declined. We'll talk about that a little bit later. We have also now improved our full year outlook of 2020 with an adjusted EBITDA of EUR 150 million and an adjusted EBIT of EUR 40 million and positive free cash flow. We also announced a comprehensive refinancing package, which also includes a capital raise via an equity issue. Next slide, please. Here we see the quarter 3 results. First and foremost, on the revenue side, we declined close to 16%, 15.8%, with a very comparable absolute numbers for the revenues for Q2 and Q3 and Q1. But on the EBIT level, an improvement compared to the second quarter, but also compared to previous year in 2019, 11.2% EBIT margin. And also on the backlog side, we still have a solid 12-month backlog, with actually growth in 3 out of the 4 business lines and a decline specifically in marine asset integrity that is more related to the oil and gas market. So as I said, good margin due to the cost reduction program and also good project execution. Cash flow from operating activities close to EUR 40 million, EUR 39.7 million, which is also up from -- compared to last year. Good liquidity, close to EUR 400 million or around EUR 400 million in cash and other available facilities as of the end of the third quarter. And we have, as you have read, also taken another noncash impairment on Seabed Geosolutions of around EUR 30 million, which is still held for sale, and we'll come back on that if you like. If we move to the next slide. This is also quite important that Fugro managed to further diversify itself. The revenue split between the different end markets is shown here. And you see clearly there that now 2/3 of our business, 66% is related to infrastructure, offshore wind and nautical markets, which is a steep increase compared to a couple of years ago, and that trend is continuing. And this is all caused by a conscious strategic decision to further diversify ourselves and to focus on new growth markets there. And as mentioned here, the market trends, population growth, urbanization, but also the need for a reduction on the CO2 side, will drive more of these markets to grow and allows us to take on more of these opportunities related to climate change adaptation and sustainable infrastructure development. Also remarkable to mention there is that, for instance, the largest region in the world, Europe-Africa, there's only 14% oil and gas now in the third quarter, a very steep decline. And this is obviously to do with the low oil and gas market, but also the growth in offshore wind, which has been 42% in the third quarter. If we go to the next slide, then we see the cost reduction plan, which is on track, with the EUR 120 million annualized savings as presented also in the second quarter or at the end of the second quarter. We have now EUR 55 million included up to year-to-date this year, and we expect another EUR 25 million cost saving for the remainder of the year. Furthermore, these buckets are still the same. As mentioned before, obviously, a lot is related to the reduction of the workforce up to or around 10%. And obviously, the reduction in the overhead cost and the freeze on the salaries and other cost savings. Also, what is, I think, quite important is the minimization of using third-party equipment, short-term charters has helped us to focus on the utilization of our own equipment. And therefore, that had also a reduction in the cost on the third-party side. If we move to the next slide. This is also my last slide. I want to emphasize that the margin improvement is visible in both Marine and Land, which is important despite the revenue decline, which is obviously caused by the COVID situation and the related oil and gas decline. If we talk about the various business lines, marine site characterization, very much a business line that is concentrated on the strong growth in offshore wind, the renewables, so to say. Margin is up there, some decline in oil and gas, obviously, there as well, but compensated by the strong growth in offshore wind. Marine asset integrity is a business line that is much more dominated by oil and gas, although some of these activities are related to inspection, repair and maintenance work, which will have to continue even in this difficult market circumstances and with lower investments of the energy companies, this still has been mostly impacted by the slow market in oil and gas. And therefore, the margins are also down in all the regions there. Land is recovering further. We saw some recovery in the second quarter this year. And this year or in this quarter -- in the third quarter, we saw the result in both land site characterization and asset integrity in improved margin and also even overall improved revenue. Slight revenue increase for the Land business, which is important because we have taken a lot of steps to rectify the Land business, so to say, that was underperforming for too long. We have seen that recovery coming in, in the second quarter of this year. And obviously now -- or not obviously, but it continued in the third quarter, which is good to see, the effect of all the actions that have been taken. And with that, I would like to hand over to Paul for the next slide.

Yes. Thanks, Mark. So the next slide is on the covenants based on the current facilities in place. So we have been able to stay within our covenants leverage, net debt-to-EBITDA solvency and fixed charge cover. The EBITDA floor, which is on the left bottom part of the page, which is only relevant for the sale and leaseback of 2 vessels, the minimum EBITDA floor was not met, but debt requirement was waived. So we got a waiver for that covenant, which we already announced in Q2 that we would not be able to achieve this, but also that we would expect to achieve a waiver, which we got. Then net debt further decreased. You see here a lot of numbers. Total net debt excluding impact of IFRS 16, and basically net debt for covenant purpose, which excludes subordinated debt, so you see the development quarter-on-quarter. So including IFRS 16, we're at EUR 565 million and excluding at EUR 418 million. And if you exclude the subordinated bonds, which is relevant for covenant calculation, with EUR 183 million. Next page. Now you've all seen that we've announced a comprehensive refinancing, an RCF term loan and an equity raise. I think important here is that this was needed to address the upcoming 2021 maturities. We have an RCF maturing of EUR 575 million and a convertible bond of EUR 151 million, so that needed to be addressed, and that's what we've done with this refinancing. The refinancing will strengthen the balance sheet, improve leverage to more sustainable level, which is actually very important in today's challenging and still somewhat uncertain market environment. For info, net leverage including all debt, also including subordinated debt, improved significantly. So pre-IFRS from 4.2 to 2.0 and post from 4.0 to 2.4. Obviously, this will only take into effect if and when the EGM will approve the equity raise. So these are pro forma leverages if and when that would have happened as per the end of Q3. Further very important, this will give management more time to focus on the business instead of on refinancing. It will increase financial flexibility. And of course, by having that, we should be able to deliver on our strategy. And last but not least, this also allows us to keep significant liquidity. Liquidity today is very good and it will stay very good also with this new refinancing package. Then on the next slide, I can only share what's on this slide. There's some legal restrictions because the equity offering cannot be done in all countries, amongst others not in the U.S. So for that reason, we are legally restricted on what we can say on the refinancing. But what I can say is on this page. There's EUR 250 million equity, consisting of EUR 53 million private placement and EUR 197 million rights issue. We are very pleased to see that a number of cornerstone investors actually backed this transaction. They, together with the underwrite on the rights issue, in total they will take EUR 113 million of the EUR 250 million and the remaining part will be underwritten by the banks. So that in itself, of course, is very positive. We will refinance the existing revolving credit facility through a smaller RCF, EUR 225 million or EUR 250 million if and when the rights issue is successful. And a new term loan, EUR 200 million term loan, which matures in December 23. We are also free to deal with the 2021 bond, which matures next year. So we might, from time to time, purchase outstanding parts back, and we'll see how we're going to do that going forward. And again, for more details, please refer to the relevant press release, because due to legal restrictions, I cannot say much more than this. We also have the maturity profile here. So if and when this package kicks in, if and when the EGM approves the equity raise, because everything is in the conditional, we will have a run rate basically until 2023. It should also be noted that the bond, the 2024 bond was put in 2022, November 2022. So depending on share price development, we might have to refinance at the end of 2022. We'll see how we deal with that. The RCF, which is in place, allows us to do that under the -- through a drawing under the RCF, so that's positive as well. Now I hand back to Mark for the outlook.

Thank you, Paul. If we look at the outlook, then we can say a few things about the markets that we are operating in. Offshore wind has been growing very steeply this year as we have seen in the third quarter and also in the second quarter this year. We have more than 40% growth in each of these quarters. We anticipate that this market continues to grow, and this is a worldwide effort right now. We see that also in the Americas and Asia Pacific. Europe, obviously, will be the leading region, so to say, in this effort, but this will continue to grow in the years to come. And it's also a large part, 30% of the Fugro business in right now. If we look at other markets, then we expect further opportunities in the infrastructure moving forward. But in the short term, potentially, this market is still affected by the COVID situation, especially visible in, for instance, the Americas. On the Land business, we see some postponement of projects and movement to next year. Backlog is still healthy there and also solid. But if projects are postponed, then obviously there is a lower amount of activity. But the growth will continue to resume as of 2021, is our expectation, with more governments supporting larger infrastructure developments. Oil and gas market, we expect to remain volatile in 2021. And eventually, it will turn around. We see various reports in the markets coming out that maybe there will be a recovery at some point with the investment. Fugro itself is very careful and prudent, so to say, in our expectations there on the oil and gas market, and we're somewhat conservative in the growth that we expect in the future. The diversification will obviously help us to grasp the opportunities that we see in the various areas of the energy transition and the climate change adaptation, but also the sustainable infrastructure development. The full year outlook has been adapted to an adjusted EBITDA of EUR 150 million, revenue of at least EUR 1.35 billion and an adjusted EBIT of EUR 40 million, positive free cash flow and also taking in account now a EUR 70 million CapEx level. Adjusted EBITDA for Seabed Geosolutions still, mentioned as before, minus EUR 10 million for the second half of the year, which will result in a breakeven result for Seabed Geosolutions, which is held for sale for the full year of 2020. Then the last slide is the midterm financial guidance. Those details have not changed as issued before the same margins there. However, at this time, there is no specific year mentioned to the midterm financial guidance, and this all has to do with the process that we're going through in the refinancing that we can't be specific about this because that will complex -- make the whole prospect much more complex and legally that is not possible to do. So with that, we end this short presentation, and we open up for questions.

[Operator Instructions] We will take our first question today from Luuk Van Beek with Degroof Petercam.

Yes. I have a couple of questions. First of all, on wind, you show a very strong growth. Is there mainly additional demand for services that you offer? Or are you also expanding the types of services that you offer in that market by adding complementary services? And the way that contracts are tendered there, is it changing in the sense that they are becoming more global contracts, including a range of service? Or are they still mainly tendering for individual services to the lowest price? So that's my first question. I'll come on back later with maybe another one.

Okay. Thanks, Luuk. So on the offshore wind side, as we have communicated before, Fugro is able with the assets and the expertise that we have to actually deliver services completely agnostic to the end market, so we can move our assets fairly quickly and easily from renewables to -- from offshore wind to oil and gas or to mapping the seabed, so to say, the nautical projects. That is very important to understand. Having said that, there are some differences in the delivery of the geo data, so to say. The requests are per market somewhat different. And what you see in offshore wind is that actually what -- to the contrary, what a lot of people realize is that what we have to deliver to our clients is actually quite complex and more complex than what we see in the oil and gas environment, as they need more high-resolution data for the subsurface, and this has to do with the installation work that they face with the monopiles. They are also more complex laboratory tests that need to be done, as you might realize that one monopile has more force to endure than maybe 4-leg or a 6-leg platform. That makes it more complex, larger and more complex tests to be done in the laboratory. Also the search for, yes, unexplored ordinance, ammunition from the second and even the First World War that is still out there that needs to be detected, and also high-resolution detection of boulders that are in the subsurface that they cannot basically encounter when they place these monopiles. So there's a lot of additional work in itself that is requested from Fugro. Those contracts become larger and more complex. So in that sense, Luuk, you're right that we have larger contracts in this area seen already. Not all the contracts are larger, but sometimes they are larger because they combine a number of things with the UXO identification and clearance or with the route surveys included. So this is more a combination of geophysics and geotechnics and geoconsulting work. Global contracts, we don't see so much yet. However, what is important to note is that several clients take us along with them around the world. So for instance, clients like Ørsted have now, yes, used us in 3 out of the 4 regions in the Americas and also in Asia Pacific. There's a large demand there for similar work in different areas, and they basically bring us along with them to operate in those areas as well. I hope that, that answers your question.

Yes. That's very clear. And one other question on marine asset integrity, where you stressed that part of that is the inspection work that cannot be postponed indefinitely. Do you think that you're now reaching a bottom or that maybe there will even be a catch-up of activity that have been postponed earlier this year with COVID? Or is it still a very -- visibility is ill very low there?

Well, I'm not going to say that we have reached the bottom that, that would be one step too far. Nevertheless, I really don't know which direction this is going moving forward in 2021. That's a little bit of crystal ball work that we need to do there. Having said that, I think it is important the message that I delivered there is at some point in time, you can't go much lower because we came out of a previous crisis where, as I said many times before, the asset integrity work had not recovered yet. Although we mentioned in the second half of 2019 that, that business line was also starting to recover. And now you get COVID, so you get another hit. And at some point in time, you get to a low point. Is that the absolute low point? I don't speculate on. But certainly, at some point in time, you cannot go much lower with pricing and also with activity if you focus on the inspection, repair and maintenance. There has been a lot postponed already in the previous energy crisis. And at some point in time, yes, this needs to be done as assets become older and need to be, yes, safe out there. So then there is a request for inspection, repair and maintenance work.

We will take our next question from Thijs Berkelder of ABN AMRO.

Thijs Berkelder, ABN AMRO. Can you maybe give a bit more clarification on, let's say, regional developments? Americas' revenues were comparable down 18.5%. I recall, I think, that last year you had big losses in the Americas because of project problems. What's the margin situation right now in the Americas? And a similar question, I would say, for Asia Pacific.

Yes. Okay, Thijs. So specifically talking about the Americas, we don't give specifics on the margin right now. However, I can say a few more words about the Americas. We're not yet very clear or happy with the development in the Americas. There's a lot happening there in the various business lines. Certainly, that's quite busy also on the offshore wind side there. The region is now more dominantly offshore wind than anything else. That is -- that -- having said that, a busy work in the marine site characterization business, but very much affected in the marine asset integrity side, but also on the land side as the effect of COVID specifically in the America has been larger, and that has an effect on the land site characterization work. And that basically resulted in this strong decline in revenue, so to say, in that particular region. We're busy working on the land restructuring in the Americas, as we spoke about before. That is going -- yes, that's on track. That's going well. Having said that, obviously, we've postponed projects and COVID situation that is somewhat complicating, yes, the direct visibility in the results, so to say. So that is what I can say about the Americas. We're working on further improvements. Obviously, we need to have the projects starting again, which hopefully will kick off in the fourth quarter and early next year. Some of these projects have been announced to start soon. If we talk about Asia Pacific, again, I'm not going to be very specific about the margins there for the third quarter. What we can see over the last couple of years is that Asia Pacific was very negative and very much down, and that had to do with the marine asset integrity business, as you all know, in particular, and this was an effort from Fugro in the last, yes, 1.5, 2 years or even longer to fix that. And despite the fact that this cost also some money in previous period, we have now this business line much better under control and the losses that we have seen in the past are not there anymore. So in that sense, we're pleased with the developments in Asia Pacific. But having said that, profitability also there. And across the board, in all, Fugro needs to move up.

But maybe coming back on the regional margin split. Is the whole of America or was the whole of the Americas in Q3 then from an EBIT perspective still loss-making?

No, Thijs. This is Paul speaking. So in Q3, and again we will not give you the trading update, but what we can say is that both Americas and APAC were at a positive EBIT in Q3.

Okay. And the other regions, probably at a more positive EBIT margin?

Europe, of course, did very well. Middle East was slightly marginally negative.

Okay. Yes. Then it's good to see that Hong Kong is back in Asia Pacific. Is that really back? Or is Lam still, let's say, very cautiously looking at the situation? And the same goes for Saudi Arabia. Also there, you were affected by many delays because of oil price, I can imagine, that are still ongoing there. Maybe you can have some -- say some comments there, yes.

Both regions -- yes. Yes, both countries, Thijs, are -- were very affected, in particular Saudi Arabia, by COVID situation. That has stabilized somewhat. So indeed, there is some positive development there. However, moving forward, we still expect that to be, yes, impacted so to say even for a bit longer. But not as much as it was a couple of months ago. Hong Kong is also back in some ways, and that is primarily because the activity that we have on the airport project there, which generates a lot of work for us. But in the midterm, the governments have spent a lot of money, and they will probably be careful in how they spend their money moving forward. So I think that will be flattish and not necessarily with steep increases in the short term.

Yes. Okay. Clear. Then I had an add-on question based on client questions I got. I don't know whether you'd answer them, they're very simple questions. Margins in offshore wind, are they higher than in oil and gas or still lower than in oil and gas?

Yes. Okay. Paul?

Yes. That's a question we get a lot, Thijs. As Mark already said, the assets people are market-agnostic. So we look more from project to project. So you have great projects in offshore wind and less good projects, in the same way we have in oil and gas. So you cannot say structurally that margins in offshore wind are lower or higher than oil and gas in our case. Obviously, the margins that Fugro used to make in deepwater oil and gas, these we don't see in offshore wind. But if you look at the other work in oil and gas, yes, it's very comparable. And again, if you look from project to project, you can have every variation and comparison that you can imagine from much better to equal to slightly lower to much lower, et cetera. It's a project business. Project execution, of course, is always very important in terms of margin development. So the good news for us is that we have market-agnostic assets and that we can switch. We don't have to do specific investments to do offshore wind or oil and gas work, and that makes it that we can make money both in offshore wind but also in oil and gas.

And comparable to last year, maybe to add that, obviously, the share of offshore wind is larger right now. And if we talk about Q3, then our margin is better than last year. So in that sense, that gives an indication on what you're asking there?

Yes. Clear. But is it so that once you have an offshore wind project, it's much more predictable than in oil and gas? Or is also that equally uncertain at times?

I don't think this is specific to the market, so to say. I think we can have similar certainty or uncertainty around oil and gas projects as offshore wind. It depends probably more if it's a day rate project or a unit rate project or a lump sum project. And all of these can be positive to us or maybe negative in some occasions. And that is the same to the offshore wind as in the oil and gas there. There is no major difference there.

And a final question on marine asset integrity. Is there already some sort of offshore wind-related asset integrity growing, and how sizable is that then? Because you give offshore wind in percentage of total, but it's, as far as I see, primarily site characterization. So in percentage in asset -- marine asset integrity, where is it?

Yes. Okay. That's a good question, Thijs. The asset integrity element of offshore wind is, I think, still very much in development. So there's activity to come in the future. However, some of the UXO work is for us related to asset integrity, and that has to do with more the expertise that we have in that business line. And therefore, we also use, for instance, the ROVs for some of the elements there, which is coming through in asset integrity. So also there, the share in wind is slowly increasing. But having -- specifically talking about, yes, the integrity of the asset itself, like vibrations or scouring or around poles and other maintenance work that needs to be done, is still relatively low and needs to come in. While these fields become older, while you get more requests for cable inspections, depth of burial, for instance, is a question that needs to be answered for governments, for jurisdictions in certain countries. You need to prove that the cable is still buried below a certain depth. But also, a lot of the work that we're doing in, for instance, the Americas and Asia Pacific, is really in the forefront. Not many monopiles are placed there that still needs to start, so to say, let alone the asset integrity work.

We will take our next question from Andre Mulder of Kepler Cheuvreux.

First question on the covenants, the new definitions. If you look at the net debt to EBITDA, so 4.0, 4.2 compares to the 1.8, other than the subordinates, are there any other changes in the definition of the covenants? And the same go for solvency interest cover, any changes in the covenants?

Yes. I would like to tell you, Andre, but I think I cannot -- although this is not related to the equity, so maybe I can. So I'll take the risk. There is -- so including IFRS 16, the new covenants. The previous ones were frozen GAAP, were pre-IFRS 16. That's a change. And I think then maybe relevant for you, the most important other changes that we had a bucket for specific items where we could exclude, let's say, restructuring costs, onerous contracts, legal costs, these type of things. So basically, larger one-offs, up to EUR 35 million annually. That is now, going forward, up to EUR 15 million annually starting next year. So this year, it's still EUR 35 million but next year, that will be EUR 15 million. That's from memory, I think, for covenant purpose most important. Obviously also, but I think that is clear that the new covenants also include subordinated assets, including all debt. So debt from lease liabilities because it's including IFRS 16, debt from subordinated loans, so the convertible bonds and, of course, the more senior -- the normal senior loans.

Yes. Okay. On the savings, can you provide us with the split between Marine and Land? And related to that, have you seen any further costs? Or have you already seen all the costs in the P&L?

Split, I don't have available for you in that level of detail precisely. Obviously, disproportionately, I would say, relative to the size of the Land business, we have done some more in Land than in Marine given that the performance of Land was lacking. So there also we made some structural changes in the organization, how we basically managed Land going forward with low overheads and with a lighter structure. Because, again, the land performance over the last 2 years was, of course, not good and we started now to see the first benefit. We've restructured more in Land, so we stopped in countries, yes, services that were loss-giving and that could not -- where the expectation was it could not be turned around quickly. So that was mainly in the Land business. So I cannot give you a specific number, but relative to the revenue, again, it's more in Land than in Marine. And then you had another question, maybe not or was this it?

Yes, that's right. There's certainly costs involved with these savings. Have you taken all the costs already? Or should we expect some more?

Oh, that's what you mean. There might still -- if we took restructuring costs of around EUR 5 million in the quarter, I think there will be some more to come, not a lot, maybe a few million. So the bulk is taken.

Okay. Then on Seabed. You're still talking to an investor, so let's call that Plan A. Have you looked at Plan B? Meaning dissolving the company and what kind of cost, what kind of impairments should we be looking at?

Yes. We're not going to speculate now on Plan B, C and D. But I can tell you, we have looked and we have analyzed, so we are well prepared at all possible scenarios. But I don't want to speculate on that now. I think for now, what's important is our base case scenario, it's the divestment. That's where all the focus is. We'll see if that will materialize. We're still talking to parties, so that's good. We realize that in terms of value, and that's why we took the impairments, it is different compared to what we might have thought maybe 6 months ago. That's the base case. And if and when we move to another scenario, we'll let you know.

Yes. And a lot...

I think what is -- I wanted to add, what is obviously important to mention there is that the new project will help us certainly to further see the value of Seabed, yes, potentially in the future for new parties that step in being higher than what it was before when the projects were not coming through.

Right. Two questions remain. Firstly, on offshore wind. When I see a new country, your name is popping up. Would you say that your market share in offshore wind is, let's say, much higher than what you see in oil and gas? I cannot really find anybody else that could [ write ] for you in that respect.

Well, what we have said ourselves is that we are a market leader. That's our own assessment there. We are also a global player with many integrated services. Some of the competition has certain services that they can also deliver in particular areas, but it's not as widely spread around the world and also not as integrated as Fugro has. So in that sense, we're well positioned and the market leader. In some areas, you could say that we are maybe stronger than in oil and gas, because there's maybe more competition there, because it's also, yes, mature markets. This is still a new market where we indeed are very early mover and always present in the new developments, so to say. Also in Australia, where the first offshore wind field is developed, so we're on top of that. Having said that, also in this market, there's obviously competition, and the competition will probably be stronger moving forward when the market further matures.

Okay. Last question on the midterm targets. You skipped the period because of legal complications. Would you say that after this issue was done, you would be able, again, to provide us with the time on that? Because as you said yesterday, there can be a difference between, of course, 5 years and 10 years.

Yes. Well, midterm is midterm. Obviously, it's not long term. So that's what I can say. It's obviously also clear that, yes, the COVID period that we have seen here in 2020, and we don't know how long that will take. But obviously, 2020 has delayed the steps that we're taking, working towards our midterm targets. So that gives you some indication what is happening here. But we cannot speculate on the exact term there.

Yes. On the level of the margins, would you say you have just repeated those margins? Or have they remained unchanged after review?

We have reviewed them again, Andre. A lot of modeling, filtered in a lot of assumptions, mainly of course on market expectations going forward, which we normally share, how we see markets develop mainly based, of course, on external views from external research companies. And we derive then, of course, what that means for our revenue. We have updated cost structures, of course, in our modeling. So we've really updated everything. And on the back of that, we come to this guidance.

We will take our next question from Quirijn Mulder of ING.

Yes, a couple of questions from my side. If I look at the decline in oil and gas, that was 43% in the third quarter and it was 29% in the second quarter. So maybe you can explain on that given the fact that the COVID had the biggest impact in the second quarter with the logistics hindrance, et cetera. That's my first question. So maybe you can answer that first.

Yes. Well, it's a little bit guessing there. But I think what I would initially say is that some of the energy companies are a bit slow in reacting to what is happening in the world. But obviously, it has to do with the investment profile of the energy companies there. And some of the things that probably still had to be completed and finalized. And yes, new investments are minimized, obviously, in the short term as much as they can. But yes, you see some of these companies pretty large being pretty slow in communicating to the outside world what they're doing.

And what about the pricing level now? For example, because you were struggling to get higher price in 2018, 2019. That is all collapsed. Is that at [ Brent's ] prices?

Yes. So what we can say about the pricing, obviously, it's clear that if one of the market segments is very much under pressure, then the oil and gas is clearly very much under pressure. And also other markets are obviously declining somewhat. So it's only offshore wind that is still growing so rapidly, which is obviously good news. But this puts the pricing under pressure more than what we have seen before when we were in a recovering mode, so to say. Having said that, we have done a lot -- and we communicated about that before, we have done a lot on training our commercial staff and people around the world to stick to certain pricing. And what we have seen in the previous crisis where we went probably too low, we have said, well, there's a limit to what we can do and we will be more firm there. And we'd rather not work for certain projects if the prices are too low, and then we just reduce the capacity, so to say. That is our preference then, and then going into the right numbers.

Okay. And in your -- with regard to your order book, it's about minus 4%. Is that -- what was the impact of Abadi on that -- the delay to 2022 on that order book? If I look at the Far East then, I can see a serious impact there.

Sorry, the impact of what?

Abadi project in Indonesia?

Okay, in Indonesia, yes. So on -- in the backlog. Paul, do you know the exact number, what the impact is?

I know the total project value. It's 12-month month number. If we -- but indeed, we include in the backlog a 12-month period, so there was still a half year that was still -- yes, number included because the expected starting date was early next year at that moment in time. Today, we know that we're expecting starting date is further delayed into most likely 2022, which means that, at this point in time, there's nothing in the backlog in relation to the project.

Okay. And then on other projects, let me say, for the OBN activities in Brazil. You got a standby fee. So how long will that -- will it last, the standby fee for the Brazilian project?

Not sure if I want to share these details until then. We got quite a few months standby fee. I'm not going to say precisely how much. But at least what I can tell you is that it's -- let's say, from now onwards stopped the standby fee. We are in discussion with the customer on a restart. We don't know if and when that restart will happen. As we communicated in our press release, it might restart early next year. But that's still to be finally confirmed by the customer. It might be delayed again. We don't know. We have good hopes that it might start early next year, but even that is not final decided at this moment in time.

[Operator Instructions] We will take our next question from Martijn den Drijver.

It's Martijn den Drijver. A couple of questions from my end. First of all, on the basis of your guidance, leverage ratios, et cetera, am I more or less right that the net proceeds of this equity offering is some EUR 220 million? So there are some EUR 33 million of costs involved?

There's a few things involved, as indeed fees are involved, which will be deducted, of course, from the equity proceeds. There's also a refinancing of the sale and leaseback, which requires a prepayment of a certain amount, a kind of deposit, which is indeed, deducted. So yes, you're more or less right on the number, yes.

Okay. And also one clarification. You talked about the new covenants, those bucket-specific items. We're talking about 50, 5-0, or 15, 1-5?

1-5.

Okay. And this year, we have a very strong year in offshore wind. Do you -- would you label this year as an exceptional one or a year of, which with the ongoing demand for offshore wind farms, growth which we could see for the next coming years?

If you look at the market reports then -- and that's what I can refer to. And as I always say, and that caveat I put in always, these market reports will be for sure wrong. The chances that they are wrong is much larger than that they are right. But at the moment, we are outperforming these market reports. I think they talk about roughly 27%, 28% on average growth per year in offshore wind. We are higher, and that has to do obviously with the fact that we are in the forefront and that we pick up more work right now. Later on when installation comes in, then Fugro will have a smaller share of that market growth area. And the amount will also be larger when there's construction work, so to say, involved and installation work. But this is certainly something to, yes, anticipate on further improving in a similar manner in the future for the market. And as I said, it might vary when the forefront work is done, then Fugro will have a smaller share of the market size.

This will conclude our question-and-answer session for today's conference. I would now like to turn the call back to our host for any additional or closing remarks.

Okay. I would like to thank everybody for your participation. Thank you very much, and I wish you all a very nice day. Thank you.

Thank you. Bye-bye.

This will conclude today's conference call. Thank you all for your participation. You may now disconnect.