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

Welcome, everybody. Good afternoon. Welcome to the full year results webcast of Fugro. I'm Catrien van Buttingha, Investor Relations. I'm here with Mark Heine, CEO; and Paul Verhagen, CFO. They'll give a presentation that will last about 30 minutes or so, I guess, in total. And afterwards, there will be room for questions. Mark, can I turn it over to you, please?

Sure. Thank you very much, Catrien. I will first go for an introduction and then hand over to Paul for the detailed financials. We'll start with some highlights of 2020. I would like to say that, obviously, 2020 was a special year, as we all know, COVID very present and started in the second quarter of the year, obviously, having an effect on Fugro. Therefore, we also see over the full year a revenue decline of 12.4%. However, having said that, looking back on the full year, we can be pleased with the results that we managed to get in this quite difficult year for many companies as well for Fugro. I will touch base on all these items that are here listed on the highlights. So I will go to the next slide to talk a bit more about the revenue development. So for the full year, as I said, a 12.4% decline. If you look at the second half of the year, it's more, it's 14.4%, which obviously has to do with 2 quarters affected by COVID, whereas in the first half, it's obviously only a majority in the second quarter. If you then look at the bottom line result, the EBIT margin then, there, you can see that, that was hugely affected in the first half of the year. We also started with a difficult first quarter in 2020 and then compounded with the second quarter where the revenue came down by 19.3% that had an enormous effect on the bottom line. Having said that, Fugro managed to step in very quickly and, therefore, also see the result of that in the second half of the year. And we even managed to achieve a better result, better margin for the second half of the year compared to the second half of the year in 2019, margin of 6.5% compared to 5.4%. If you look at the diversification of Fugro, which is also an important element that we have spoken about quite a lot over the last period of time, especially also around the refinancing, Fugro is diversifying. This is a conscious decision from the company to see if we can balance the mix better with different end markets, obviously, talking about oil and gas, used to be very prevalent, close to 80% in 2014 and now down in 2020 to 45% for the full year. If you look at the 2 separate half years, and we have to realize that quarter-by-quarter, we mentioned that in quarter 3, due to the refinancing, we actually issued quarterly results for the markets. We will continuing to list half year by half year. That has to do with the fact that there is quite a bit of fluctuation between the quarters. And therefore, we will continue to present these by half year. Also, we saw in the second half of the year a further decline of oil and gas and stepping up even more in the offshore wind. The renewables is then 24%, close to 1/4 of the total revenues for Fugro, which is a nice imbalance with infrastructure, also 24%, and also a growth in nautical. There's a small correction between the quarters in the second half of the year, EUR 6 million correction is also listed there in the footnote. But all in all, we see a growth in offshore renewables for the full year of 28%, which is remarkable, especially if you look at the COVID year. If we -- oops, let me see. I went a bit too quick. If we look at market by market -- no, 1 back. Yes. So the trends in the Fugro markets, I think there's the general global trends we can talk about, and we spoke about that: population growth, urbanization, climate change, but also the technology developments are quite important for the whole world. And that has an effect on the specific industries that Fugro is working for. And this results in, yes, topics like energy transition, climate change adaptation, but also sustainable infrastructure development and then, obviously, the digitalization that the company needs to go through. So this is our key industry trends that we will continue to focus on and to also support these industries in this development that we will see becoming more and more important every year from now on. In the short term, if you look at the markets, we can obviously see that the pandemic, the COVID pandemic, will have an effect and continue to have an effect on the global economy, on the world society in general, and that will continue for the upcoming quarters. That is obviously clear and it creates uncertainty, and we have to be clear about that as well. But Fugro does expect in the second half of the year that we will get to more normal market circumstances. That's maybe good to mention there. What we also see is that the pandemic has an effect on a number of topics, global topics, primarily climate change, and we'll come back on that a little bit later in another slide. If we look at the energy transition in itself, then you can talk about, yes, the renewables, in particular. We see, obviously, a number of movements there, especially the growth in offshore wind, which has been for multiple years now above 20%. And also for the upcoming years, we expect a steep growth in the offshore wind development. Oil companies or energy companies, I must say, they shift their investment program also much more to the offshore wind developments, the renewables developments, wind and solar. But for Fugro, specifically, in the offshore environment, the wind market is quite important. And we see growth in Europe, as we spoke about, but also in the Americas and Asia Pacific, and that is growing in every area of the world. But if you look at oil and gas in total, you could say that, that will remain volatile for 2021. Report obviously give different insights there. But especially, Fugro is quite careful in estimating a return on the oil and gas side. But also, having said that, oil and gas will continue to play a role for Fugro. And also moving forward, I think oil and gas is also needed for a sustainable world for the decades to follow. Some examples in this area, and that is always good to be a bit more concrete, what is Fugro doing there? Well, if you look at the energy transition, for instance, in the wind business, you see that we also get involved now in floating wind. Here, you see an example of a project that we support in Portugal. The first floating wind projects are starting up right now. Fugro has to play a role there for the foundation, the mooring on the seabed, but also for the positioning and moving these structures offshore in the right location. This is same submersible offshore wind floating solution, and Fugro has helped there with various services and solutions that we have to offer. So you see probably floating wind picking up more and more in the upcoming years. Specific companies that are only focusing on floating wind will see more and more in that sense. On the right side, you see another project in Germany where there's power cables, yes, underground power cables installed to actually transport all the, yes, wind power that is collected also offshore. This is a big project. Fugro is involved with the AAA services that we have. So acquisition of geo-data, analytics in our laboratories, we have 37 laboratories in the world and then also providing the advice that is required for these projects. And the geo-data forms a central role there. If I go to the next important industry trend that Fugro supports is the sustainable infrastructure development, which is obviously an important driver for -- yes, as a whole in the world where we see urbanization and population growth becoming, yes, very prevalent. And if you look at this market trend for a number of years, infrastructure market is growing. We also managed to pick that up again, that growth, and we expect 2021 to grow again. Obviously, COVID has stopped that growth for a period of time, especially because projects were delayed, postponed, not so much canceled. But those projects are also being picked up right now. Globally, we see projects, yes, starting again. That always takes time. Certainly, in the winter months, it will take a little bit longer, but we definitely see with the government support that you see in various countries coming up now, the recovery of this market segment. Very important, we also bring in more digital solutions there that we actually can drive efficiency and actually make the operations more, yes, more effective, cost-effective as well. Maybe if you look at an example there. This is a very good example of something that we do very close by here in the Netherlands, in Amsterdam. We're monitoring with new technology, Fugro TotaLite solution, which is something that we are just deploying for the first projects now. Very innovative, based on light, we can actually monitor the behavior, the stability of these, yes, walls of -- and bridges in Amsterdam, which is very critical, especially in an area where we see more and more aging assets in the world. Everywhere, the assets become older. Maintenance is postponed. It will be an enormous program to get back to that maintenance program. And in the meantime, we need to start monitoring to ensure the safety, yes, for the people that live there. And that will become more and more important everywhere in the world. We see similar requests coming up more and more. And you can, with the technology nowadays, also go to near realtime or real-time measurements where you continuously monitor these structures. If we then talk about climate change adaptation, that is also very important in a world that faces this climate change and the temperature rise. We see an enormous effect by climate change with natural disasters of extreme weather. I don't have to give you the examples there. And there's an enormous investment needed. We're talking about, yes, EUR 140 billion to EUR 300 billion investment required to actually, yes, get the adaptation in the world implemented. This is an area where Fugro can actually help with solutions for flood protection, coastal resilience, but also areas where, yes, water is scarce, is drying up. We will see an enormous effect on foundations there. And we see that here in the Netherlands, we see that globally as being a big topic. But also fresh water, sourcing fresh water is becoming important everywhere. Now we see a number of areas, and the new Biden administration also gives us hope that even there in that area of the world, there will be more attention to the climate change adaptation work. And Fugro can play an important role there. Let's look at a few examples there. Some good projects here. We have been very active in Romania where we -- for the World Bank and Romania did an extensive survey on, yes, building a digital terrain model to actually calculate what floods could take, how it works, model things, very important for, yes, climate change, flood control type of work. On the right side, we see something else where we talk about mapping the seabed, which is hydrography work that we do in many places in the world. This is in Australia where we also deployed our USVs, the new USVs that we launched, the Blue Shadow as we call them now. And they basically collect seabed information, water depth, which is very important to also better understand the behavior of the oceans and how actually it affects the coastlines and, therefore, also important for coastal resilience. This is something that is now more and more outsourced to commercial parties. Even this year, the UN started the UN Ocean Decade that started in -- at the beginning of this year, which is a decade long where they will focus on mapping all the oceans. There's only 19% mapped of the oceans, so there's still a lot of work to be done. Then 2 more slides from my side, then I hand over to Paul. We also announced that we have an ambition to contribute to moving towards carbon neutrality, very important. The full management team in Fugro is very committed to work towards carbon neutrality in 2035. And we will do that for our own operations, so you talk about Scope 1 and Scope 2 here. We have a number of actions listed there. We obviously have to look at our vessel fleet because that's very important. 80% of the carbon emission and footprint comes from the Fugro vessels and the vessels that we obviously use in our operations. And we have a whole program, obviously, replacing them with remote solutions, lightly crewed solutions, uncrewed solutions, but also maybe with hybrid propulsion or energy sources, different fuels and maybe even different platforms in the future. And it obviously has an impact on many stakeholders here, our clients, employees. Clients want to progress with their programs as well. So it's very important that we, as a supplier in this market, actually help the world to become, yes, faster in changing to carbon neutrality. By the way, Europe has a target in 2050 to be carbon neutral. So I think companies have an obligation to contribute to that. Then my last slide before we go in the detailed finances. This is a slide that many of you have seen before. We have used it during our refinancing as well where we list very clearly our key investment highlights, the strong points of Fugro. We believe that they are still very applicable. We are well positioned, a much more resilient company that obviously focuses on our technology, our solutions that we can offer, much more mobile, much more remote, much more flexible in basically serving, yes, markets that still change over time. And we have seen in 2020 that we have adapted ourselves quite well under very difficult circumstances. And with that, I would like to hand over to Paul for the results.

Thank you, Mark. Maybe first a few key messages. Yes, a modest year-on-year EBIT decline despite the strong revenue decline with even a recovery in H2, as Mark already said. Acted quickly and decisively with cost measures, which contributed, of course, to the EBIT recovery in H2 growth in offshore wind and also important improvements in land. As said, the actions in land start to yield results in the second half, clearly visible. I will show it in the upcoming slides. Very good working capital performance resulting in a DRO of 83 days. Good cash flow, EUR 105 million, including some, let's say, one-offs like the EUR 50 million divestment proceeds from Global Marine and EUR 20 million COVID-related deferred tax payments. And as you all know, yes, refinancing is done successfully and will provide flexibility to deliver on our Path to Profitable Growth strategy. Oops, I've gone too far. Yes, here, you see the cost measures. So you see that we had a very significant revenue decline. So the EBIT in 2019 was EUR 68 million. Revenue declined by EUR 245 million, so with no cost measures would have been taken then. If the same cost base, EBIT, of course, would have been down with the same amount. But you see there the various buckets. Other income year-on-year increased by EUR 15 million. Third-party costs were lower by EUR 132 million. Personnel expense low by EUR 55 million. And other expenses, mainly discretionary, lower by EUR 20 million. And D&A also slightly low, resulting in a EUR 48 million EBIT in 2020. Maybe good to note that these cost reductions that you see here are also supported by currency developments, is around EUR 30 million to EUR 40 million currency impact, further reducing the cost. And in my next slide, which I will show now, that there we put it, excluding currency effect and also only the measures that we have specifically taken and not the benefit from other cost reductions that we have seen. Yes, we are on track to realize EUR 130 million cost savings. You've seen it also in the previous slide, which is in excess of our previous targets. It was EUR 120 million. Here, you see the various buckets where we have explicitly taken action. EUR 95 million is in the pocket, is done. And we expect in the coming 3, 4 months in this year, year-on-year, a saving of around EUR 35 million as per the various buckets that you see highlighted here. For the full year 2021, of course, you have to realize that this cost program kicked in already from, let's say, April, May onwards last year. So from that moment onwards, of course, the comp is similar to, yes, the reduced cost base as we have it today, so the big change you will see in the first, let's say, 4 months or so. That's one. And two, another important point is that these savings reflect the savings of actions that we specifically take and do not include some other items that result in cost increases, like, for instance, salary increase. So this is the net amount of personnel expense reduction as a result of the acts we've taken. But of course, that will be partially offset if and when we would decide to do a salary increase somewhere in the first part of this year. The same is true for discretionary expenses. Of course, COVID has resulted in no travel, no marketing conferences, low office utilization, low utility cost. Obviously, when this gets back to normal, these costs will increase somewhat compared to the very low level that we see here. Despite double-digit revenue decrease, modest fiscal year EBIT decline. We mentioned that already. You see the 12.4% revenue decline for the full year and 14.4% for the second half. It was around minus 10% in the first half. I think most important here is the H2 EBIT, which improved from 45 -- 5.4% to 6.5% with a decline in marine, I will come back to that, and a pretty significant improvement in the land business. Here, we see the marine figures. So for the full year, revenue decline of 15%. Half year, so second half year, a 20% decline. And in the first half, it was approximately a 10% decline. You see the margin, full year, coming down from 5.7% to 3.5%. But also in the second half year, a strong recovery compared to H1. H1 was 1%, H2 is 5.9%. But year-on-year, still a decline from 7.6% to 5.9%, but which is limited, again, on the back of the 20% revenue decline, mainly because of, yes, the cost measures we've taken and the very strong growth in offshore wind. Land. Yes, here, you see a different picture in terms of revenue. For the full year, revenue down 5.4%. But for the second half, flat marginal growth even, 0.6%. And in the first half where land had a tough time, in particular, in the Americas, we were down approximately 10%. And you see here the margin development, 2019, more or less flat; 2020, 3.4%. And you see the big improvement in the second half, EUR 16 million. And I think most important here is that this improvement is visible in all regions. All 4 regions, the improvement is basically carried by -- yes, across the board, and that is very important. Two, the EUR 16 million includes EUR 3 million to EUR 4 million transaction gain on sale of property in China. That's, of course, a one-off and should be adjusted for that if you do a like-for-like. And maybe also important to note, although I don't have the specific figures, in H2, there is government support included, also in H1, but more in H2 than in H1. And some of that government support is most likely related to H1. But we can only account for it once we know that we get it. So some of the H1 government support was accounted for in H2. Now the 4 regions. Europe-Africa, 11% down in revenue. Second half revenue decline was actually, contrary to all the other regions, was lower than the first half. So the first half revenue decline was higher, around 13%; and the second half, around 9% to 10%. Still, despite this 11% revenue decline, a decent EBIT margin, although down year-on-year from 10.5% to 7.9%. But I think more important, Europe-Africa did an incredible job in the second half, still with a significant, almost 10% revenue decline. We saw the margin improve to 12.8% compared to 10.4% in the second half of '19. So very, very strong result in Europe-Africa. And again, that has everything to do with the cost measures taken, but also, of course, with the strong growth in offshore wind. Americas, a different picture, 12.6% revenue decline for the full year. Second half revenue decline was higher, it was almost 15%; and the first half, around 10%. You see a very different picture for marine and land, marine improving year-on-year, in the bottom part of the slide, land coming down. Now if you zoom in into the half years, you see that the improvement of marine was fully in the first half and was down year-on-year in the second half on the back of, yes, pretty steep revenue reduction. Land is the opposite. The result that you see there coming down is fully related to the first half. And land year-on-year was improving in the second half, again, on the back of quite some measures that we have taken. Oh, one too far. Asia Pacific, yes. APAC, 10% decline. So you see basically across the board, all double-digits declines, 13% in the second half and around 7% -- 6% to 7% in the first half. The revenue decline in Asia Pacific is fully related to -- for the full year, this is fully related to marine site characterization as we saw growth in the -- marginal growth, but still growth in the other business lines, which is in itself good, of course. You see there the decline in EBIT for the marine business, but a very significant improvement in the land business. This part, of course, includes also this transaction result of China. But overall, yes, we saw growth in the land business all in the second half, but even so much that the full year resulted in a growth with cost measures and, yes, growth plus cost measures give this result, which is pretty good, obviously. Middle East & India, yes, that's challenging H2. What we see in all the regions is that H2 is better than H1, except for Middle East & India. You see there the revenue decline of 20%. The revenue decline in the second half was slightly more than 30% and around 10% in the first half. So a very significant revenue decline. It has everything to do, of course, with the large O&G, oil and gas exposure that we still have in the Middle East & India, with limited offshore wind and other work that we see in the other regions. The land business improved a lot, as you see there. Also growth in the land business, so that's a positive. But the marine business, yes, in particular, again, due to the oil and gas exposure, had a pretty difficult time. And we are taking further actions to adjust the organization and the cost base, of course, to the new revenue reality. Then Seabed. Yes, Seabed is still held for sale, as you all know most likely, and has been very severely impacted in 2020 by COVID. As you know, the large project was stopped in the middle of the project, unexpected, to be honest. We have a pretty big impact on the bottom line. We have had basically no work since May last year and started to work at the end of this year for a project in Brazil. Workforce reduced by around 60%, so very significant cut. And as you see, quite a few specific items, a EUR 70 million noncash impairment, EUR 25 million onerous contract provision, mainly related to this S-79 project. And yes, net-net resulted in an adjusted EBITDA of EUR 4 million, which includes, by the way, a EUR 5 million gain related to the sale of shallow water cable assets. Then everything below the EBIT, there's quite a few things. You see there the EUR 28 million of specific items. That's mainly restructuring costs, EUR 18 million. But as you've seen, we target EUR 60 million personnel expense savings at a cost of EUR 18 million. So that's not too bad. Noncash impairment of EUR 6 million; and other cost, mainly legal costs related to the Southern Star arbitration of EUR 5 million. Then in the financial expenses, you see a big currency revaluation loss, so revaluation loss on cash balances are related to U.S. dollar cash balances, Singapore dollar cash balances, Angola, but also a few smaller ones like the Brazilian real, the Norwegian krone, et cetera. But the largest one were the 3 that you see on this slide. In addition, we had a DTA, deferred tax asset write-down in the U.S. of EUR 19 million. And yes, if you add it all up, that brings you to the EUR 74 million net result from continuing operations, negative, minus EUR 74 million. And then with Seabed, basically, the EUR 100 million negative there is almost all specific items, impairments and restructuring costs and onerous contract provision. Working capital, very good performance. As you know, we are typically around 90 days, plus or minus 5. Every quarter, we see swings. Obviously, this quarter again, but of course, a lot of attention and effort on it. We managed to get to 83 days, the best I've seen in Fugro so far. Really good performance, good contributions from all regions, which is also important. Then in addition, there is a EUR 20 million deferred tax payment in this 8.1% of revenue working capital in this EUR 112 million. That will partially, let's say, be paid in the course of 2021, approximately 50%. And we expect that at, yes, year-end '21, we still will have around EUR 10 million deferred tax payments in our working capital. Maybe also good to note that last year, so December 29, we also saw a very low working capital, and that was because of the working capital -- the impact of the Southern Star provision on working capital. And there was a payable in there. It was not yet paid. And that payment was done in 2020 and, of course, impacting as a result of that also the cash flow of 2020. Now you see the cash flow, EUR 105 million free cash flow; last year, EUR 58 million. You see the swings here. Operating cash flow before changes, EUR 86 million; working capital, a big plus. Of course, we've got this deferred tax payment, also because of the revenue decline because if revenue declines, of course, we release cash from working capital. And once revenue starts to grow again, you build up working capital. The divestment proceeds from Global Marine, EUR 50 million; CapEx, EUR 81 million; and some other resulting in a pretty decent cash flow of EUR 105 million. The refinancing is known. I can be quick. It's done, successful, very pleased that we have been able to achieve this towards the end of last year. You see here the maturity profile. We have EUR 59 million, and that was a deliberate choice of the 2021 bonds remaining will be paid, of course, at maturity. There's still EUR 100 million of the other bond maturing in '24. We have a put in 2022, November. And then, of course, the term loan and the RCF, and the RCF is undrawn at this moment, and only the term loan is fully drawn. Then the net debt, EUR 296 million including IFRS 16, and only EUR 163 million excluding the impact from IFRS 16. As a result of the refi and, of course, the equity raise, you might have expected, of course, a strong improved balance sheet, which you see here. A leverage of 2.1, including the impact of IFRS 16. If you just forget IFRS 16 for a second, it's 1.6, at a relatively low point in the cycle, I believe. So a decent, very good leverage. Interest coverage, 3.2; and solvency, 41%. So all of that looks good. And that brings me to the outlook, and Mark will do that. So over to you, Mark.

Yes. Thank you very much, Paul. Yes. First, have a quick look at the backlog, the 12-month backlog there. We see an 8% decline currency comparable. Obviously, we're comparing here with pre-COVID numbers, which was still growing backlog at the end of 2019. I maybe have to recall that we had 8 quarters in a row, 18, 19 consecutive quarters of growth and improvement of the bottom line. That obviously stopped due to COVID. And if you look at the total revenue decline of 12.4% over actually, yes, the whole year of 2020, then an 8% decline in backlog is not surprising. It's actually quite solid to have such backlog. So we're quite pleased with that, primarily growth in Europe-Africa where we also saw the strongest decline, obviously, on the revenue side or at least absolute numbers in 2020. If we then look at the overall outlook on the next slide, then we can say, and I said these things already, that, yes, the pandemic, obviously, will continue to have some impact on the economy in the upcoming quarters and will also still affect Fugro maybe with some project delays, maybe some cancellations. Although having said that, we know how to work with the current environment quite well. Most of the projects are, yes, started up again. And therefore, we can also say very clearly that the second half of the year, we anticipate more normal circumstances also after all the vaccinations probably in a large part of the world have been done. The offshore wind has continued to grow, and we, yes, we expect there also to benefit from that. Infrastructure is expected to pick up again this year. And then due to the government support, as I mentioned, oil and gas remains volatile, as mentioned as well. We continue to focus on managing our cost, our cash flow, but also concentrate on operational and commercial improvements excellence there and, obviously, with the aim to further improve the margins, as we were on that track in '18 and '19, and we'll continue to go back on that Path to Profitable Growth. CapEx guidance is between EUR 80 million and EUR 90 million for the full year of 2021. Last but not least, the management agenda, no surprises there. As I mentioned, we, first and foremost, focus on our cost base and the cash flow generation. Then we want to strengthen operational and commercial excellence. Complete the land turnaround, the restructuring there. We have seen, as Paul mentioned, the benefits in all the regions. We have taken a lot of steps. That started already in 2019. We have presented about that a number of times. And we see the result right now. It kicked in during the course of the year in 2020. And we obviously want to complete that now and move on with a more solid land outlook. Then we focus on technology, as I mentioned before, new solutions, digital solutions. There are some exciting stuff in the pipeline, and we will continue to bring that to the market and benefit from that, very much integrating the geo-data based on all the digital and technology possibilities that are there. Last but not least, Paul mentioned it already, the Seabed Geosolutions, we still have that held for sale. We continue to sell that. We expect, as Paul mentioned, to complete a transaction in the first half of the year. And we cannot say anything more about that right now. Unfortunately, I understand that everybody would like to hear more details, but that's just how these things work. And last but not least, we will continue to focus on our ESG road map, environment, governance, social elements there, all of them. And as I said, we also target net zero in 2035. And that is the end of the presentation, and we can open up for questions. So I would like to hand over to the operator for questions.

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

First of all, a question about the difference between site characterization and asset integrity, where site characterization is doing quite well on sales and backlog. And in the past, it was always a leading indicator for performance in asset integrity. Is that still the case? Or has that changed with the growing importance of wind?

Thanks, Luuk, for that question. Yes, that's absolutely still an indicator you see. And we have seen that over the last couple of years, and we spoke about that a number of times, that, yes, it's almost by the book, as you can expect. You first see site characterization work kicking in for the design of projects for the develop -- before the development can start. And then only 1 to 2 years later, you see the development of the project itself. Asset integrity work is also related to ongoing maintenance and inspection and monitoring. That is a little bit less dependent on what is done for new projects. So in that sense, you will have a stable basis there for asset integrity as well. That will always continue. But in principle, you're absolutely right, it is going up and down with the cycle of the market, which is also a little bit complex now because we have seen multiple things happening over the last couple of years. We were nicely recovering in 2018 and '19, and we first saw site characterization picking up again. Then only at the end of '19 or the second half of '19, we saw asset integrity picking up. But with COVID, this obviously disturbed the whole picture again. And now you see that, obviously, site characterization also having an effect on, yes, projects that are maybe not handed out yet. So we'll probably see some of that also in the results overall. But in principle, you're absolutely right, it's a good indication. If a site characterization pops up, then later on, you will see asset integrity to follow 1 or 2 years thereafter.

And second, when I try to calculate the asset -- the vessel utilization for Q4, it seems to have been quite solid. Is that just a quarterly fluctuation? Or are you also confident for vessel utilization for 2021?

Yes. So we're not specifically guiding for the percentage of vessel utilization for 2021. What you normally see, if you have a busy season on the marine side, then Q2, Q3 is busy. And then it will roll over into Q4. That generates then a nice utilization in Q4. However, as always, in the winter months, it tapers off. And then you see that in Q1, there's less activity because either it stopped in Q4 or it ends early in January. And then you have some quiet period always in the first quarter. If you're busy again in the season, then you'll have more activity in quarter 4. So that's how we look at it.

And then finally, on the remote operations, autonomous vessels and so on, you mentioned it briefly in your presentation. Can you give an overview of what you have developed so far and how your experience is also regarding your competitiveness in the market with this offering?

Yes. Yes, there's a lot of things happening in Fugro and also obviously around us because this is a whole topic for many companies looking at remote solutions, uncrewed solutions, lightly crewed solutions. So you see a lot happening around us as well. We follow that, obviously, with interest. If we look at ourselves, and that's what we can concentrate on, we're really accelerating that program for ourselves already for quite some time. We have now 5 USVs in the water. The first SEA-KIT unit is also launched and deployed now. So we're doing the first test with that, and then we can actually start using it commercially, which is very important because you need to gain the hours of experience because it works well. But there's always learnings, and you need to modify the, yes, the ones that you built while you're still testing the first units, so to say. So you learn a lot along the way. You make the modifications, and we're very pleased with what we have developed thus far. We also have just recently got a subsidy program for docking station for one of these USVs. So that's a new development where we actually look at how we can download data, refuel these USVs, which is a new development, and we will start with that or we're busy with that right now. And at some stage, we will also announce that to the market. Now the solutions always go further than only the equipment itself. You need to look at the data, what do you do with the data, how do you integrate that with the end solution for the client. That is actually ultimately what the client ask for. So we very much concentrate on how can we speed up the delivery of the data, how can we keep the quality very high, how can we have our laboratories deliver on time. So there's a lot of things happening around that. Also with the 8 remote control centers that we have operating now in the world, and we see the activity there really increasing rapidly, so we make more hours. We have more projects that actually support -- are supported by remote solutions. So we're very pleased with the development in Fugro. Obviously, we'll follow up very carefully what's happening outside. There are a number of parties that also make very nice steps, very interesting, very good. It keeps us sharp. It keeps us on our toes, what is also needed. But it's only a few parties that actually make the same progress -- or not the same, but yes, they make steps also on that front.

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

First question. Paul, I first want to thank you for all the hard work in the past few years. And that's simply because, otherwise, we maybe would forget it. Good luck at ASMI. Can you give us an update on the CFO succession process?

I think that's more for Mark to say something about that, Thijs.

Yes, Thijs, thanks for the question. It will be interesting if Paul selects his successor, but that process has been kicked off. So the search program has started. We obviously have an executive search company involved there. And yes, we will make an announcement as soon as we can, yes, be more clear about that. But that process is in full swing.

Okay. So you hope to have a candidate there before the AGM?

I'm not going to speculate on that. These processes take time. And in that sense, yes, it's only a few -- or months ago that Paul announced that he's leaving Fugro, which is obviously unfortunate. I personally like to work with Paul over the last couple of years, and you thank Paul. We will do the same on our side because he has contributed a lot to Fugro, and he has a warm heart to Fugro as well. So I know that he will follow us very carefully. But he's leaving us end of April, and we're obviously very busy finding a replacement for him. How the new person and when that person can start exactly, I cannot speculate on that. There might be a small overlap or gap. We will have to come up with, yes, a clear explanation how we will deal with that, and we'll do that in due course.

Very good. Then second question is about marine site characterization. I see that backlog is even higher than a year ago. Can you maybe specify whether it's higher in all regions or not?

Yes. Yes, we can say something about it, specifically in Europe-Africa, where the backlog is higher on the site characterization side, marine site characterization side. Obviously, a lot related to offshore wind developments, which is obviously picking up here as well. There's a lot happening already in offshore wind for many years in Europe. At the same time, there's still a lot planned, as you know, and you follow in the news as well. And then we expect also, yes, the Americas to follow thereafter. There's a lot of development kicked off, yes, earlier last year and the year before. And we expect also Asia Pacific to pick up, but a little bit later. So the big growth in offshore wind is probably more 2022 than this year. So -- but it's, at the moment, the backlog, primarily Europe-Africa, on the marine site characterization side.

Okay. Third question is on, yes, on the future of technology on ESG. Your CapEx guidance for 2021, what is roughly the split between growth and maintenance? And then how should we see it? How much money will be spent on new unmanned service vessels? I think there is another one SEA-KIT vessel at plant, but I guess that you will have to move faster. And related to that, will this be accompanied at the same time with potentially the divestment of manned vessels? And as a consequence, also the, let's say, the exit of potential, let's say, seafloor employees on your vessels?

Yes. Okay. Thanks, Thijs. I will answer a part of the question, then I'll hand over to Paul to be a bit more specific on the maintenance and the new CapEx, I would say. What I can say in general, we see this as a gradual process. So you will not see, yes, in a very sudden moment all the vessels that we have being redundant and then that you move over to the new technology. And we see that already building up this experience over the last period of time where we actually are operating with our USVs, where we also follow very carefully what's happening around us and how people are deploying their assets and how much utilization they have. So we follow that very carefully. We want to have a decent return on the investments that we actually deploy. So we have a program for ourselves, how fast we want to go. And yes, we are going fast, and we are accelerating on a number of items as well ourselves because that's just part of our program and the technology possibilities that we have. But having said that, you need to also learn in that process, and it will take time. Not everything can be done by the uncrewed solutions, so to say, or the autonomous solutions. So you still need the platforms that we currently have as well. Over time, we will phase out the older ones. We will not replace them, and we'll step into the new technology more and more, and we will follow that very carefully. Maybe we need to speed up at certain moments in time, maybe we need to slow down a little bit. That really depends how quick our clients, our industries are actually picking up these solutions and what the real demand is. Because at the same time, yes, we see a lot happening, but also the industries in some areas are pretty conservative. And it takes time to actually convince and to move into the new technology and the new solutions. But definitely, from the CapEx, there is quite a chunk listed to the new money or new money going into new development, so to say. Paul, maybe you can be a bit more specific about the maintenance CapEx?

Yes. Yes, that will be around 50-50, I think, Thijs. It depends a little bit on dry docks, when and how they happen. But if you take 50-50 into account, so 50% maintenance-related, and the other 50% on the back of EUR 80 million to EUR 90 million that I'm talking will be project-based and new developments both for land and marine. We always talk vessels, but don't forget, there's also a land business. There's also land. There's quite some exciting stuff coming in. So also there, we will continue to invest. And maybe coming back at one point on your retirement of, let's say, the more traditional vessels. Step one, of course, will be to charter less. And that's already what we did in 2020, actually, where the relative weight of our owned vessels, fins were significantly higher than what we saw in 2019. So there also, we have room to play in combination, of course, with retiring when needed all the vessels.

And then maybe to come back on one element there, Thijs, is that you asked about the people in Fugro. I specifically think that we still need the people, probably deployed in a different way. So people move to operation centers, remote control centers. They are getting more involved in the technology development themselves, maybe in smartly processing the data, faster delivery. Over time, yes, certain positions will be probably be redundant and not needed, but you will have to have other roles there. And as we also have committed to further growth in the future, Path to Profitable Growth, we also think that we can redeploy most of the people that we will probably make redundant over time in working in a different way.

We'll take our next question from Andre Mulder of Kepler.

Have you given thoughts to reports on a segment basis, so not marine, land anymore, but within newbuilds, oil and gas and [ spawn ]?

To report in market segments, Andre?

Yes, yes.

No, that has not been a consideration that -- we always consider many different things, but it's not the direction that we will take. We will continue with the market segmentation as we report right now based on the regions. And we will continue to, yes, to report, as you know, marine and land, but that's also to give you the same insights that you had in the past. So I think with the regional reporting, we already have more insights than we provided in the past. I don't know, Paul, you want to add anything or no?

That's correct, what you say. So...

You built now quite many for offshore wind, the ones who have been involved in that. Can you give us an indication of where you think that the margin is compared to oil?

Yes. Yes, so we spoke about that quite a bit. Maybe 2 things to mention there. First and foremost, and that's also one of the reasons why we would not go or we don't have a preference to go to end-market segment reporting, is that the investments that we make and the expertise that we have, we can deploy actually completely independent from the market. So we have no investments that we do specifically for one or the other market. In the end, it doesn't really matter what we start building or what somebody starts building on the land or marine environment. Yes, there might be slightly different questions because a monopile in the ground has a different question than maybe a platform with 4 legs. That's completely true, but it's the same expertise. It's the same equipment. And therefore, we believe that it's more important to actually report region-by-region and continue to report the difference between land and marine. But we also supply the information, as you had in the past, based on market segmentation, which might change a little bit over time. So I think this is important to mention that the investments are, yes, agnostic to the end market. And I'm thinking the second part of your question was related to -- help me there. The...

The margins.

Oh, the margins. Yes, sure. Sorry, Andre. So coming back on the margins, in actual fact, then you can also see that in the performance, if you look at the decline in oil and gas over 2020, and you see actually the step-up of 28% over the total year for offshore wind, that we actually achieved similar margins. And if you look at the region, as Paul said, Europe-Africa, second half of the year actually improved the margin, and that's on the back of, yes, a lot of the offshore wind work that we have picked up there. So we have already stated for some time that the margins in offshore wind and oil and gas are quite similar in some areas. And yes, we can achieve those margins simply because we can move our assets around between the various markets, whereas maybe a party in the industry that has very specific investments required for one end market might have more difficulty to move the asset around. And therefore, we'll see different competition in different markets. And that is, for us, slightly different. And therefore, we see the same or similar margins. And you can have good projects and bad projects, both on the oil and gas side and in the offshore wind side.

Then a question on ESG. How will that reflect in your remuneration? Secondly, what extent has ESG an impact on your loans and interest charge?

Okay. The first question, Andre, can you repeat that? Because I couldn't hear that.

How does that ESG part, how does that boil down into your remuneration?

Remuneration.

Oh, in remuneration. So we have targets for the long-term incentive program for the top management of the company, the Board of Management and the executive leadership team and the more senior people that have performance shares. There's an element, there's strategic target already for a number of years. And also for the years to come, we will focus specifically on ESG and the progress made there. And we just defined another target related to CDP, Carbon Disclosure Project, how we want to have a score there in 2023 that we actually get down and higher up actually on the ladder there in becoming a more leading party on the ESG side as well. And then you had your second question was around...

Debt and interest charges. So...

Okay. The loans for Paul. Maybe you can...

So what is the question in relation to ESG? Yes, I'm not sure if you're...

Yes. Well, actually, look, as you had said, with some companies, they made progress on all these. It will result in lower interest charges.

No. So I assume you refer to green bonds, indeed. That's, of course, something we will look at for the next refi when that is to be done. It's something that we have discussions with, with various banks, of course. They are happy to pitch these type of solutions. It's not something we will do short term. But yes, the term loan has a 3-year maturity. So it is possible that, that might be replaced by green bonds, I don't know, but it's something we will definitely look at.

And last question, what's the remaining book on your statement?

I think capital employed is in [ roughly EUR 0.4 million ], so 0.