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Edited Transcript of BOSN.AS earnings conference call or presentation 20-Aug-20 9:30am GMT

Half Year 2020 Koninklijke Boskalis Westminster NV Earnings Presentation

Papendrecht Aug 20, 2020 (Thomson StreetEvents) -- Edited Transcript of Koninklijke Boskalis Westminster NV earnings conference call or presentation Thursday, August 20, 2020 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Carlo van Noort

Royal Boskalis Westminster N.V. - CFO & Member of Management Board

* Martijn L. D. Schuttevaer

Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications

* Peter A. M. Berdowski

Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO

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Conference Call Participants

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* Andre F. M. Mulder

Kepler Cheuvreux, Research Division - Analyst

* Luuk Van Beek

Banque Degroof Petercam S.A., Research Division - Analyst

* Maarten Verbeek

The Idea-Driven Equities Analyses Company - Equity Analyst

* Thijs Berkelder

ABN AMRO Bank N.V., Research Division - Equity Research Analyst

* Tijs Hollestelle

ING Groep N.V., Research Division - Research Analyst

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Presentation

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [1]

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Okay. Good morning to everybody. Very welcome, most particularly to those here present. It's been a long time since we were actually able to meet each other physically, which, in itself, is quite unique. Five of you here are present. Some of the other analysts are also welcome on webcam. Our Belgian analysts were not capable, obviously, because of all the rules and regulations to be here physically. But I know they are here through webcam. So very welcome, and all of us who are watching us also. And particularly, Boskalis employees also have the possibility to follow this meeting. So very welcome.

The rest is routine as usual. So we're here to present and discuss our half year numbers, half year results. As usual, Carlo will take us through most of the numbers and through the details. I will provide you with a short introduction. And I will also provide you with the outlook. And after that, there is ample possibility of asking questions physically for those who are here, but we've also made it possible through Martijn that those analysts who couldn't make it today have been in the opportunity to provide us with questions, and Martijn will ask those questions on their behalf.

So this is an introduction, starting with the highlights. I think you've all seen it. I must say as an opening word is that if you would have asked me, end of Q1, 3 months ago, if we would expect numbers like these, I honestly must say I wouldn't even be in the position of hoping it. So the results of Q2, in particular, but through that also of the first half year, are far stronger than we even could hope then. And that's obviously a reflection of the fact that we've been capable of managing Boskalis through the corona crisis quite well. I will come back to that a little bit later.

So if we look back at the half year, revenue of EUR 1.261 million (sic) [EUR 1.261 billion], which comes close to the revenue of last half year. Obviously, we've been helped here with the addition of Horizon, our survey company, which is fully consolidated now. Carlo will tell you more about it later. EBITDA, particularly very satisfying, over EUR 200 million. First half 2019, EUR 136 million. And I must say, for me, EBITDA is the best compass to look at the performance of the company because all kind of extraordinary results that we've seen last year and also this year, I think that this is the best guiding number. So a good EBITDA, so to speak.

Extraordinary items, EUR 148 million charges. Most related to 2 associated companies, goodwill and assets related to those. Carlo will come back to that into more detail. Net profit adjusted for these extraordinary items of approximately EUR 50 million. And which is very important when we came into the corona crisis, for us, there were a number of priorities, one being obviously the safety and health of our people. But secondly, we have to make sure that projects that we have in order backlog can continue as much as possible. And today, we speak with more certainty than 4 months ago because it was absolutely unclear whether or not we could continue on projects. We were allowed to continue on projects, let alone the physical conditions in order to do so. So the first priority was make sure that we generate cash through the projects. So make sure that we keep the projects running. And looking backwards, we've been quite successful in doing so.

And the second, obviously, is you have a running order backlog, but it's also important that you fill the order backlog with new orders. And if I now look at the position, end of first half year, that the total order backlog is almost the same as where we started with last year, end of last year. And keep in mind, that was a historic high level. We can be, I think, satisfied that we managed not only to execute the projects, but also to fill the order backlog.

On top of that, I'll come to that in a bit more detail, but end of 2019, we already had a positive cash position, net debt positive cash on the balance sheet, and we were capable of improving that through management of working capital and a lot of other measures, up to EUR 190 million. And you all recall that, in general, the midyear position of cash is usually weaker than end of year. So if you take that into the equation, I think also, here, we had quite a performance.

Solvency, still very strong, above 50%.

Now maybe good to enlighten a bit all the impact and measures that we've taken. As I said, the #1 priority in the operation has been the health and safety and the well-being of our people. And I'm -- I think it's good, and I'm proud to mention that we've hardly seen COVID incidents within the company. A limited number of individuals, not work related, mostly private life related, but we've been hardly impacted with COVID cases in the company. And from day 1, the standard procedure has been for most of you, I know, is working from home is, let's say, the starting position. That's what we all do. Having said so, that's all very nice for the offices, but it's clear you can't work from home at a vessel and you can't work from home at a site office. So our business, by definition, can only be run in the operation at location, and that meant also from day 1 that we had a big challenge to continue the operation by making sure that the people there could work safely at the working environment, but also to get them there and in their work and relieve scheme, make sure that we could travel with them. We've seen huge challenges there. We've extended also the time that people stayed on board. But having said so, we were capable, at the end of the day, to bring people home and also to refresh crews at the vessels with all kind of measures. We used a lot of charters, for instance, private charters.

What was helpful for us as Boskalis, we have a quite an experience with salvage to get people at all places in the world at a relatively short notice. And that's a helpful experience, has been a helpful experience also in the recent months because we've been using the same charter companies for our dredging relief schemes as we've done for the salvage people in the past and still do, for instance, on Mauritius recently.

Having said so, we've seen restrictions, although air travel is getting more easy again, quarantine restrictions have become more strict and are still becoming strict, just for your illustration. Keep in mind that, as we speak, every employee of Boskalis who is entering into Singapore, for instance, has to stay 2 weeks in quarantine in a hotel room, not allowed to leave that room and not allowed to even go to the gym. So it's quite heavy, but it's also quite costly. And it also means that you don't have the 2 weeks available, obviously, at the operation. So the schemes also are very tight between relief and between work. So it's a huge challenge, has been and still is.

It also affects, obviously, the cost of projects and the efficiency and productivity of projects, but we'll come back to that a little bit later.

It has affected the start-up of new projects. And what you see is that if you look at the Dredging division, turnover is a bit lower. And that is related also to the start-up -- the delayed start-up of new projects, which is, again, then affecting, obviously, also the utilization of fleet. You've seen that the utilization of the hopper fleet is a bit less than it was a year ago, the first half of 2019. That is very much related to COVID because if you look at my budget, we were expecting comparable levels. And it's not because turnover wasn't there. It's more that it was a delayed start-up because of COVID. And that has an effect at the end of the day of the total margin, obviously, of the division. I'll come back to that later again. So it impacts revenue, but it also impacts the utilization and earnings.

We also took quite some measures on the financial side of the company. And from day 1, the focus has been very much on cash generation and preservation. As I said today, we feel a lot more comfortable than we did, let's say, 4 months ago. It was, yes, complete fog in which we had to sail. That has improved. I think the visibility is far better than it was then. But then everything was focused on cash, make sure that we would generate enough cash to keep the company running. And because of that, we took quite a number of measures to optimize working capital on both sides, the debtors' and the creditors' side, so to speak, and we immediately reduced the 2020 CapEx program. We halved it more or less. The initial budget for investments was around EUR 400 million, and we've brought that back to around EUR 200 million, mostly through delayed investments, and it's not that we've said we're not going to invest in those assets that we've shown also in the corporate business plan in the longer run, we will, but it's more a matter of phasing the investments.

As you know, we've seen no dividend over 2019, and we've suspended the share buyback program. All of that to save cash to make sure that the balance sheet would stay strong. Looking backwards now, we succeeded in that pretty well, as Carlo will show in the balance sheet also and in the cash flow a little bit later.

End of half year, obviously, like all companies, we were very much aware of the completely different market circumstances, and particularly in the oil and gas environment, offshore environment. So as more companies did, we took a very critical view at our balance sheet. Looking at, let's say, our own assets, we came to the conclusion that the valuation of most of the assets on the balance sheet is okay. Looking at 2 associates, and that's Smit Lamnalco and Asian Lift, we came and management, I should say, came to a different conclusion, environment is different. There's still quite a lot of goodwill on the balance sheet of those 2 JVs. And management came to the conclusion, looking at the market as it is today, to write down -- to write off those goodwill items that were still on the balance sheet. That obviously also affects then our balance sheet because at the end of the day, we have 50% in the equity value of a JV. And with the write-down of goodwill and assets of those JVs, obviously, that has an influence on our balance sheet. And because you write down on your balance sheet, that also run through your P&L.

Having said so, just for your understanding, the actual cash effect of these 2 JVs is 0 because that's dividend related and we have not seen any dividends from these JVs in the last couple of years. So A, no cash effects. B, because these are associates, we are only allowed to consolidate the EBIT and not the EBITDA, but the EBIT, and the EBIT of those 2 JVs has been less than EUR 2 million. So at EBIT and EBITDA level and also cash level, it hardly has an effect because these are very, very minor cash-generating items for the total Boskalis balance sheet. Having said so, on the equity side of the balance sheet because of the valuation of the equity of the underlying values of the JVs, it does has an effect, but noncash. So that's the biggest part of the impairment that's with the 2 JVs.

And then, there's also impairment of old vessels. And here, we talk about, in particular, the 2 old cutters, the towers and the Phoenix that we still had, more than 40 years old. And they were on the list to be scrapped as soon as the Helios and the Krios would enter the market. And certainly with today's market circumstance, we've come to the conclusion that we will do that at short term. We will take them out of operation, and that's the reason that we write off both on the vessels, but also on some of the spares that are still involved there.

So that is more or less a summary of what we've been doing in the last couple of months with respect to COVID. I now give the floor to Carlo, who will take you through the numbers, as said.

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [2]

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Yes. Starting with Slide 7, the revenue split by region. As already said, bottom line, revenue in line with EUR 1.3 billion with H1 2019. No major shifts in region, however, some movements. The Netherlands' up with busy activities in the Dutch infra market.

Rest of Europe, down a bit in last year, in 2019. It contains some major cable projects.

Australia, Asia, we expect an even higher number in the beginning of the year. But as already said, we had some delays and the impact of lockdown, for instance, in Singapore, but still at a considerable level, of course, with almost EUR 300 million.

Middle East, some projects in the beginning of the year, the cutter projects in Middle East. So also high utilization of the cutters there.

Africa, still quite some works in Nigeria.

And North and South America helped with, for instance, a project like in Canada, the LNG Canada project. That's for the revenue recognition of the regions.

Then split all the revenue and EBITDA by segment, starting with Dredging & Inland Infra. As already mentioned by Peter, Dredging & Inland Infra, slightly down. As already said, also, where

the impact of COVID-19 is there. As an example, for instance, our Pulau Tekong polder project in Singapore was hit by the lockdown but also delays on projects -- start-up delays, so inefficiencies there.

Offshore Energy, more or less the same level. Here, you also have the impact of Horizon now consolidated. It's more or less EUR 50 million impact of that in the first half year.

Towage & Salvage, a high level, this is the revenue of Salvage. So Towage not included here as there are equity accounted for. So leading to the revenue of total EUR 1.3 billion.

Then EBITDA, yes, Dredging & Inland Infra, down compared to 2019, as already mentioned here, especially outside of Europe. We had the delays with projects and, of course, also the extra cost because of quarantine measures, et cetera, travel -- extra travel cost are all consumed by those projects in the region outside of Europe.

Offshore Energy. Of course, especially compared to last year, a very good result. And last year contained the onerous contract provisions of around EUR 100 million. So good result for Offshore Energy.

The same can be said for Towage & Salvage, and especially Salvage is the main contributor here. It seems like the same level as 2019, but please know that also that year was already a very good half year also in 2019. So we're very satisfied also with the first half year of 2020.

Holding & Eliminations. Here, you have to know that, of course, in 2019, we had a 40-year 2 additional gains there, the extraordinary gains there, the sale of a vessel and sale of Kotug Smit, the joint venture. So if you eliminate that, we can see that later on also, you see the increasing result because of cost measures we have taken.

Then the operating results by segment. More or less, per segment, the story is more or less the same, of course, with the operating result, as said just a minute ago with EBITDA. However, the big game changer as said is, of course, Offshore Energy, leading to an operating result of EUR 72 million compared to a loss in 2019 of EUR 33 million. Adding the extraordinary items, the impairments, and we'll come to that later on, of EUR 148 million, leading to an EBIT of minus EUR 75 million.

The order book, yes, we began the year with EUR 4.7 billion, had a record level. And also -- and the first half year with the same level, around EUR 4.7 billion. So no significant cancellations. Also, due to COVID-19 and with a significant order intake in the first half year of almost EUR 1.2 billion. And also you see per segment more or less the level of the order book is the same as in the end of 2019.

Then the phasing of our order book. For the rest of the year, EUR 1.2 billion. Already realized first half year, EUR 1.3 billion, and already in hand for the rest of the year, EUR 1.2 billion. Also for next year already in hand, EUR 1.6 billion. If you would reference that to a revenue level of last year of EUR 2.6 billion, you could say more than EUR 60 million is already in hand for next year and the rest is expected later on as of 2020.

You have a nice picture of a project in the Maldives, our hopper, the Fairway. Maybe an example of also a project that was hit by COVID when our staff arrived in Malay, they were forced to go in lockdown, also in quarantine. So a lot of issues to be dealt with also on this project. But in the end, started up successfully.

So a deeper dive into addressing Inland Infra. As said, especially outside of Europe, of course, a lot of disruptions. Traveling restrictions, quarantine measures. Of course, also clients dealing with COVID-19 with permits, things like that. Solid contribution of Dutch Inland Infra, of course, also project in Holland where we're confronted with COVID-19 measures. However, no lockdowns of projects. So a very solid contribution in revenue and operating results from the Dutch Inland Infra activities. Order book intake, around EUR 650 million with quite a sizable project from also Boskalis Netherlands. So dike reinforcement projects, in which we have already reached a successful history. Some additional work also for the islands, the IJburg Island in Amsterdam, reclamation works. Dredging works in Finland, in the Port of Helsinki, and also substantial works in Russia and East Russia, leading to the results as presented and already, I believe, explained just a minute ago. So with an operating result of EUR 30 million compared to last year, EUR 58 million.

Yes. Also due to the COVID impact, and I believe also already explained by Peter and, for instance, an example is that Maldives project, I just mentioned that we see delays in projects. In the end, started up, but of course, with delays also for our big hoppers. So leading also to somewhat lower utilization of the hopper fleet. The cutters were quite busy in the Middle East in the beginning of the year. So these were higher than 2019.

A deeper dive into Offshore Energy. Here, our heavy transport vessel, the Forte in Malaysia, delivering the Petronas topside to its final destination.

The revenue breakdown. If you look at the contracting and services side, the split is now 56%, 44%. So contract activities, of course, like the cable projects, seabed intervention, rock dumping activities, et cetera. Services, of course, transport, especially survey diving activities, et cetera.

Renewables, nonrenewable split, 39%, 61%. Renewables, in our case, mostly winter-related projects, the cable projects, for instance. And nonrenewables is not only in oil and gas, but of course also marine infrastructure projects and the likes.

Contracting, we have very good contribution from seabed intervention, both revenue and result. A lot of work related to pipelines in all sorts and forms, protecting those pipelines, rock dumping activities but also seabed preparation, surveys, et cetera.

Offshore wind. Last year, we had quite some comments, of course, on the execution side of wind projects and the cable business. However, this year, we could say that operationally, those projects are under control and well executed.

Marine installation, we have some last phases of some decommissioning works in the North Sea. Quite successful. Finalized, especially also supported by a successful operation by the Bokalift, our crane vessel. So also helping to finalize those projects successfully, leading to, of course, a much better result than reported last year. A huge swing, of course.

The services side of offshore business. Here, we saw, of course, also the impact of COVID. For instance, for our transport activities, a lot of yards, of course, went into lockdown. So planned deliveries of structures were delayed. And also, if you look at, for instance, the activities surrounding the North Sea, due to weather conditions, Q1 can be seen as a start-up period. However, when things are starting up in the North Sea, March, COVID was fully there. So also some delays there. Of course, also all majors delaying some packages. So we saw some delays also in Q2. Having said this, also, if you look at the activities at the moment, they're all quite busy and all assets are quite heavily utilized.

Order book, around EUR 450 million. Just to pick one, the Fecamp offshore wind project in France. In consortium with SAIPEM and Bouygues, we are designing and building and installing 71 concrete structures to build on a wind farm and especially our scope is in installing and ballasting these concrete structures. Projects of around EUR 110 million.

Towage & Salvage. A recent project was still ongoing in a freighter that went the ground in the coast of Mauritius. This is not in the H1 result, but will contribute, of course, to the H2 result. Towage & Salvage, as already said, a very strong first half year like last year for especially Salvage. Slightly higher contribution from the remaining operations for Towage, Smit Lamnalco especially and Keppel Smit. And slightly higher is in the fact that, of course, last year, still remained part of the Keppel Smit result, which is now divested. We always include the overall Towage financials presented here. More or less, that is Lamnalco again and Keppel Smit. So you see also the operating result more or less in line with last year.

Then Holding cost. You see the operating result, and as already said, we took our measures, of course, when COVID-19 started. So also head office costs were less than forecasted.

Extraordinary items, just to split. So the EUR 148 million, impairments of the associates and joint ventures on Lamnalco and Asia Lift, which is EUR 123 million. And then the impairment of the assets, as already mentioned, mainly the cutters, but also some crude transfer vessels that were impaired. And the other EUR 9 million is, for instance, in the write-down of inventories that were linked to those cutters. And the book profit of last year contained those sales of the asset and the sale of Kotug Smit and the book gains on those transactions.

Then going to the balance sheet. I will only highlight the main variances, starting with joint ventures and associated companies, which came down significantly. That, of course, due to the consolidation of Horizon, which last year was still in that line. But of course, also impacted by the impairment of Smit Lamnalco and Asia Lift, bringing it to EUR 225 million.

Then looking at working capital, then you have to take the net amount of the current assets and the current liabilities. You see that the net improvement in working capital is almost EUR 170 million in the first half year. Also contributing to the good net financial position, of course, if you take the net amount of the cash equivalents and the interest-bearing debt, you see that at the moment or at the end of the first half year, the net financial position, so the net cash position is EUR 190 million. Maybe to explain, you see that the cash position is quite high the end of the first half year. We withdrew -- withdraw on the RCF on the loan. We have just to -- as a precaution in the middle of the COVID crisis. However, in the beginning of July, we repaid that amount to normalize also our cash position again.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [3]

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That was EUR 200 million. Yes.

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [4]

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EUR 200 million. Yes, EUR 200 million, sorry.

Solvency, still, at an amount above the 50%, almost 51%.

As already mentioned by Peter, we limited the number in CapEx. However, still a CapEx amount of more than EUR 100 million. An example seen on the picture is the new survey vessel of Gardline, which is in its CapEx number, but also payments on new cutter, and for instance, also the new building of the Bokalift 2, the new crane vessel is in this number.

With a good operational result, of course, also comes a good cash flow, which can be seen here, almost EUR 180 million and compared to last recent years, up, of course.

Then cash flow, as already mentioned, we started the year with a net cash position of EUR 26 million, ended with the half year of -- with EUR 190 million. The good operational result helped here, but of course, also the movement in the working capital was a significant contributor to this good improvement in the net cash.

This brings us to the outlook.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [5]

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Yes. How do we look to the rest of the year, to start with? Well, starting with Dredging. Stable at the current level: current level of utilization, current level of turnover and also current level of margin.

Offshore Energy, contracting. It's been a very good year, first half year for Seabed intervention. But also the rest of the year looks good. Not as good as the first half year, but it was excellent, so to speak. Also, subsea cables is looking good for the rest of the year.

Services is stable for the second half, which means that the effects that we see because of COVID is -- we will see that for the rest of the year. And having said so, if I look at the utilization of vessels, also where we stand today, yes, we are more dependent on spot market for some of the service activities. But all in all, I think we've been quite successful in keeping the vessels utilized, and we expect the same for the rest of the year.

Well, Salvage has had a very strong half year. And with the order backlog that we have, we expect the same for the rest of the year. So a good year for Salvage, which is good. It also goes to show that because of the spread of the total portfolio -- business portfolio of Boskalis, you see the strength of that also in a crisis like this. We had a very good half year in the Netherlands and expect, more or less, the same with the rest of the year. And the same you see with Salvage, parts of offshore wind have been doing very well. So it's not that all activities have been hit at the same level. So also the business portfolio is quite robust, as shown.

Earning guidance. Well, most of you would have expected that we wouldn't come with a concrete guidance. But looking at the first half year, looking where we stand today, looking at the order backlog, all things being equal with COVID-19, obviously, as a Dutch saying, if the sky falls down, we will all wear a blue hat tomorrow. So this is not that scenario. But let's say, if circumstances stay as they are today, looking ahead, we feel confident that the EBITDA level for the year will match the 2019 level, which is, again, quite a bold statement. If I take it 3 months back, I wouldn't have even dared to make a statement on this respect.

CapEx, slightly over the EUR 200 million. Has a lot to do, of course, also with the moment of certain terms within a contract and milestones to be reached. But that is excluding acquisitions like, for instance, the Horizon acquisition early this year. Looking ahead, obviously, with the balance sheet that we have,and the fact that we do see a lot of distressed assets and companies, I will not exclude that for the rest of this year, if we see opportunities, we will not grab them.

Also here, 4 months ago, I would be more careful because you have to make sure your balance sheet is in order. But with the balance sheet that we have today, with the cash that we have today, we also feel comfortable to look at bolt-on acquisition opportunities if and when they arise. I'm not saying that we are in the middle of acquiring one. That's not my statement. But it's clear that where 4 months ago, we would be very reluctant in this field where we stand today. And also given the fact that the market gives opportunities, we are open to them. But that's all excluded from the EUR 200 million, obviously.

And then an important one, resumption of the share buyback program, starting again, tomorrow. As of tomorrow, we are in the market again. I think an important sign to our shareholders, we all made our sacrifices to manage the company through the crisis up until now. We cut on dividends, we postponed the share buyback program. But where we stand today with the strength of the balance sheet and also with the outlook, we feel this is also the right moment to do something back to our shareholders, and we do that through the resumption of a share buyback program.

So that's the outlook 2020. And looking beyond 2020 is, I think, at this moment, extremely difficult because no one knows how long the COVID-19 crisis will last. And nobody knows how it will impact the markets where we depend on. So we feel comfortable with the outlook for 2020, but obviously are reluctant to make any bold statements of the years thereafter.

Okay. That's that. This is a very nice picture of -- you see very small figures in the top. That's our Smit salvage crew standing on the vessel in Mauritius when it was lost. Where we stand today is that we've refloated the foreship 2 nights ago. We were capable of getting it on tow 24 hours ago, and it has been towed away from the coast. So it's no longer a threat for the coast. We've cleaned all the oil from this part. So it's a relatively clean vessel. It's 6 miles out of the coast line of Mauritius, and it's up to the local government to decide what to do with it, where we stand today. It is stable. It looks like a wreck but its floating capacity is there. That's more or less a big pontoon, so to speak. That's no longer self-propelled, but it's stable. It's close. And we could bring it everywhere, if necessary. But again, that's not up to us to decide. And as we speak, we are also discussing a plan to remove the rear end of the vessel with the engine room, that's the heaviest part. Also, that is as good as clean. But you can't refloat that part. The floating capacity was in the front end of the vessel and not in the rear end. So it means that it will have to be cut into pieces and be then grabbed away, put on pontoons to be taken to a scrap yard somewhere. But that's the next stage. Good thing is that we've removed all oil that was in the vessel, that it's no longer leaking and no longer a threat for the beautiful environment that we have there in Mauritius.

Okay. I'd like to give you the floor now for questions, and Martijn will fill any holes, if there are, with questions that have been brought in before. Any questions? You all have a mic, which is directly connected. So if you want to speak, raise your hand.

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Questions and Answers

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Luuk Van Beek, Banque Degroof Petercam S.A., Research Division - Analyst [1]

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Luuk Van Beek, Degroof Petercam. Well, first, on the way customers handle any delays, I know in the past you've had standby fees, for example, from marine transports when the customer was not able to deliver the unit in time. Does that apply now as well? Or is there a sort of leniency in this regard?

And also, when you are not able to deliver in time, are they more lenient on any penalty clauses?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [2]

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So question by question, I think that works best.

In that respect, obviously, everybody starts first with, yes, this is an act of God. This is something that was not foreseen. So we are not liable, you are not liable and there's a lot of gray areas in that respect. For most contracts, we are not liable, number one. Secondly, the customer is mostly liable. Having said so, we all realize we are in this crisis together and we have to work out ourselves together. So there are obviously discussions about demurrage because we are making costs because of that. But let's say, our tendency is not to be too sharp in that discussion because you also have to work together afterwards.

So mostly, we are not suffering. I think that's the good news. There is some upside, but we don't want to drive that to the limit. That's more or less. The good news is because of the postponements, we've seen some recoveries now, but more having marine transport work, for instance, is shifting into 2021 and even into 2022. So ironically enough, the backlog for 2021 and '22 is better than it was for 2020, but certainly, it is for the second half of 2020. So it also gives us, yes, a bottom, so to speak, for the next years.

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Luuk Van Beek, Banque Degroof Petercam S.A., Research Division - Analyst [3]

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And my second question is on working capital. Part of that is obviously timing of tax payments and so on that were delayed. Can you give a bit of indication about the timing with which they will reverse, so we'll see the cash outflow?

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [4]

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Peter already mentioned that. We always have the seasonable impact, of course, of working capital, especially, for instance, on the North Sea. So yes, part of it will reverse. But looking at the current forecast, we still believe we will have a considerable positive cash position at the end of the year. But part of it will reverse.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [5]

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And as an addition, you also have the effect, certainly, companies who are in distress. They make sure that the position by the end of June is okay. And if you look 24 hours later, all of that is gone. Where we stand today with the cash position, the cash level is exactly the same as it was by the end of June. So it's not just a moment of we are managing it all to the last day of June. Now it's more structural in that respect.

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Luuk Van Beek, Banque Degroof Petercam S.A., Research Division - Analyst [6]

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Got it. Okay. And the final question is on the oil price. At the start of the year, it was a different world and you were quite optimistic about the recovery based on the oil services market. Obviously, since then, the oil prices collapsed. I can imagine that it's now different. The oil prices has recovered a bit. So can you discuss, especially for the Offshore Energy part of the business, how you look at the outlook for order intake now?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [7]

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Yes. As I said, I think it's quite a thing to look to the end of this year, and to look beyond that is extremely difficult. So I think nobody is capable of reading where we stand today how the oil price will develop and how the underlying markets and particularly offshore markets will develop from there. So what we've said, let's manage the company through the crisis first, and it's all very much on short-term related, make sure that we generate cash, make sure that people are safe, make sure that we execute the project, but also make sure that we acquire new jobs. You can see also at the order backlog of offshore that we are still capable of acquiring jobs there as well. And it's not only oil and gas, but also other type of segments. And we've said, let's wait until the dust has settled down before we make new projections on markets in that respect.

Obviously, short term, for instance, on the North Sea, you've seen enormous cutbacks on, for instance, IRM budgets. Having said so, also there, there's a limit to what you can postpone. And already we see for next year in the North Sea that, for instance, IRM activity is diving, are at a higher level than they were 12 months ago. So it's, let's say, not completely black and white. It differs through the different segments. We also have a backlog, for instance, with heavy marine transport that will still take us 2 years ahead. But even with marine services, the transport activities, floating activity is not dry. We've been capable of keeping the vessels utilized even on a spot market. Having said so, we haven't chosen the North Sea to be a spot market, but we've taken vessels away from the North Sea. So it's also managing the opportunities in that respect.

But in short, to take now a view on how the oil markets will develop in the coming 12 months, I think it's impossible. And there are a lot of opinions but no science.

Thijs?

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [8]

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Yes. Thijs Berkelder, ABN AMRO.

Looking at your Slide 11 on the order book timing. Can you maybe explain, let's say, how you handle projects here? For instance, we've seen the news that Woodside has the latest Scarborough project. Is that then also in this picture already delayed by a year?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [9]

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This is to our best knowledge, Thijs, so where we stand today. We've made a recalibration of the timing, and this is to our best knowledge where we stand today. So any delays known to us are reflected in this overview.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [10]

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Okay. And in that respect, looking at the Philippines and the lockdown situation in the Philippines, how should we then look at the Philippine dredging?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [11]

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We expect no activities this year. So if there are activities, it's next year. Probably I've reached the slide when the question is asked, yes?

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [12]

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This slide. Yes. Correct.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [13]

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Yes. Sorry.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [14]

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Clear. Then another question on...

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [15]

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Slide 44. Don't drive me crazy now.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [16]

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This is a perfect slide to have. On the one-off costs, COVID-related costs, can you give any quantification on the extra costs you made in this first half?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [17]

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If I may, first, let's say, what is interesting, obviously, as Carlo said, as I said, you see an effect on the margins of Dredging because the margins in the Dredging division has come down, right, the turnover, but also the margin. So we always have discussions here. So what is the EBIT margin, the gross margin on the projects? And also, what's the quality of the level that -- of new projects that we acquire? And we used to say 10% to 12% and the last -- the recent years have been 8% to 10%. We made that analysis when we closed the books for the half year and could see that 8% to 10% for new projects, gross project margin still stands. That's an important observation.

But having said so, this is the margin precalculated before you start a project, and we all know, right? And also, if you look at the margins at the end of the day, in the first half year, they've been far higher. And that obviously has to do with how successful are you in the productivity and efficiency of a project on one hand. But on the other hand also, are they variation orders? Are they lucrative? And yes, don't underestimate it, what's the utilization rate of your fleet? Because if we go from gross margin of a project to EBIT margin of the division, there are 2 important components there at the end of the day. The realized margin at the project, but also the contribution of fleet that's within the division, but not within the project margin, obviously. And then on top of that, what is the cost -- your general cost?

So if you look at those 3, starting and now moving from acquisition, so precalculated margin to realized margin, if I look at the projects, the margins on the projects have been under pressure because of COVID has created inefficiencies and additional costs, yes? That's an effect, but a relatively small effect [overall], but it is an effect. Huge effect is the postponement of projects and the late start of projects, and you could argue, is that a project effect? Or is it a fleet effect? But truth is that we had 32 weeks, the first half of the year. The quality of the order book when we started this year was better than a year ago, but we ended up with 28 weeks of utilization. Those 4 weeks are mainly we can maybe attribute those to COVID. And if I add the different parts together,and take into account then that we successfully brought down our general cost, but at, let's say, the EBIT level within the division, you could say that 2% to 3% margin over turnover was lost because of COVID. And it's obviously, again, not a scientific approach, but we've made the estimate looking at the different components. So where we still are in the bracket, 8% to 10%, you have to take into account. Currently, we lose 2% to 3% in the operation because inefficiencies. That's approximately the effect.

If you then go bottom line, of course, offshore have been doing pretty well, but we've managed to recover that loss mostly on the GA side, on general cost, because we brought those down by all measures from day 1 to cut on cost quite well. And it balances out more or less like that. And when I say we're looking ahead with Dredging with a stable level, take into account that's also the stable level with difficulties that we have outside because quarantine measures are getting stricter instead of looser. So the 2% to 3% that we lose at the end of the day in the operation will be there in the second half of the year.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [18]

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Can you -- or have you forwarded these costs to the customer or...

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [19]

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No, because those are our costs. At the end of the day, the client is not responsible for the fact that your vessel is not there on time of -- you can't get your people on board of the vessel. That's the government who causes that. And at the end of the day, the client can change that.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [20]

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And looking at tenders, let's say, right now, is that then changing in the tender structures, in the conditions?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [21]

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In the fact that we are demanding 2% to 3% more margin.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [22]

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Well, at the current time, you have to now reckon with quarantine periods. So will [both fill] for them?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [23]

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Our biggest priority is to acquire projects, not to freight enough clients. And I assume that, let's say, the reaction of most of your colleagues hasn't been to raise prices at this moment, where you're already freighting off clients. So every client is sacred in these days. So we have to be extremely careful, obviously. And there's competition as well and they are struggling. Maybe you saw the press coverage of Jan De Nul yesterday as we are all struggling. And so you have to be aware of the competitive environment. And this is not the moment to say the problems that we have, our clients will have to pay for because the client is also having problems with budget, and you name it.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [24]

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And a question on the capital return decision. Why did you decide to, let's say, resume the buyback scheme, but not decide for a restart of the dividend, let's say?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [25]

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The big difference is, I can tell you today that we will restart the buyback program tomorrow. If we would opt for an interim dividend, it means that, yes, we would have to call for a general meeting in order to decide because the company can't decide on dividend without a consultation of the shareholders' meeting. So it's quite an administration to do so and this is obviously a very easy and direct manner, which, at the end of the day, has a comparable effect to the shareholder.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [26]

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Okay. And then looking at, let's assume your forecast comes in, you indeed can keep the EBITDA flat for the full year. Is then logical to just have a 2020 dividend? Or a 2020 dividend plus a kind of recoup of 2019? Because it wasn't...

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [27]

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Well, the first question is, will there be a cash dividend, yes? That hasn't been decided yet. But following lines of logic, as you did, it would be strange to start a buyback program, not taking at least into consideration to provide shareholders with a dividend over 2020. And let's say, in the level of that dividend, I think it's far too easy to speculate about that. But I think the most -- this gesture, obviously, is a gesture of confidence. And if and when we feel confident about the balance sheet and the future of the company, dividend is our policy. And a policy in the last years has been cash dividend. It also would be ludicrous to buy in shares and then to pay in stock dividend. So that's also not logic. So again, following the lines of logic, we agree, but it's too early to speculate about levels of cash dividend.

Further questions? Andre?

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [28]

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Andre Mulder, Kepler.

First question on working capital. How sustainable is that improvement? I would have expected that it's -- or the whole world looking for preserving cash, that there would be some pressure there. But in statue, you made a big improvement there. How sustainable is that?

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [29]

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I believe I already answered that question just a minute ago. But looking, for instance, for the rest of the year, we will see a small reversal for some projects in execution. However, at the moment, like Peter said, it's still at more or less the same level. And also for the remainder of the year, we expect that also, in the end of the year, it will have this substantial level. A bit lower maybe, but substantial level.

For the years to come, it's very difficult, of course, to forecast that because, in our case, some big projects can really make the difference in a positive and also in a negative sense. And we are still in challenging market circumstances. So I cannot really forecast that for the coming years to come. But at the moment, it looks good. We're working on it also on the, of course, contracting side. Also, like Peter said, also on the creditor side. And as a big company, we can manage that. So we are quite positive on that.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [30]

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Question on Offshore Energy. Could you indicate what the split is in EBITDA between contracting and services?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [31]

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Martijn?

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [32]

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Next question, Andre, then I'll have a look. I've got it somewhere.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [33]

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The 62nd question.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [34]

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Next question?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [35]

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Yes, please do.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [36]

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Looking at the Towage result, have you stepped out Kotug? It was slightly better than last year.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [37]

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Correct.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [38]

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Why is there then such a big write-down? Have you become so negative on the future of those operations?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [39]

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It's not so negative, but you also look at the amount of goodwill. Now it's -- the story is, Andre, is that there are 2 big contracts within Smit Lamnalco. One in Russia, one in Iraq. Both have been restarted and restarted for, I think, I'm counting while I'm talking is, I think, 3 times. And in the current market situation, it's more uncertain whether that will revolve into the future. And we get indications both from Russia and from Iraq that eventually these projects will be terminated at a relatively, let's say, within 12 to 24 months, but you have to take that into account.

What has changed in particular is that there's quite a number of vessels related to these contracts. Quite a number of these are vessels that are also quite specific for these contracts, is that now you also have to take into account what's the residual value of these vessels. Because when you step into a contract for 5 or 10 years, you have an assumption on residual value. You now come to the conclusion that the residual value because the change in the market has become much lower, because the value of assets in the offshore has been impacted hugely. Market value has come down. Well, the market value discussion of these contracts has triggered the discussion on value on the balance sheet and that's not alone, these vessels, obviously. But that's also looking at the goodwill that is in the JV. And for your understanding, most of that goodwill for Smit Lamnalco still comes from the time when we sold Smit terminals into Lamnalco. We made quite a cash gain then but also created a substantial amount of goodwill on the balance sheet. And then you look at that goodwill, also in connection, again, with the trigger of the assets and then you also say, let's be prudent, let's be cautious and let's take a far more careful approach towards the future and write-down on the goodwill.

But the main trigger also is the auditor because, obviously, these are discussions you also have with your auditor. What's the trigger to have a different view, which is exactly your question because the trigger is not the current result. The trigger is the future. But in the future, we, one, see issues with the residual value of the assets related to these contracts; but two, also, and these contracts also have EBITDA value in it, also have taken a more prudent approach on the goodwill.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [40]

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But it's more about extension of contracts or simply the stopping of an existing contract?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [41]

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No, because the existing contracts were already ended but we've been rolling over with extension of 6 months, 6 months, 12 months, you name it. But let's say, we have more worry about the extension of these contracts. And every time we do have a contract for 6 months and 12 months, but we now feel there can come an end to that. And where a year ago, I felt confident about the residual value of the assets, I don't feel that any longer. And then you have to take different view.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [42]

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Any indication of the size in the order book or still 0?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [43]

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The size in the order book, Smit Lamnalco?

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [44]

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Yes.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [45]

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No. Lamnalco is an order book of hundreds of millions. But if you refer to these contracts, the size of these contracts is 6 months. So the biggest size in the contracts in the order book of Lamnalco is not related to these contracts.

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [46]

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Andre, on slide -- the 100% slide of the Towage financials, you see the order book of EUR 1.3 billion and that is Smit Lamnalco.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [47]

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The question was how much of the contract...

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [48]

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Very limited, very limited.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [49]

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Andre, just coming back to your question on EBITDA contribution within OE, roughly 35% to 40% comes from services and the remaining from contracted.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [50]

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Further questions, Andre? Tijs?

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Tijs Hollestelle, ING Groep N.V., Research Division - Research Analyst [51]

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Tijs Hollestelle, ING.

If I listen carefully to your comments, it sounds to me that you're quite pleased with the offshore wind performance after you derisked the business last year. It's making a decent margin now. So the troubles have gone. Is that fair to assume?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [52]

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Well, the market hasn't changed to start with that. And obviously, there's also the effect, if you put a lot of cautiousness in the numbers of last year, second half of the year, it's clear -- or the closing of the first half year, I should say, it's EUR 100 million, it's clear that if you do better than that, it's now reflected in positive numbers. So that's a bit of a relativation, obviously, of the numbers. Having said so, the good thing is, as Carlo said, the projects are under control. So we know what we're doing. We're performing as we should. We even are performing better. And on top of that, we have been capable of regaining some of the losses with the clients through variation orders. Not that much through claims, mostly through variation orders. But it has been a bit battling backwards. But for me, the most important part is that operation is under control again. We know what we're doing. We know what we're earning. We even are doing better than projected.

Looking at the market because that's the underlying big question, do I see changes there? I must say, not really. It's still a very competitive market, both on the cables and on the installation side, with a lot of relatively newcomers who don't fully understand the risks of these type of projects. And with price levels at certain places where we say, well, those are not the price levels that we are capable, let alone of willing to work for. But there are opportunities, but you have to be selective, careful not overreach yourself.

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Tijs Hollestelle, ING Groep N.V., Research Division - Research Analyst [53]

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That's clear. And if I look at the current portfolio of projects and execution, also in the order book, it's primarily cable. So you don't have very large installations?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [54]

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No, no, no, Taiwan. The big wind farm in Taiwan is a substantial one. That's where we're building the Bokalift 2 for. And that's a substantial of in total...

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [55]

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EUR 270 million.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [56]

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EUR 280 million, EUR 270 million, yes?

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [57]

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Yes, yes.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [58]

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Yes.

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Tijs Hollestelle, ING Groep N.V., Research Division - Research Analyst [59]

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Yes. And that will be executed?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [60]

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End of next year and then the year thereafter.

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Tijs Hollestelle, ING Groep N.V., Research Division - Research Analyst [61]

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So there's no big influence in the numbers right now from these projects.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [62]

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No, no, no, no.

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Tijs Hollestelle, ING Groep N.V., Research Division - Research Analyst [63]

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Mainly cables?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [64]

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Yes.

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Tijs Hollestelle, ING Groep N.V., Research Division - Research Analyst [65]

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Okay. Okay. And a question on the scrapping of the towers and the Phoenix. Do you expect some positive cash inflow from that?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [66]

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No. I think the balance of the cost of scrapping and transportation versus the income for the scrap value will level out.

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Tijs Hollestelle, ING Groep N.V., Research Division - Research Analyst [67]

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Yes. And also a follow-up question on the dividend of Smit Lamnalco and Keppel. Why does not pay dividends to you because the leverage of the business seems okay?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [68]

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What we've been doing with Smit Lamnalco in the last 10 years is to plow all cash back into the business to let the business grow, and I think we've grown it successfully. Don't forget that we sold Smit to -- Smit terminals to Lamnalco and that was a total consideration of...

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [69]

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$430 million, total consideration of Smit.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [70]

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Dollars?

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [71]

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Dollars, yes.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [72]

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Dollars. Yes. That's why I'm -- yes, so dollars. So EUR 375 million, $430 million. Right, Martijn?

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [73]

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$450 million.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [74]

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$450 million, and EUR 380 million or something at what? Anyway. But that's a considerable amount. That was cash taken out, obviously, but it also put a lot of debt on the balance sheet then. And for instance, we took over PB Towage, a towage company in Australia and total consideration around USD 80 million then. And that also was through the cash on the balance sheet and with additional debt.

So with Asian Lift, we've taken out more dividend there in recent years also by restructuring the balance sheet every time. So leveraging up to the max, which is mostly 3, if you take out. But with Smit Lamnalco, that hardly has been the case because we've seen it as a growing engine more. That will change towards the future, obviously. But that's, let's say, over the last 5 to 10 years.

Martijn, any questions?

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [75]

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Yes, yes. A couple of questions from Kempen, from Henk Veerman.

First one is related to the CapEx in '20. Business plan CapEx was EUR 900 million for the 3-year period. Obviously, for this year, it's lower. Do you have any insight into how that EUR 900 million will split over the period currently 2020, '21, '22?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [76]

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Well, as I said, we have to recalibrate the corporate business plan later this year, early next year. It depends on when more clarity is there. I think it's important to note that, let's say, the most important pillars of the corporate business plan with new assets being, in particular, the Bokalift 2 but also the 2 new hoppers, around 20,000 cubic meters and the lengthening of the prints or the orange, they will go ahead. But it's more a matter of timing in those 3 years. Obviously, we've postponed what we could postpone this year. So more will shift into 2021 and 2022, but also beyond. So I doubt that the EUR 900 million that was mentioned then will be still full in place. But I want to emphasize that the most important strategic investments we wanted to make will be made, but it's a matter of timing and phasing.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [77]

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Then a follow-up question on the M&A. You implicated that with the current strong balance sheet, there may be opportunities in the market. Henk is wondering whether you could provide some color on the types of assets, types of businesses we -- Boskalis may be interested in.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [78]

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Yes. In that respect, I can still refer to the corporate business plan because the direction of what we want and what we do hasn't changed because of this temporary crisis. It's more a matter of timing. And I think it's more opportunity driven. It's not that we say we now are hunting for a strengthening of this type of activity of debt. It's very much driven. Where are the opportunities? Does it fit? And what is important is either it is a typical asset that strengthens our fleet composition or it is a company that strengthens our market position. So for instance, if we are a #5 somewhere in the market, and by taking over #4, we can become #3 in the market. Well, those are interesting steps to consider.

But it's -- I can't say that we have some kind of a hit list, a long list, short list that we are hunting. It's opportunity driven. And also to manage the expectations, it's not that we expect to fill a basket of 5 acquisitions in the rest of the year because I want to keep the focus also of the people who are involved in the business very much on the operational day-to-day activities of the business.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [79]

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Okay. Then from Bart Cuypers from KBC.

Question regarding the holding cost, where in the first half year, a strong reduction of the cost to roughly EUR 3 million at EBITDA level. Question is whether -- what would be a normalized level for the second half of the year and thereafter? How sustainable are these low costs for the next 6 to 18 months?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [80]

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These costs are quite sustainable because, as I said, we've cut down costs for this year that's reflected already in the half year numbers but will also be continued in second half. So these are not incidental, but these are structural for the year. Obviously, a lot of these costs are related to all kind of improvement projects of the company, of the organization. You can't roll this over for years. But for this year, the decision has been made. These are -- this is the cost level that we find appropriate for this moment, and we will continue with this at least until the end of the year.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [81]

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Okay. Then a follow-on question from Bart is related to the provision of EUR 100 million last year, where, out of prudence, those costs were taken. Now the question is, what is the progress on recovering a part of that EUR 100 million? And how much did it contribute in the first half year result?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [82]

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Yes. It's out of prudence. It's what we explained then. It's more bringing those activities in line with the normal attitude that we have towards projects, also within Dredging. And if you look at these projects, some of them are still running. Some, we still are also in discussion with clients. But for instance, with cables, we've seen some recovery of the projected losses through variation orders, as I just mentioned. And if I have to put a price on that, yes, it probably is somewhere in the region between EUR 10 million to EUR 15 million that we, in their terminology, have recovered. I don't see this recoverage, but EUR 15 million -- EUR 10 million to EUR 15 million is the number.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [83]

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And then the last question from Bart is relating to the tendering environment. What is the current environment which we're seeing in the Dredging division specifically in terms of appetite with clients in the pipeline?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [84]

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One observation is what I said, is that the good thing is looking back is that the level is still 8% to 10%. And you talk about the appetite of clients, it's very regional determined. Europe is still looking good. Southeast Asia is looking good. Russia is looking good. But Middle East is completely down, completely down. Not that remarkable, obviously, because of they are very much related to oil price. The Americas are down. Africa is down. So for us, the 3 regions that determine order book development for, let's say, the coming 6 months are Europe, Southeast Asia and Russia.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [85]

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And then moving on to Christoph Greulich from Berenberg.

Just seeking confirmation that there was no aid applied for or received from government schemes related to COVID.

And a follow-on to that, how much of the cash working capital improvements relates to better payment of government clients?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [86]

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The first is yes. We have not received from the Dutch government any money, other than some of our colleagues have, that's one. And we haven't applied for it. So it was also almost principal decision. But if you look at the turnover levels, they are quite comparable, we wouldn't even qualify for it. So it's almost a no-brainer. And you've seen in some countries that clients are, let's say, a bit helpful on the payment schemes, but that hasn't have had a huge impact on the development of working capital. That's more management on our side than, let's say, altruism from clients.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [87]

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Then a question on Horizon. Obviously being consolidated as per January of this year, whether we would be prepared to provide the EBITDA contribution in the first half of the year.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [88]

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I would not -- we usually don't do that. And you also have to take into account is that we are merging all the survey activities into one unit. And so the EBITDA of Horizon, in itself, will disappear by definition.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [89]

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One last question then is related to the revenue split. You see a growth from just over EUR 100 million in H1 last year to 100 -- just over EUR 150 million in H1 of this year. Question is, where -- which projects were the main contributors to that?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [90]

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For the regions, sorry, Martijn?

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [91]

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Americas.

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [92]

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Americas. Several transporting jobs because the transport revenue is linked to the port of arrival. And as said, LNG Canada is also in there for substantial amount.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [93]

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I think also survey, Carlo, we've also been doing quite some surveying on the East Coast for wind.

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [94]

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Yes, East Coast. Yes, yes. Correct, Martijn.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [95]

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That's all my questions.

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Carlo van Noort, Royal Boskalis Westminster N.V. - CFO & Member of Management Board [96]

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Very good.

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [97]

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And answers.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [98]

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Thijs?

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [99]

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Yes. Thijs Berkelder again, ABN AMRO.

Previously, you gave information on where you thought utilization was for competition in the dredging market. You were at 28 weeks in the first half. What are you seeing at the competitors?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [100]

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I do it by head, but DEME is around the same level. So we both came down with 3 to 4 weeks, so to speak. De Nul is around 24, 25 weeks. And for Nord is just below 20 weeks, right?

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [101]

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Yes.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [102]

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Okay. And a question on the decommissioning market with oil price down, you would say. And now really, is a big wave of decommissioning works coming to you?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [103]

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No, I think that's -- it's not -- it's the oil price is down. Everybody is sitting on their money, on their cash. And the question is, if you want to sit on your cash, do you start burning cash on decommissioning? That's a different line of logic. We don't fully agree on this one, Thijs. But because they sit on their cash, they are quite reluctant in doing so. And so what you've seen, let's say, in the last 24 months, that the bigger oil majors were selling off their obsolete assets to smaller parties, also to avoid all these issues. A lot of these assets are now with smaller oil companies, with private equity companies who are suffering is that they don't get the income there. They've spent the money, and they are looking desperately for all kind of possibilities to avoid cash-outs. That's on the IRM side, but certainly on the last step to be taken in decommissioning.

Can be different from the bigger ones, but everybody is sitting on their money. That's for sure because they need their money for dividends.

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Thijs Berkelder, ABN AMRO Bank N.V., Research Division - Equity Research Analyst [104]

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In that respect, and looking at the enormous governmental budgets in the EU for potential economic support measures by -- help financing infrastructure projects, are you seeing their concrete activity coming to you?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [105]

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No, it doesn't work that fast in that area. I'm not -- for instance, what you see in Saudi Arabia is that the Red Sea developments to create more tourist regions there, including tourist ports, tourist islands. You see more attention there. But having said so, it's also taking money short term. And looking at the budget of Saudi Arabia, the Kingdom of Saudi Arabia, they're tied on money also. If you look at dividend to be paid by Saudi Aramco in relation to the money they are making there, you clearly see the government needs money. I expect that -- but I see that more as a structural development certainly at Saudi is that they want to invest themselves further away from the dependence of the -- strict dependence on oil and a little bit of gas. I think that's a more important driver than the short-term driver, let's invest in infrastructure because that will generate employment because they all know it doesn't generate employment that fast in these countries.

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Maarten Verbeek, The Idea-Driven Equities Analyses Company - Equity Analyst [106]

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Maarten Verbeek, The Idea.

Could you break down the impairment on goodwill for Smit Lamnalco and Asian Lift? And how much is still left for both?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [107]

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Martijn?

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Martijn L. D. Schuttevaer, Royal Boskalis Westminster N.V. - Head of IR & Corporate Communications [108]

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It's on Page 30 of the half year report.

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Maarten Verbeek, The Idea-Driven Equities Analyses Company - Equity Analyst [109]

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A couple of months ago, you were pretty optimistic about the marine transport. In the meanwhile, something has happened. But do you still see good demand for your marine transport business in the long run?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [110]

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In the long run is difficult, as I said. So short-term FPSOs are in the pipeline and they have been postponed because of COVID at the shipyards. Postponements of, let's say, 6 months, but they will be there, which is good news both for wet transport solutions and dry transport solutions. So we feel still quite confident with, let's say, 2021, 2022. But as I said earlier, it's far too early to take a view on what will happen thereafter.

I think we all have to, and again, you see the first shock reaction in this year and that also will dampen out. But I think it will take at least early next year before you develop again a feeling on what's the structural development in the market.

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Maarten Verbeek, The Idea-Driven Equities Analyses Company - Equity Analyst [111]

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With (inaudible), I don't believe that the Mauritius project was already in the order book by June 30. Could you more less give a ballpark figure what kind of order that was?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [112]

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Sorry, which project?

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Maarten Verbeek, The Idea-Driven Equities Analyses Company - Equity Analyst [113]

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The Mauritius project.

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [114]

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Also, that's too early because you have to take into account that, let's say, our first activities are very much related to oil removal, that's one. The second is to the refloat of the vessel, which is only, as I said, the front end of the vessel, and then to tow it out. Those are, let's say, relatively limited costs we talk about. The bigger chunk is with the rear end of the vessel. So if we do get the award because at the end of the day, it's up to government, client, insurer whether or not we would get that reward, that's where the substantial part of the turnover would be. And you talk about typically a job of tens of millions in that order of magnitude.

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Andre F. M. Mulder, Kepler Cheuvreux, Research Division - Analyst [115]

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Another question on offshore wind market in Europe is a bit spoiled by these oil services cowboys. How about the Far East and the U.S.? Are you able to make better margins there because those cars are not there?

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Peter A. M. Berdowski, Royal Boskalis Westminster N.V. - Chairman of Management Board & CEO [116]

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Well, as you refer to them as cowboys, their prairie is worldwide. So they don't limit theirselves. So in particularly in East America, you also see them. So that's the reason why I said you have to be very selective in where you go for. It's also the reason that we find it important that we do have 2 lifting vessels that are not only one-trick ponies for winter. If you look at the utilization of the Bokalift 2, recently, we did an interesting salvage job also with the Bokalift 1. It is broader spreads and we want to make sure that we also look at opportunities broader than wind. Taiwan is a different story because in Taiwan, the rule is that the vessel is not Chinese built. And that limits the number of vessels capable of working there. That's a big advantage that we have with the Bokalift 2. It's not Chinese built. Obviously, if Taiwan would follow Hong Kong, that could change. But where we stand today, that's still the reality.

Further questions? If not, thank you very much for your presence, attendance. I see that some of you saw there's a little bit of a small holiday to be out of the office and to be here. I must be honest, I felt the same. So it was great to see you all in life again and in good health, so make sure you keep it -- keep that. I say, obviously, the same to everybody watching. Thanks for your attention, and I hope to see you in good health the next time. Thank you.