Fugro (Euronext:FUR) Q2 2026 Earnings Call

0:00 Good morning, good afternoon, good evening to some of you with the half year results presentation for 2026, first half of this year. This year will be slightly different as we're still in the full process of recruiting our new next CFO. So I will present the whole deck today. And I'm very much supported here by our interim CFO, Kees den Aulden, who is here, but also our Group Controller, Marine Fettis. So if there are questions that are going in a bit more depth that I cannot answer, then I always have these support lines. But I will do the presentation myself. So if we start with looking at the first half of the year, we have an EBIT margin that was 4.1%, higher than last year.

0:53 However, we have to also say that we are looking at a challenging second half of the year. So improvements on the EBIT line as well as the cash flow for the first half of the year, but I'll come back to talk about the second part of the year as we see in the backlog a development that we feel that needs to get some attention. The volatility in general of the current market conditions has reduced the near term visibility beyond of what we would normally expect at this stage of the year, making the earlier expected margin improvement for the full year unlikely. And we continue to focus on the control what we can control ourselves, including the rationalization of our fleet to rightsize our cost base to the current market conditions, targeting also an annualized saving on top of the earlier savings of €50,000,000 with obviously a continued focus and emphasis on cash generation.

1:50 We will remain committed to our execution of the Towards Full Potential strategy to benefit from the structural demands that underpin our markets, while also obviously adapting to the operational current environment. And I will share a few examples later in this presentation to give you an idea of what we're working on. Maybe one of the first reasons that the first half of the year is affected is the impact of the war in The Middle East. We have been explicit about that. That impact is on the bottom line, 15,000,000, and that is partly split in the direct impact in the region as well as for the rest of the organization. The impact in the region was two thirds of this 50,000,000 and relates to, yes, spoofing, jamming of our GPS signals, GNSS, Global Navigation Satellite Systems.

2:44 Those are blocked in war zones and then you cannot work because you cannot position your assets, your vessels. And this had impact primarily in The UAE and Qatar and obviously limited our operational days. And there are several knock on effects as I said as well for the rest of the organization and the rest of the world with higher cost specifically around fuel. And obviously, we can recharge clients for our fuel cost, but there's always a bit of a bandwidth and some of it will end up in our own cost and own risk. So we do see that this conflict is continuing unfortunately. Nobody knows where this is going over time. We do expect this effect to also continue to, yes, impact us.

3:34 However, we have also installed some different equipment, so having less effect on the jamming and the spoofing of our navigation signals. And we also know a little bit better how to work and operate in this environment currently, but the effect will still be there and we will have to follow that very closely. If we look at the markets, and I will first talk about Offshore Wind, and obviously a lot of people will have questions around what is happening in the Offshore Wind environment, one of the key reasons why Fugro is also affected in general in this current environment. We do, in the first half of the year, two thirteen million of wind work. That is, yes, for a large part covered by Europe Africa and a small part is covered by Asia Pacific. And these are the regions, obviously, you also see colors of Africa. We don't do wind work in Africa or in China, but these are just simply representing the regions.

4:37 And then The Americas has no wind work whatsoever at the moment, which is no surprise to anyone. If you look at the bottom left picture, and I think that is a very clear picture of what is happening in the market right now, You see 26%, 27% being down. And this is actually common knowledge that there is currently a phase in this market where there is a reset ongoing, especially in Europe, but also in Asia. But in Europe, they're looking at different contract setups, contract for difference. We spoke about that before. And this takes time before these new contracts are brought to the market. There are good signals as we spoke about in the past. So most of the markets in Europe and countries, key countries there are developing these new licenses and the new license rounds.

5:24 And you see a few things listed here in France. There's, yes, a lot happening at the moment. It's coming to the market, several blocks there for 10 gigawatts. But also in Denmark, in The Netherlands, they're talking about bringing this large area, six, seven, to the market. And this is for more than 20 gigawatts of wind power in the years to come. But if this tender comes to the market, let's say, in September or in the latter part of this year, it will take six to eight months with a European tender before the first vessels go out to the market to do some survey work or geotechnical work as we do in Fugro. So this is basically the situation. We cannot change that. Most of the governments are very aware of the fact that, yes, there is a gap for most of the companies. They're trying to accelerate things.

6:17 We do see the activity really coming up and increasing, but it's not happening right now. As we said before, it will take time. In Asia Pacific, we see in several countries developments. There's still ongoing developments in South Korea, Taiwan and some in Japan. But we also see new opportunities coming through in Australia, Philippines and Vietnam, as we spoke about in the past, but it is very slow and it's not moving very fast. The Americas, as I said, in The United States, nothing is happening. Canada and Brazil are definitely looking at something. I spoke about a pilot project in Brazil, which is starting up in the second part of this year for us and will also generate some work in the nearshore environment.

7:05 So this is the wind business. This is really affecting us and I will come back on what has happened for the full year and for the first half of this year. If we then move to Oil and Gas, we saw a growth in Oil and Gas in the first half of the year of 22%, and we'll talk a little bit more about that. We do €424,000,000 in Oil and Gas. This is obviously split around the world in the following blocks. You can see it there in the picture at the bottom there. The traditional energy oil and gas is, yes, you could say back on the board. It's a more buoyant market. We have seen growth, as I said, 22% in the first half of the year. However, I will come back to the backlog.

7:53 We see also a small decline in the backlog in Oil and Gas, which is I think or that is fully attributed to the large project that we have done and executing on in Indonesia as we spoke about before. So the underlying Oil and Gas business is still continuing to grow. What you can see there on the graph is a small growth in the CapEx and OpEx graphs there. It's slightly higher than what we showed you before because, yes, if we go back two quarters or so, it was more hovering around zero. And now we see this slightly increasing already. If we go through the various regions, then Europe Africa. In Europe, there is very limited developments ongoing in Oil and Gas. Obviously, The U. K. Is looking at it. Again, as we picked up in the news, Norway is a pretty steady development with exploration activity there.

8:51 But in yes, in general, Europe, you could say, is pretty slow in developing oil and gas work. But for Africa, we see many things on the board. It takes time. It's primarily deepwater developments in Angola, Nigeria, Mozambique, the fields are developing there. But also the East Mediterranean gas development, so the North Part Of Africa is still on the board and has priority there. In Americas, it's really focused on South America. There we see lots of developments in Guyana, but also in Brazil and in Suriname as we spoke about before. Asia Pacific, as I said, we are executing on this large project in Indonesia. There are multiple roll on projects coming out there as well.

9:41 We see other developments. You probably picked up the news for Timon Lester where we have also picked up the first project. This is a large development and there might be some additional work that we'll do there also on other activities. So we do see blocks coming back in Asia Pacific, a region that is developing quite nicely for Fugro. Middle East and India, there's a lot on the board. There are a lot of opportunities, obviously, somewhat stalled by the current situation, primarily affecting The UAE and Qatar. As I said, because of the jamming and the spoofing, the work is there, but we can't have every day operational because at some days we do not have navigation signals. Obviously, yes, the blockage of the Strait Of Hormuz is an issue. We don't have to go through the Strait Of Hormuz all the time. In actual fact, we want to go through with one vessel one time, that will be great.

10:34 So we're following that very closely. And as soon as we see an opening, then we'll make this move. In the meantime, we'll look also for other opportunities for the vessel that we have on standby there. Other markets, Azerbaijan, Iraq are actually developing quite well for us and then we also see some deepwater work coming up in India. If we then look at the infrastructure markets, again, bottom right, you see the split there between the various regions. I'll click through them. Obviously, in Europe, Africa, but also in The Americas, Asia Pacific and Middle East, India are splitting the rest there. So lots of opportunities there. They are obviously affected by the general economic situation in the world. Infrastructure is always affected by that. So geopolitical situation in The Middle East is affecting the general developments for infrastructure in The Middle East.

11:35 If you look broader in the world, then we see new developments coming up, especially around nuclear. There are quite a few projects worldwide on the board. We see that in Europe coming up, obviously, very actively in The Americas, but also the rest of the world is talking about Nuclear. And those are smaller reactors, so the small modular reactors, the SMRs, but also full blown larger nuclear developments are on the board. Data centers is another development that we see coming up, huge ambition there. And this is obviously happening also in Europe, Americas and we'll expect that to be there in the rest of the world as well. Middle East and India, we primarily focus on ports and harbors, which has a lot of development and also our capabilities are really well tailored for that.

12:29 And you see a CAGR that is now for the upcoming years around 6%. That hasn't really changed over the last few quarters. It's always hovering around 6%, seven percent, something like that. So that's the infrastructure market. We'll still be a good market for Fugro and we have also new technologies that we can deploy there and I will say a few more words about that a little bit later. If we then look at the development markets, these are markets that we have listed in our strategy in Pillar two. Yes, basically adjacent markets that we can serve with our current expertise and we can, yes, basically do similar work than we do in our traditional markets. Coastal resilience and Ocean Health, it's captured in Water.

13:17 This is in one way a little bit affected by sustainability being not highest on the list anymore in the last year or so. However, there is tightening regulations in particular areas, especially around developments in Europe, also the wind developments where they have really high demands around biodiversity, ecology surveys and this is driving basically also this part of Ocean Health, so to say, and the biodiversity. And then we have a lot of coastal protection surveys that are popping up that are quite important with the changes in the climate. And I think everybody is following the news.

14:02 This is very visible, obviously, here in Europe with the temperature rising, but it has a lot of effect basically risking situations with harsher weather patterns, but also risk for floods and hurricanes and all these kind of things. So this is a market that is still a developing market, so it's still small. It's a future growth market, we called it before, but it's something that we continue to focus on. Then in the middle, Critical Minerals, obviously something that's really needed for everything we want to do, the electrification of the world, the battery power that we need, but also many other things. If we want to build windmills, yes, you need also the minerals and the metals for that. So those kind of things are really important because there's almost a battle in the world who has control of the critical minerals imported for chips and so on. So there are multiple jurisdictions with The U. S. Obviously very high on the list, but also The Middle East really looking at taking more control of finding the critical minerals.

15:09 We see that with a change in The Middle East, especially in Saudi Arabia, where they have in their Vision 2030 now a full push for critical mineral developments. And one of the things that we're doing in Saudi Arabia is really tilting the business also towards that, diversing it and we pick up the first projects there, which really helps us to basically recover that market as well. After, for instance, a project like Neom is now in the doldrums and it's not happening anymore. So also in The Americas, in Canada, U. S, but also South America, this is high on the list and there are a lot of developments ongoing and we see opportunities to further grow this market. Then on the right side, we spoke about that before, security and surveillance, quite an important market that is new and coming up. We have 1,000 Russian dark vessels sailing around on the North Sea, trying to inspect and also probably influence our infrastructure that is out there, map it.

16:13 So we need to get to situations where Europe can protect itself for these threats. And this is something that Fugro can play a role in mapping the conditions, but also the situation on the North Sea. And also in The U. S, we see multiple projects coming up where we can help basically the countries, the governments with mapping and understanding the baseline of the current conditions of the infrastructure. And we see this also popping up now in the rest of the world where this becomes a more important element. If we then go to the backlog development and the split in markets, then on the left side, you can obviously see revenue by market segment.

17:02 And what you can see there, what I already spoke about, 22% growth in oil and gas for the first half of the year. You see wind coming down with another 24%. So mind you, last year we dropped 45% in Offshore Wind. There's another 24% on top of it. And if you then go to the right side of the picture, another 47% down in the backlog. So yes, this is really going to be significantly smaller for Fugro and over a very short time frame, and this is also the reason why we have to step in and do more cost savings in the short term. And it's not so much that we say something else than what we did a couple of months ago. We still say that this market comes back. We see the positive signs. We see multiple countries bringing these licenses to the market, but it takes time, as we said as well. However, what has the change maybe?

18:01 We thought that we were already bottom earlier this year, but we see actually that it is declining even further. So it goes deeper before it comes back probably second half of next year. So this is important to note. Then if you look at the other markets, then infrastructure, oil and gas and water, they have been growing in the first half of the year. And they have basically fully recovered that 24% drop in Offshore Winds. We've grown 4% for the first half of the year, primarily due to a 10% growth in the second quarter. Mind you, the second quarter of last year was quite low, so it was easy to grow and show growth in the second quarter. So also good to take note of that. Now if you move forward and you look on the right side, again, on the backlog development, a couple of things to say there. You see 8% drop in Oil and Gas, which is, yes, fully attributed to the project that we do in Indonesia where we had it in the full backlog.

19:04 And then this year, there's only 15% left of that project still to be executed on. So that is a big drop. That's also if you dive into the regions why you see Asia Pacific dropping in the backlog so aggressively. That is only related to that project. Now what is also important to note, because the backlog in itself drops by 13.9%, Roughly half of it is related to this project in Indonesia and the other half to Offshore Wind dropping even further. Underlying Oil and Gas business is growing. So this is still also still happening and we do expect also to continue to grow with other projects again like the one that we just announced in Timor Leste in Asia Pacific.

19:55 What is important to note there as well is the different dynamics in these markets. So offshore wind projects are larger in size and there are more you can anticipate them earlier. So you know that you bid for a license for next year to be on the board for maybe multiple months of work, where Oil and Gas is always a shorter backlog. So there's more uncertainty in the backlog right now because we need to rely more on Oil and Gas. There are also larger projects in Oil and Gas as we have shown in the past as well, but the majority is also shorter term backlog that we still need to secure. So I think these things are all important to note because in the upcoming months, we're going to secure more work for a few months down the line to still execute on.

20:42 The project in wind is often larger, not always, but often larger and more continuation on one project. So there are differences there and that has also created more uncertainty to know exactly how the rest of the year progresses. That is also why we have to step in and adjust ourselves to the current market environment. And we're also going to do vessel rationalizations. All in all, the cost savings should contribute to €50,000,000 annualized savings. A large part of assets that you see here on the board. We're doing several things and some of these things are really related to, yes, scenarios that we already spoke about before.

21:32 So we always said we can take out a few older vessels and we postponed it and postponed it because we still needed those assets. But now are we going to actually take them out and say, okay, this is it. As soon as the project is over, we'll take out this vessel or that vessel. So two to three vessels. And why is that still not 100% clear? Because we're still evaluating what we can do and which one we really need. And as this is changing all the time, we might extend one a little bit more or take it out as listed here. Also charter reductions, we always said in the strategic review, we can adapt ourselves. So even when we were investing, for instance, and mind you, we were investing in the geotechnical fleet, not so much in the geophysical fleet or not at all in the geophysical fleet.

22:19 And we said we bring in these newer capacity, we need that because we need to retire the older capacity. We haven't done that yet, now we're doing it. And we also can adapt ourselves by reducing the amount of charters there. And that is also what we're doing right now. We're taking free charters out over time. So it's not like that's already happened, but that happens one maybe in September, another one in November, those kind of things and one is happening as we speak. So that is basically the more permanent structural change. We can obviously use those assets that we have installed on these charter vessels again if we want to ramp up. So if we have a drill rig that we take off a vessel, then it's obviously ready to be mobilized again on a new charter in the next season when it picks up. So the capacity is not necessarily completely gone. It takes time and it's also a conscious decision that you have to take because if you mobilize these vessels, then normally you have to run with it at least one or two years to three years to actually earn back also the mobilization cost. So we will be careful before we take that decision again. Then we have some relocations we spoke about in the past. That's a little bit less of a cost saving, but that's also important to drive utilization up. And then on the right side is more temporary solutions.

23:40 Cold layup of one or two more vessels, those are owned vessels that we will layup then temporarily. Well, what is temporarily? At least six months. Otherwise, you don't go to a cold layup. Cold layup means that you actually take down also quite a bit of the personnel and that you cannot the next day mobilize again. You can mobilize, but it will take a number of weeks to have it ready again to be operational. And that has to do with certifications that you need on these vessels, etcetera. So if you go to a winter layup on the right side, and we haven't mentioned how many vessels because that's really dependent on how the winter will develop, but it could easily be five or six or seven vessels that we will temporarily lay up. And then they are almost in a situation where you can, in a few days, mobilize again. So this is also much more reduction in the cost savings. So it's not really a large cost saving. So this is quite an important element. That's why I spent a little bit of time on it because it's quite important for us to do this. We have postponed some of these actions, obviously, as long as we could and utilized those assets as long as we could, but now it's time to make this move.

24:58 And that's, as I said, a move that will gradually be implemented in the upcoming months, so because some of the vessels are still operational. Then I want to show you a little bit on some of the things that we're doing in line with our strategy before I dive into the hard numbers. But I think it's also important to show some of the good things that where we get traction also to change the portfolio of Services of Fugro because that's the whole intention that we're also less cyclical sensitive to these market dynamics in the future. We spoke quite a bit about the new technology, Ground IQ, which is basically using more data that is available from particular sites, but also using geophysics.

25:43 And you can see on the right side an animation of several nodes in the ground. They look quite large, but they're actually only 10 to 15 centimeters high. And you put them in the ground and you listen to

25:54 the ambient noise, so no active noise, but noise that the ground actually generates by cars going by or by machines working in the neighborhood. And then if we listen for a couple of days, we can actually determine a three d cube of the whole environment. So we can see what kind of layers there are. And then if you as you see with a drill rig, go to the particular sites, then you can calibrate this whole three d model. And what you see on the left in the animation is how we actually get to this three d model where we can quickly analyze and you see that with these green blobs where are the critical areas and then you can also make the plan much more specifically where to do boreholes and where you can maybe have a sparser array for drills or CPTs that you will do.

26:44 So before, the traditional way of doing this work would require that you basically do some CPTs or boreholes with a certain pattern in a block that you need to survey. You get to a probably 0.1 degree of mapping the area. With this way, we're going close to 100% of mapping the area knowing exactly what the subsurface is all about. And this is really critical because then you can concentrate more boreholes in the critical areas. And you might know and pick up from the news that there's a lot of money wasted by law lawsuits and insurance claims at the end because they haven't done the groundwork properly. It can also save a lot of money for clients to know how they should develop their fields and design them. It's better data, as I said, close to 100% compared to less than 1% or 01%.

27:43 It's a lot faster and it's even cheaper. So it's almost too good to be true. There are some great examples. So we have here some examples on the board. I don't want to dive into all of them in detail, but they all are aimed at collecting data quite fast in a matter of weeks. This example, for instance, on Bertel in Rio Grande LNG terminal that we have done. This is basically, yes, gathering information in a very fast way and really help them to accelerate. And they had already their traditional information, it matched completely and we basically could confirm what they already knew and that gave them more confidence to move forward. You see also examples of data center in Europe here or nearshore cable survey, which is very interesting because this was in the surf zone. So this is even in the nearshore area where we can also deploy when the water was gone, we could very quickly actually have some measurements done with the same system.

28:49 So it really drives speed and better data and much more insights and a lot of cost reduction for the end clients. So we're very excited about it. You can see already, we started with this actually last year. We picked up 22 projects last year. We're now, for the first half, already on 27 projects. We expect this to further grow this year. And this is one of the successes of new technology that we're bringing in. I believe, especially on the Land side, there's enormous potential also to go back in areas where maybe there's more commodity or commoditized areas and we can probably do a lot more and also have decent margins again in this area for the Land business to further grow.

29:35 So we're quite excited about this. And we'll see in the upcoming years further growth in this area. We're aiming also more towards this and the investment is relatively minimal that we have to do in this area. Then you probably picked up from the news that we have invested in a company, in a Dutch company, Detect. We have acquired 30% of the shares there. And that is basically a continuation of a partnership that we already started earlier, where we do a pilot for the Dutch Navy or defense, where we basically analyze and pilot what I just described, critical infrastructure on the North Sea, where we can basically with satellite information and various data sources combined and our data that Fugro has the knowledge on the geo data, determine where are the critical infrastructure, which pipelines are more exposed, which could be maybe dragged from the seabed by anchors from dark vessels.

30:37 And if we see those dark vessels that are by satellite basically tracked, then you can basically indicate which vessels could be at risk coming close to a critical pipeline or cable. And then obviously, you can decide to have a surveillance vessel going there. This is one of the examples that we're working on together with Detect. But they have a data fusion platform where they can have multiple data sources being on top of each other. I think we all know about the other companies and more from The U. S. That do these things. Detect is a similar one, but then a Dutch company that can basically combine multiple data sources, even cloud independent.

31:23 And this is very critical for Fugro to further develop the area that we have always announced as our pillar three developments for software and hardware and geodata solutions. So we're very excited about this and that we can work even more closely together. Then coming back strategic agendas that we have is advancing the capabilities we have on the USB side. You see a few projects mentioned here. You see also different USBs on the screen here. In the middle, you see our larger 18 meter platform, the Eclipse. We brought that to the market end of last year and has been working very steadily on multiple projects.

32:15 And this is just one project as an example, but we see that this vessel is nicely filled. It's larger. It can operate better on the North Sea with obviously harsher weather patterns. We have a smaller one on the North Sea doing a little bit less work because it's obviously more affected. So we really see that we move in the right direction there. We are looking at the development of the next generation. However, we also are very careful in the investments currently today. So we're keeping cash very high on the agenda. So we have also slowed down some of the developments, but we're still in full force ahead with the ones that we have in the making. What is not shown are the geophysical U. S. Fees on this picture. We have five boats that we're building, 70 meter. They come to the market, the first one end of this year, early next year. And then we'll start doing geophysical work with these prisms, as we call them, 70 meter, we can do geophysical work with them. The ones that you see on the board here are doing inspection work with ROVs, robots that come out of the back of the boat. You can see that in the middle, the yellow robot there, they can do inspections.

33:26 And the one in the middle can go a little bit deeper. And obviously, there's also a request for even going deeper water, especially in areas like Brazil where they want to do inspections without divers or in The Middle East. So this is still high on the list as something that Fugro feels we should develop the inspection markets in. But it takes time and it is a market that is still quite young and needs to further mature. So it's also coming with start up pains with not enough utilization in certain areas yet where we see the successes already on the board. Especially in Australia, we have done quite a lot of work for multiple clients. And also in end of the second quarter or during the course of the second quarter, we were working in the Bass Strait, a very difficult environment, obviously high currents, but and also in the Northwest shelf, we did a nice campaign. So we see this, yes, working really well. And then clients adapting to this new environment where they can use these uncrewed, no people on board, once again, uncrewed platforms that are operated from control centers.

34:40 Okay. Then we get to the hard numbers. I already mentioned some of the numbers and you have seen the press release, but let me go through the basics there. Yes, the second quarter. The second quarter had a growth. As you can see there, I already spoke about it. Now the second quarter of last year, you can see as well, was quite low. So it's easier to generate the growth, but it's good to see that growth of 10 plus, close to 11%, which is basically solid and that was good. Also on the EBIT side, close to 8%, 7.9%, an improvement compared to last year where it was 4.3%. So that is positive and in that sense, yes, also helping us for the first half of the year. Operating cash flow, as you see on the bottom left graph, also significantly better.

35:38 If you talk about free cash flow, we see also an enormous improvement in the free cash flow. That's not shown here on the slide. But we have reduced CapEx quite a bit and also improved working capital. And yes, this had a positive effect on the free cash flow generation. It was positive free cash flow for the second quarter, which is good. For the whole first half of the year, minus €38,000,000 That is not strange for Fugro. We normally see more cash inflow in the second half of the year, and it's an enormous improvement compared to last year first half. If we then go into Marine, then we see that Marine grew by 4.2%.

36:24 The margin was however flat. Site Characterization reported an increase for the first half of the year. This was primarily related to some larger oil and gas field developments, as we said, in Indonesia, but also in The UAE. In Saudi Arabia, we did a lot more work in the marine environment. This is something that we have not done in the past. So Saudi Arabia was primarily a land business for us. We now pick up more and more work in the marine environment, which is actually quite good for us and also diversification again for the country. The growth in Asia Pacific and Middle East regions, as I just mentioned, was partly offset by lower volumes, especially in the offshore wind environment in The Americas. There is no offshore wind in The Americas anymore. We had a little bit last year, euros 20,000,000 still in there, nothing now anymore, and obviously in EuropeAfrica.

37:16 If we talk about Asset Integrity, then results both in EuropeAfrica and The Americas were impacted by reallocating or relocating a vessel. We moved a vessel, we spoke about that before, from Europe to The Americas and it had quite a few knock on effects. This is was very much needed because we have these large contracts in Brazil for Petrobras, four projects, four years, really good steady work, which is now, by the way, at Dutchwood, working really well. We have two vessels working on it, the Aquari and the Dweller. They are in full force ahead and that is just for the upcoming years, steady income and steady returns for Brazil. However, it took a little bit of time to get these vessels there and operational.

38:03 We also had a dry dock of one of the vessels that was already working there, the Fugro Aquarius, and that dry dock took a lot longer because these contracts are so intense that you don't really have the time to inspect the vessels during these projects. So we had a few more things to do in the drydock when we brought it to the shore. So that took time. In the meantime, Europe Africa didn't have this vessel anymore in the beginning of the year, so they didn't generate any revenues. They tried to or we moved in with the Fugro Resolve that was working with the Blue Dragon, our new robot for deepwater geotech work, but we thought we can use this vessel temporarily for ROV work in Denmark.

38:51 We communicated about that already in the first quarter, and that didn't go flawlessly. So they were somewhat delayed. They also mobilized a new vessel a little bit later, so than we normally operate in Europe. So that is the EDT Hercules that was operational at the end of May is now full force ahead. So the Hercules as well the EDT Jane are for the Europe Africa region for the remainder of the year, quite steady income and quite good. So MEI was quite affected there in the first half of the year. Obviously, in The Middle East, were affected by the war situation and the spoofing and the jamming, which also had an impact on our first half there. If we go to Land, then Land grew close to 5% currency comparable, supported by a strong near shore development in Europe Africa.

39:46 So we have a lot more activities there, a good return, so that's great. In Asia Pacific, we're affected by a slow market. We spoke about that more often Hong Kong, but also to some extent, a slow market in the nearshore area in Japan in Offshore Wind. We do expect that there are opportunities again in Japan nearshore very soon, so we have a rig there that should be able to start working in the near future. In The U. S, particularly in the first quarter, we're still affected by the prolonged government shutdown that we had end of last year. So this was still delaying permitting because in actual fact, we have quite a lot of work on the land side for The U. S. So that is also the reason why you're seeing the backlog, The Americas actually growing because we have quite a lot of firm work to be executed on in Brazil, as I spoke about. That is on the Marine side and on the Land side in The U. S. So this is helping The Americas to probably counter a little bit the uncertainties they have in the Marine Site Characterization, which is significantly smaller for The U. S. Moving forward.

40:57 So those are the business lines. Then I go to the net result, which is maybe not the nicest picture to show because we have a negative €62,000,000 net result including discontinued operations. Basically two blocks, two clear blocks mentioned on the right side, specific items. You all picked it up. We have done impairments of €36,000,000 That is, yes, due to the challenging market conditions in Geophysics. We have taken a downgrade in four vessels on the value there, and that's because of the market situation and the pricing pressure there. One is retired, so one of these vessels in Geophysics is retired. And the other one, we actually cold lay up one of the vessels. And that has an impact. And always, the short term development in these calculations, as you know, it's accounting, but you need to calculate the net present value of these things. And then the short term, the next one or two years have a lot of effect on these calculations. So this is why this needed to be done. There's, in addition, also a conversion ongoing on one of the geotechnical platforms. This is basically the last modification that we're still completing as we spoke about before. This is the Fugro Scout. I'm not keeping that as a secret.

42:17 But we had quite a bit of issues there with the yard executing this. And basically, we had during halfway during the work taking the vessel apart. That went well, but basically rebuilding it is not being done by the same yard. So we're moving this vessel. We have moved this vessel to a completely different yard to complete the modification of this vessel, which obviously had an impact on higher cost and we have taken a downgrade on that in this current €36,000,000 There's also €9,000,000 in writing down the bad debt provision in Asia Pacific. There we're obviously still going after it, but at the moment we have taken that hit. And the remainder is relates to restructuring expenses, which is relatively small 2,000,000 Then the second block, which is obviously also affecting the net result, is all to do with income tax expense.

43:12 And then, yes, the current tax expense is only €7,000,000 or is €7,000,000 I should say. And the rest is all related to, yes, a derecognition of deferred tax assets. And this is again the same calculation that you do for your impairment testing, obviously, the future forecast and then the next one or two years have a major effect. We have also upgraded some of the DTAs last year. This year, we come to the conclusion that we have to downgrade that in certain geographies, and that had an effect of €41,000,000 Yes, all in all, ugly picture because then you get to €62,000,000 negative net result. Luckily, some of it is non cash, but that is always a little bit of a yes, unimportant one because it is basically reducing your balance sheet position.

44:02 Then if we go to cash flow, free cash flow, this slide is showing. Then overall, cash flow amounted to minus €38,000,000 as I said, negative, so which is not unusual for the first half of the year. As I said, typically, we see working capital wind down towards the year end and therefore supporting the H2 cash flow. Operating cash flow, we already looked at was, yes, 85,000,000 or operating cash flow before working capital movements was €85,000,000 and that is up from the 58,000,000 mostly due to higher EBITDA. So the seasonal working capital buildup consumed €59,000,000 of cash, an improvement compared to last year where it consumed €81,000,000 of outflow in the first half of twenty twenty five.

44:56 And I will get back to the working capital in the next slide. Capital expenditure is €81,000,000 for the first half of the year, representing a decrease 87 decrease from last year, 168,000,000, which is obviously a big drop. If we then get to working capital. Working capital amounted to €310,000,000 in June 2026 compared to H1 twenty twenty five. This is an increase of €46,000,000 And this is a result of trade and other receivables consistent with the increased revenue in the second quarter. In addition, reduced CapEx resulted in lower trade and other payables, which obviously has an effect also on the net debt.

45:47 At 16.6% of the twelve months revenue, working capital is lower than the previous two quarters, but still outside of our range that we have communicated before between 1015%. That bandwidth is important. We want to drive that back into that, obviously, and we're really focused on getting this done. And also, yes, Marine, Group Controller and Case, our interim CFO, are really on top of this, as we have been over the last period, and we will obviously continue to do that. On a positive note, days revenue outstanding improved to 78,000,000 coming down from the, what is it, the 87,000,000 last no, 85,000,000 last year.

46:33 So that's positive side. Then if we go to the balance sheet, then net debt amounted to €473,000,000 at the end of June, up from the €383,000,000 at year end in 2025, so year end compared to June. In addition to the free cash flow development, this increase was primarily due to the payment of dividend over the year 2025 and additions to leases. The net leverage at the end of June was 1.7x, which is down from the 1.8x previous quarter. We're still above the 1.5x, the self imposed target that we have of 1.5x. We want to be below 1.5x leverage.

47:22 We focus obviously very much on that by improving our cash flow, actively managing the capital discipline, limiting CapEx as I just presented, but also driving down the working capital there. So our target remains there still to get in the level of 10% to 15% for the working capital in the revenue compared to revenue. In July 2026, we have added a bank to our banking group, DNB, which basically gave us an additional €50,000,000 to our credit facility that now is 400,000,000 not because we want to draw that, but this is just flexibility that we create, operational flexibility if required. And this is also something that all the companies obviously do in this uncertain time that you have options there. The one year term loan that is maturing in October, we either pay that down with the available cash or we will use one of the financing options that we have. We have multiple options to refinance that term loan or extend it or go into different scenarios. So we're not concerned about that. Our key focus is to bring leverage down. That is basically what I want to emphasize and to focus on cash returns.

48:49 And that brings me to the last slide, the outlook of 2026. And yes, we have said that the uncertainty remains elevated due to the ongoing conflicts in The Middle East, but we also see the ongoing weakness in wind market. That is not new because we said it will take time, but we go a little bit deeper. And we have more oil and gas work to replace this offshore wind. And that is, yes, a little bit shorter term backlog and there is more uncertainty in the backlog and that's also driving the backlog down now in the short term or the twelve months because you have less work beyond the six to nine months, which is normally what we also see in our backlog. And as it says here, we have taken the previously expected margin improvement.

49:37 We took that away. We say now that it's unlikely that we will achieve that. And that has to do with, first and foremost, great improvement in the first half of the year, but we expected even a better improvement, I can say that, because the war was not anticipated and the pricing pressure was probably more severe and also the second half of the year being more uncertain. We want to be very careful in what we do. We don't want to go back to the market obviously with surprises there. So we better say what it is and therefore we take away that earlier guidance. And to support free cash flow, we have driven the CapEx or the investment profile from 150,000,000 to 165,000,000 now to the lower band around €150,000,000 And yes, we can end with a little bit strange to say, but in the mid to longer term, we still feel that geodata is really required and our core markets remain sound. But obviously, I fully appreciate that everybody is looking at what is happening in the second half of the year and early next year. So and obviously, that's not necessarily the most optimistic outlook, but that's why we formulated it like this. And with that, I want to move over to questions.

50:50 And as I said before, I have some support lines here. If you become too technical on the finance side, I will call in my support lines here from Case and Marine, which are here only a few meters away. Who can I give the word first? Luc? A couple of questions. First, on the CapEx. Can you explain a bit on the plans, the outstanding expansion plans that you still have for execution in 'twenty seven? And also the maintenance CapEx level, I think last year was slightly above €100,000,000 Will that come down into what level approximately?

51:36 Then a question about the change in this type of orders that you mentioned by from the from wind to oil and gas with smaller contracts and a shorter planning horizon. Will it make it more difficult for you to optimize your utilization because of the shorter planning horizon? Or will it be offset by the fact that it's smaller projects and you have some flexibility from customers? And then finally, on the behavior of customers in this environment. One of your strengths is obviously that you have you can combine several services, and you mentioned an example with Ground IQ, how you can save money for customers by doing that and replacing expensive services by cheaper ones. But I can also imagine that in the current environment with price pressure and some competitors with smaller set of services being desperate for work that some customers may be shifting to tendering each bit apart to have the lowest price possible for each individual part. So how are you behaving? Are they opting for more integrated packages like yours? Or is it still very heavy competition for smaller parts?

52:42 Yes. Thank you very much for the questions, Luc. Maybe first on CapEx. And I think I know the number roughly from the top of my head, but maintenance CapEx for the first half of the year was EUR36 million, if I'm not mistaken. And yes, if you would double that, then you're lower than the EUR100 million. I'm not saying that, that's exactly the way you should look at it, but we are lower this year on maintenance and sustaining, so to say, the expectation. There are a few larger blocks in the CapEx, and one is the vessel that we just mentioned that is going through the modification. We're also finalizing these prisms, the 17 meter USVs.

53:27 That is more expansion and growth as we call it. And then there are smaller things like growth on, for instance, some additional ROVs that we need to have and some other things, smaller things. There are no big blocks that we can necessarily take out so easily anymore. So we're really strict on what we're doing there. And yes, we will keep the maintenance as sustaining down and has also to do with less maintenance on the vessels this year. So that and that is always difference between the various years. We expect in 'twenty seven, we have again maybe a few more vessels going into dock or into special survey. As you know, every five years, you need to do a special survey. You can't really deviate from it because if you don't do it in that time frame, you can't work with these vessels anymore. And then you have these intermediate surveys every two years.

54:24 So this is on the CapEx side. Yes, wind is absolutely, yes, creating more certainty in the longer term. So indeed, as I said, there's a different dynamic in oil and gas. With the actions that we take right now, we obviously adapt ourselves to the right size of serving the market that we feel is there. We also pick up things that maybe the next season we need more capacity, but that's with a certain peak. And I want to make sure that we also drive or stabilize pricing again. So I'd rather take out a little bit more or stall a little bit more on some of the assets so that we also see that there's imbalance again with the market size.

55:15 So we take the steps that we feel is required right now. With the steps that we take, we can still be quite flexible. Especially with geophysics, we can mobilize more easily short term charters. We're also working on an extension of our strategy to become even more flexible so that we can more easily ramp up and down. This is always a bit more complex for the geotechnical platforms because, yes, as I said before, you mobilize them for at least two to three years. But this is also something that we are looking at. Can we create more flexibility there? But especially on the geophysical side and also with The U. S. Fees coming in, we do see a completely different way of working in the future on the geophysical side. I'm not planning to talk for another few years about geophysics. We're just going to shake up that geophysical market and do it in many different ways with more modular solutions, with more use fees, but also with different technologies that we can really compete again and make money. And if not, we'll leave those areas in particular areas.

56:23 Then the behavior of the clients and if they are now tendering certain blocks separately, I don't necessarily see that, but there are a few other things. The markets are different between wind and oil and gas because the oil and gas players are much more mature and they have very specific requirements. They have also departments that really know I need to have this for geotech or I need to have this for my met ocean research, so to say. And therefore, they have always been a bit more selective in bringing packages to the market. That's a good that was the right answer, no. So anyway, they have always been a bit more particular in we want to have this for the met ocean or this for geophysics or geotechnics.

57:12 So they have specialists there. Where the wind business is more integrated services, longer contracts and more combined services. If we talk about the Land business itself, I think with the movement into more total solution around Grand IQ, we do see more embedded services coming together. And that is I think also a positive thing, especially because it drives really the cost down for our clients. And I think, yes, if you look at it correctly, any clients listening, then this is also the sales pitch because this is really beneficial to them for lower cost and much better data and less risk on the ground. So it's really driving ground risk down. Quirijn Mulder from ING.

58:05 Three questions. First, about The U. S, as usual. So are you still expecting profit in The U. S. Full year 2020, 'twenty six on EBIT level? And in connection to that, we discussed last year the issues with regards to jackup rigs, etcetera, that they were not utilized. So is that situation now improving there? My second question is about the debt. You see an increase of additional leases, for example, euros 36,000,000, I think. Is the reverse coming in the second half because of the rationalization of the vessels and the taking out of the some charters? And then on general, I think if you look at situation, are you if you look at wind offshore and you say, okay, we can maybe if it is early then in September, October, the tender restarts and then it takes six to eight months before the vessel is being asked to perform.

59:14 What is then, in that respect, your view on 2027, especially with regard to the seasonal period? Yes. Thank you very much, Koenig. So let me go back to first question on The U. S. I'm not specifically going to guide on a particular region and then on the profitability. So you obviously couldn't expect that. But I'm optimistic about two things in The U. S. Or in The Americas, and that is on the one side, the Land business development. As I said, some of the permitting unfortunately delayed some of the work into the second half of the year, but we do have solid work there. And that is positive. That is data centers. That's nuclear and LNG development. So there is quite a lot happening and also on the defense side, the security side.

1:00:10 So I'm optimistic about that. I'm also optimistic about the Asset Integrity business in The Americas, especially with the Petrobras work that is now ongoing with the vessels up and running, generating good returns. So always pray for vessels not breaking down. But if that continues as is at the moment, then that is also a solid return for the second half of the year. And in general, we see in our position in construction support work that we do is actually worldwide strengthening. So this is good business for us. This is just simple positioning. It is helping our customers for the work that they do in various areas during installation, during the build, but also in OpEx related environment.

1:01:01 So that is positive. I think where the risk in The U. S. Is still is around the MSC work. It was not too bad in the first half of the year, but we see less work there and the limited projects that are there on the MSC side. There's obviously more competition and also pressure on the pricing. So that is basically what I can say. It is significantly smaller by now than we used to have in The Americas on the MSC side. So the risk is a little bit lower to see further drop. So we have, yes, a more optimistic view of the second half of the year for The Americas. So that's one. And then, yes, you spoke specifically about jackup rigs, which is one thing that is needed. So we are bringing in a jackup rig or barge for the project in Brazil.

1:02:00 This was a problem because we wanted to actually bring one over from The Middle East. That didn't work. Then And we had to source another one. So this is that was delayed and caused some issues there. But that is now under control, Quirijn. Then on your additional leases, will that drive down the overall cost? So with the charters obviously disappearing, that will help, but no charters disappearing at July 1. So it's during the course of the second half of the year. And how much the impact exactly will be is difficult for me to know exactly at the moment. But in principle, yes, the additional leases should come down because we're very focused on doing more with our own equipment.

1:02:46 The other thing that we see, Kurain, is that we hired quite a bit of third party assets in the project in Indonesia. You need in Asia, so if you were to drill deeper into the third party cost, which is actually up compared to last year, which is a little bit strange, the amount that it's up. But that's because in certain countries, you need vessels that are flagged for the country, so Indonesian flagged vessels. And we are actually bringing one vessel now into an Indonesia flagged situation. But before that, for the project that we have executed over the last half year, we had to hire quite a lot of Indonesian vessels and that drove up also the leases and the third party cost.

1:03:32 Then your last question is the crystal ball question around Offshore Wind Europe. So the view on 2027. So what I said before, things take time for the wind business to come back. But also, if you look at our slide that we presented on the market, you see multiple licenses now coming on the board. Obviously, some is delayed in Germany towards next year. But you see also now in The U. K. End of this year, they will start again with the next round, which is positive. I just spoke about The Netherlands bringing a large area to the market. Denmark is doing things. So there is a lot of activity and that wasn't there this year or end of last year, so to say. So in that sense, we do expect that during the course of 'twenty seven, yes, we will see activity picking up on that side. I'm still careful in saying how much that is and when it exactly will happen because I'm taken by surprise all the time, but we're emphasizing this and pushing also jurisdictions or the governments in various countries to help the business to really, yes, overcome this gap.

1:04:50 But having said that, it's not for nothing that we take out capacity and that we now retire some of the older assets and let go of some of the lease assets and move some vessels around in the world. Yes, we don't do that for nothing, but we have the flexibility also during the winter season to lay up warm or hot stack some of the vessels, small cost reductions, but not large, but then we can actually ramp them up again in the season next year. Yes, first, we have multiple yes, go ahead. Christoph Sammack, KBC Securities. First, on turnover and backlog. You commented on the trends and the comparable evolution year on year. In the past, you've also shed some light on pricing and volume trends in there. Could you share that with us both in terms of revenue and backlog?

1:05:46 And then as a second on the Land business, comparable growth in the first year of 5%, respectable growth margin, I would say. But if you strip out the capital gain on the building sale in Hong Kong, let's say, a substitute result. The Land division has been underperforming for quite a while. I mean aside from Ground IQ, what are the main growth pockets within the Land segment? And what share, what proportion of the Land business is indispensable for nearshore activities?

1:06:33 Because in the past, you've always indicated that the relevance of the Land business is for the nearshore activities. And then a final housekeeping question. Maybe I'm mistaken, but I couldn't find the vessel utilization rates in the half year report. If you could share that with us. Okay. Thank you very much, Christoph. First on the backlog, yes, we have not issued the details on how much is volume, how much is pricing. And I understand that, that could be interesting to know all the details on. To be honest, it's not easy to actually get a very exact pricing effect in the various regions and then have one overall picture that gives you a good insight on what's happening because we see in some regions actually hardly any price effect.

1:07:29 And in other regions, obviously, the effect in the wind business is quite large. And then obviously also other markets like oil and gas benefiting from that in particular situations. So what I can say is that we have in our current backlog absolutely already priced in the pricing effect. So yes, for the work that is already on the books, we don't feel that there is a large additional drop on top of what we already know and see for the remainder of the year. But as I said before, it's also important that we balance again the oversupply because we have actually gained quite a lot of market share in some areas. For instance, on Geotech, we have managed to grow market share significantly.

1:08:18 But if you are one of the competitors to Fugro, then after sitting for half a year, you're going to become quite desperate and then you will drop your prices probably to be cash flow positive on a particular asset and a job and then you go in very aggressively. This is also happening. Now for the projects that are already secured, that's not so much the case. But you see in certain areas that, yes, you normally have an offer attended to a client and then you get a request for a best and final offer, a buffer. And now we have seen certain contracts where they ask three times for the best and final offer, which is actually scandalous if you ask me because they should also make sure that parties like Fugro and also some of our peers continue to exist.

1:09:04 But to be honest, they are not so nice. And then when these crises are over, I know from the past as well, then they apologize and they say we shouldn't do that next time. And the next time comes and they repeat exactly the same thing. So that's painful. But I don't think it will help you a lot too because then you need to dive into all the regions in specific and we also don't want to necessarily open up too much on that. On the Land side, so you're obviously right that the result is affected by the income of the building. You can read that. We're not hiding that €12,000,000 of the building sale. We also, as I said before, we're also not hiding the impact on the Land business, for instance, or on the overall business on the Middle East situation.

1:09:53 So that's obviously also in there, the €50,000,000 negative there. So obviously, we will have to balance those out and then look at Land as a specific thing. If you take out all these special items, then you could see that especially nearshore is doing well in Europe Africa. Then you see that land in The Americas has been staying behind absolutely, but with lots of potential moving forward, as I just described. Middle East, India, very much affected on the land side by the current geopolitical situation and the war situation there. And then, yes, Asia Pacific, we spoke about the Hong Kong market and also Japan. And nearshore market has been slow.

1:10:40 We do expect not necessarily Hong Kong, but certainly Japan to contribute a little bit more moving forward. Then your question around, okay, what else is there in the Land business and what are you focusing on beyond near shore? Because most of the people see that near shore is an interesting market. Well, to be honest, it is Ground IQ. And the next thing is Ground IQ. And the next thing is Ground IQ. Or what I'm saying is everything in Land will be changed to the new situation where we're going to change everything towards Grand IQ. We have a lot of potential to grow, I think, our share, our opportunities because as I said, some markets are maybe commoditized and we never served anymore. And we believe with this new technology, yes, I always call it the iPhone of the site characterization, we're going to change. We're going to change the Land business, how it's being done. And this is happening.

1:11:31 And we see the first proof points and it's growing very rapidly and we'll change the whole Land business and then nearshore will continue to do what we have been doing. Well, there are investments required, but it's relatively small. You have seen in the news that we also created a new setup in Australia, where we bought a small setup in Australia with geotechnical expertise and we'll complement that with geophysics so that we have a real good hub there for Grand IQ development because we see that this area also offers opportunity to further grow the area in whole Australia with large projects that are coming up where we can also offer Ground IQ. Also in the Mining business, Ground IQ can offer quite a few solutions there.

1:12:28 So I think this is helping a lot. But to be honest, over time, yes, things will change to Ground IQ and Newshore. And that's a Land business for the future. Monitoring will also stay because we do monitoring services. But solely only doing, let's say, CPT work or drilling work, that will disappear over time. If it makes money, I'm less eager to close it down because making money always fits in our strategy. So then your housekeeping question, and now I'm a little bit stuck because I Yes, I thought it was also in there, but I didn't want to from off the cuff mention the number. It is down compared to last year.

1:13:22 And then also Jeremy. Thijs Berkelder, ABN AMRO, ODDO BHF. First housekeeping question. One off costs for the efforts to realize your €50,000,000 cost savings. What should we pencil in there? Then coming back on Ground IQ and the numbers you mentioned, back of the envelope, let's say, 2,500,000 per project means Ground IQ revenues last year, something like €50,000,000 And now in H1, already 60,000,000 Is that too high? Or is such a project on average much smaller than that or maybe much larger?

1:14:14 Further, I want to have an update on The U. S. Sort of unmanned fleet. What is the revenue growth there? The utilization of the unmanned fleet because you are rewarded in your bonus schemes based on that. So I'm curious what the progress is there. And I have a couple of other questions, but they're more on corporate governance. Okay. Thank you, Thijs. So I'm going to ask one of my experts here to maybe say a few words on how much the cost is for the cost saving and maybe they don't have the full answer, but they can think about it now while I answer the other questions. So on the Grand IQ side, I think you're slightly too high, not on average project size by the way.

1:15:14 But basically, we have projects that are actually EUR 20,000,000 that will run over multiple years and involve Grand IQ. We have also projects of a couple of 100 K. So it's difficult to give you that average number. So that is basically what I can say there. Then let me see. You asked a question around the utilization of The U. S. Fees, and that is obviously also connected to us being successful in maybe some incentives. Well, the incentive program is not running really well for management at the moment with the current figures, And this is also part of that. Some is still close to meet, others are far from. And I think this is one that is staying behind in the first half of the year, certainly really catching up in the second half of the year, but I don't think we'll meet our targets that are set for our incentive scheme unfortunately, but that's life.

1:16:21 Okay. Then the corporate governance, can you give an update? But we can first maybe answer the question on do you have an indication on what the cost could be for downscaling, basically, €50,000,000 the restructuring cost that is related to it? You have a microphone there. It's Marianne Fetters, our Group Controller, answering. You can speak. He's already on? Yes. So the costs related are similar to the restructuring costs that you have seen for the first half year. There will be a little bit more on the vessels, but I don't expect that to be in this half year yet. Governance question here. Yes. Then on the can you give an update on the process to hire a final new CFO?

1:17:12 Where are you in the process? When should we get announcements there? Yes, you've probably seen the news on WSP approaching Arcadis with a bit. Did you also receive a letter in the past few weeks from WSP or maybe other industrial players approaching you? I would say you are, as an engineering firm, maybe as attractive or more attractive at this point as Arcadis. So from a consolidation perspective, it's maybe now the right timing to consolidate, also viewing FinConceri, let's say, acquiring Nex eo, an example of that.

1:18:12 Finally, it's going back on guidance. The profit warning, in my view, has two sides: Middle East continuing the events and offshore wind orders not yet in. Are these the prime components? Well, coming back on Asia the Asia Pacific project is about to end, so maybe you also banked there on a further progress. E and I has done a lot of additional discoveries offshore Indonesia, so is that also a factor? Okay. Thank you for all the questions there. So let me start with the easy one. We did not get a letter from WSP or from anybody else, so that's one thing.

1:19:03 If it's the right time for consolidation, I leave that for you to speculate about and write about. The question on the CFO, it's quite clear that you don't like me as a CFO, but that's not taken personally. But the update there is that we're working through that recruitment. That's a process. We want to hire the right person. And that takes time because, yes, there are multiple phases that you need to go through. Obviously, our Supervisory Board is very involved there as well. And we have a reputable, obviously, executive search firm helping with us with that. And that's progressing. There are good candidates that we're talking to and that is progressing. But we are actually very pleased that we have interim CFO right now, Kees de Naudo, that the pressure is off.

1:19:54 Kees is just in for three weeks. So we give him a little bit of time before he's presenting towards you. But he's getting a good handle on the business supported obviously by our existing team and Moraine who just spoke. So that is the update on the CFO. On the outlook, you're right that there's a lot of uncertainty. So I would create basically the change in the outlook. I said before, it's two reasons. First is the first half of the year that we would actually expect more, although I know the consensus was below what we delivered right now. We had the feeling that this could be better if the Middle East India wouldn't be would not have been there some of the operational issues we had with vessels moving around. So that has affected also the confidence that, yes, if you're already below in the first half of the percentage that you basically generated last year, 4.1% versus 4.9% last year, That is one reason. And the other reason is, yes, the uncertainty in general moving forward. We don't know how the conflict will continue and how long it's lasting. That has an impact. We're quite optimistic about several items that we have on the board, but especially Marine Site Characterization in Europe and in The Americas is still, yes, uncertain, especially because it relies on oil and gas development and that has a shorter outlook, shorter

1:21:24 visibility. So that is what it is. Not so much wind not coming back this year because wind not coming back this year, I already said a few months ago, that's not the case. We are moving further down, so we would have expected a little bit more replacement work there for the amount that we were doing. Asia Pacific actually shows a steady continuation. They don't have a second Indonesia project, but they do have follow on work and other projects like Timur Leste, and there's more to gain. Thank you very much, Thijs. Then we move over to Philippe. Afternoon. Yes. Fugro Good N. Goet from Kepler Cheuvreux.

1:22:09 One follow-up on the last comment on the guidance. I was also I was still wondering, given that the order book for renewables has declined so much, that must have come, of course, as a negative surprise even though you expect you didn't expect it to come down or to recover this year yet. So can you say anything about that? Are there other things that are driving that in terms of clients just being more cautious? And the other questions I have are, first of all, on the recovery that you foresee, offshore wind recovery in 2027. You mentioned, of course, the tender and the auctions that are upcoming.

1:22:55 But are there any other concrete evidence that supports the thesis of a recovery in 2027? Are you getting approached early by governments or potential developers? And also, I'm interested in understanding what your base case is for the oversupply situation that we're seeing now in geotech. If these additional work come back to the market, will that be sufficient to and I'm asking you, of course, look in your crystal ball, but will it be sufficient to balance the market again to remove that oversupply and pricing for that to recover? And I think related to that, maybe interested in also hearing your views on whether you're seeing or what you're hearing in the market or other place taking out capacity as well.

1:23:42 And from the vessels that you are taking out, what portion is geotech and what is really geophysical? And then I have one last question on working capital. And that's more on the we've seen receivables coming down, of course, days payable outstanding coming down. I mean, at the same time, it was helped, of course, also by the write down. So the drop is maybe a bit less. But the unbilled receivables actually moved up year on year. So maybe you can explain what's driving that specific region as well. Very good. Thank you very much. So first, your question was around clients being more cautious and order book coming down. I think what we did expect, obviously, there will be a drop with an Indonesia project that was in there last year and not in here right now.

1:24:38 So you could basically see that coming because we don't have those projects. We announced when we came to the market that it was the largest project that we signed in Asia Pacific region since ten years or so. So a very large project. So that could have been expected. And if people would have thought about that, then you could see that. The other part is that, yes, their clients are in some areas waiting and waiting longer. So there's much later awards coming through. So the work is still there, but they obviously negotiate longer, as I just said, do the second and the third BOFA, best and final offer. So they drive the price down where they can, but also they award much later. And then that creates uncertainty.

1:25:30 Last but not least is that I think our teams are also much more careful what they have in their backlog, especially the highly likely backlog, which we saw in the past sometimes pushed out again. So people are also more conservative in how they look at their backlog. So this is also an element that is somewhat in the backlog development. So I think there is an element there also when it comes back and that is your second question, is then the capacity that is taken out enough that is taken out because it's then in balance? Or do you need more? So that is a very good question. So my experience from the past is if markets come back, they don't come back with 5% to 10%.

1:26:19 They come back with much more and much more aggressive. And you can see that in the past in Fugro history as well. So once the market comes, and I say the first signs maybe in 2027, but we know that there's a ramp up coming for offshore wind, then you need a lot more capacity. So people are obviously waiting as long as they can to reduce capacity to make sure that they are able to serve the market in the future. Having said that, I see all our peers also reducing capacity. Some are laying off staff as well similar to Fugro. Others have had their vessels idle for more than half a year. We have been working. This is also what I've seen in the previous energy crisis that Fugro was with lower prices still at work and the peers did not have work, some of the peers.

1:27:09 So this is also what I see, but I see competitors taking assets out because everybody knows it will take time before that ramp up comes. But when it comes, we will all be scratching again for having enough capacity. One of the things that are important there is that you have the drill capacity for geotechnical. So the drill rigs are not disappearing. We're not even if we take out a charter or a permanent vessel, we keep our drill rig basically ready to be mobilized again. It will take a couple of weeks or a month or two to get the vessel up and running, but we can ramp up and we can see that coming then the market coming back. So I think it is important that capacity comes down and we need to do our fair share. Is it enough to stop, so to say, the fighting in the short term? I don't think so. That's why we're also careful in that and we mentioned pricing pressure will continue.

1:28:05 Then you have a question around working capital, especially about the unbilled. Maybe, Kees, you want to say a few words about that because I know you picked up on that as well that you're going to really emphasize that element, the work in progress on I think Please use the microphone. Kees, can you use the microphone? Sorry, but your question was more about the prepayment, I think, in the or not? Unbilled receivables. Unbilled receivables. Working on work We're working on work in process. It was already a project. We started on a very high quality. But of course, we want to look to the total cycle from getting an order in, maybe a bit more hard stringent contract conditions to get prepayments more and more easy way of being able to bill to invoice when you have a when you met a deadline.

1:29:08 Because when two weeks earlier project becomes a debtor, it's also two weeks earlier on the bank. So we're working on that all over the world to get improvements there. But in the contracts, in the behavior, in the project setup, everything we can get some proper improvements there. Although people are working on high quality already on it. Yes. I think so. We have had a few projects like that to really focus on, obviously, recovering outstanding receivables, also invoicing earlier contractual terms and conditions, but Caisse really put it high on this list to give this an additional push now together with the whole financial team to say, yes, we have to go and do even better in the second part of this year and moving forward because this is obviously, yes, just hard work and you can never stop with that. You had a follow on question?

1:30:15 And the write down on the receivable that you took, the 8,800,000,000 what type of clients was this that you Yes. So this is a local wind player in Asia. And basically, they should definitely pay this amount. And they stop their wind farm development and they basically stop paying everyone. To be honest, they have a parent company that has enough money, I would say. So there is obviously lots of battles. We're not the only one, but there's lots of battles. So we're starting this we have started a legal process to confiscate whatever they have on the bank accounts and so on. But this is obviously, we're not the only one. And yes, we basically took this write down right now. Just to be sure, it doesn't come up. There's nothing else there. It can only be upside in the future if we recover some of it.

1:31:10 Hi, Mark. Jeremy Kincaid from Valencia Kempen. Three questions. First, one more on the guidance. You talked to a €15,000,000 headwind from The Middle East in the first half. What do you assume in the guidance for the second half? Second question, just on the offshore wind recovery. You mentioned that you now expect a recovery in the second half. That seems to be pushed back from the first half that was previously communicated. I was just wondering what's changed. When I look at the tender outlook, it doesn't appear as though there's much slippage. Just curious on your thoughts on that. And then on the oil and gas outlook into 2027, just sort of curious on your view there.

1:31:57 It feels like there's conflicting messages. On one hand, the oil price is high and the forecast you have in the presentation from Rystad look like there'll be growth in 'twenty seven and there's lots of regions that are coming to the market. However, on the other hand, you mentioned the IEA sees oversupply of quite a lot of oil in that year. So it's just hard to see more capacity or more production coming online. So just curious on your thoughts. Very good. Okay. First on the Middle East impact of €50,000,000 for the first half of the year. In principle, we would expect it to be lower for the second half of the year. However, I'm careful because we don't know how this progresses.

1:32:46 And we have to see in the beginning of the conflict, there was a different situation where obviously there were lots of bombs thrown on The UAE and Qatar and that has now changed towards Bahrain. Now yesterday again we see that, Iran is fighting with Saudi Arabia. Yes, so this is very, very difficult to say. So if the conflict is the same as the earlier part of the year and depending on how long it will last, then maybe the impact will be roughly the same. I would think it could be lower. However, if it changes, yes, I will come back to you and tell you, surprise, surprise, it is even worse.

1:33:32 So it is a lot of uncertainty there. I cannot make it much nicer there. On the Offshore Wind side, what has changed? As I said, not a lot has changed, because we said in the beginning of the year as well, it will take time before these new licenses come to the market. And yes, you're right, these new licenses are on the board and they are progressing. And some of it is actually brought forward like the round in The U. K, they want to do as fast as they can. Also, The Netherlands is now bringing something to really quickly decide on, okay, Area six, seven, very large, we can bring this to the market to help the industry. But it takes time. And this is what it is. I think what is the difference is there is much more aggressiveness in whatever is left.

1:34:24 And we have done well on the geotech. We have not so well on the geophysics. And there's a lot of fighting going on with all the parties that are still out there trying to get what is still out there. So there's more competition and there's lower pricing. So this is what it is and that is more aggressive than what we maybe anticipated earlier in this year. Because we were doing quite well in the earlier in the year and now we see that, yes, some of our peers have not had any work and they become really aggressive now to jump and basically desperate to get some work as well. So this is basically what we see. Oil and gas, crystal ball question again. If I had the answer, that will be great. I don't know. I also read the overcapacity and oversupply in storage and all these kind of things.

1:35:18 So at the same time, I see a lot of oil and gas companies thinking, hey, this is the time because now sustainability is a little bit on in the background. This is the time to progress with the field that we still wanted to develop in, I don't know, Mozambique or in Nigeria or in Angola. We are allowed to talk about oil and gas again, And we're moving forward and we know how to make money with oil and gas even with lower oil prices. And I think the anticipation is that, yes, that we still need the oil and gas for and especially gas for quite a bit longer. Energy requirement is enormous in the world, obviously, especially with the AI data centers and storage capacity that's required that in itself is driving energy requirements up, which for many, many years people kept a stable outlook for energy. So there's a lot of things happening.

1:36:17 Now do you need to take my view for granted? Absolutely not. It's a crystal ball answer and I don't know exactly how it will go. But over time, absolutely oil price could come down again, if you ask me. Berkelder, ABN AMRO, ODDO BHF. Coming back on your jamming and spoofing. Your Global Positioning business, is that also affected by the jamming and spoofing? Or how are you handling it there? Can you still deliver towards your clients? Yes. Very good question.

1:37:02 Well, we are protected in those contracts in a different way. We cannot control, obviously, that delivery. So we are protected in where we only supply the signals for DP, for instance, for platforms and so on. So that is a different situation than where we offer a service to the customer, where we say, hey, we're going to do a survey for you. And yes, then we cannot sell because we don't have the capacity or we don't have positioning. And then we cannot enter the 500 meters zone of a platform and do inspection on platform legs or on the pipeline. So it's different situations. But to some extent, yes, they are obviously also being jammed and spoofed, so in that sense, absolutely. The beauty is as well for Fugro that we have obviously a lot of knowledge, we're one of the leading parties or the leading party in the world on positioning offshore.

1:37:55 We have a service that basically also signals if there's spoofing going on. Spoofing is basically giving the receiver different location, telling you that you're somewhere totally else than what you are. And if this is automatically connected to your navigation system, it goes wrong. So that is a big problem. Jamming is very difficult to overcome because, yes, if somebody from the site is jamming the signals, which is happening, we are now moving towards different antenna setups and different equipment where we can block basically the jamming a bit more because we only look at a certain angle. But sometimes there's jamming coming from the top as well or different areas, and then we're still out and cannot work.

1:38:45 So this is a very hot topic at the moment in the world because a lot of suppliers cannot work, they cannot do pipe lay or they cannot do their service in certain areas, because it's not only in The Middle East, it's also in the Baltic Sea, there's a lot of jamming and spoofing going on, and in several other areas as well in the world. And it's not one party doing it, it's actually all the parties doing it towards each other. So therefore, it's also important, especially for the spoofing, to have multiple services. So yes, you need to have GPS from The U. S, but also GLONASS from the Russian system as well as the Galileo system as well as the Beidou system from China. So we have these G4 systems that we can actually also pick up which signal is maybe spoofed and which one we should use. So those kind of things are really technical things that we're trying to solve. Can we solve everything? No. Because if it are weak signals and if you come and jam, then it's jammed.

1:39:45 Then another question on the outlook. You're giving a sort of outlook for the second half of the year. But your we have to first make, let's say, the forecast for Q3. So is it primarily related to not having the order backlog now, which makes you cautious for Q3, which makes you cautious because you're now not yet knowing what the weather conditions will be in Q4, etcetera, etcetera. Yes, that's primarily the question. And last year, you gave an outlook at this point in time and five weeks later, had to give a totally different picture. So could it be vice versa this year? You want to tease me into doing the same as last year? Well, good luck. I think we're over time. This is a wonderful last question because you're now asking questions that you don't get an answer to. You know that as well because you asked very specific what is happening in Q3 and Q4.

1:40:58 There's a lot of uncertainty for the second half of the year. That's what we have guided for. That's why we're careful because we don't want to be in the same situation as we have been in the past. So we're careful in what we guide for. And we realize that this is obviously difficult because everybody wants to know obviously where this is going. But if somebody could tell me what is happening with the oil price or what is happening with The Middle East or what Mr. Trump is going to do in the next few weeks, then I can give you an answer. But I think this is a wonderful way to stop this first half of the year presentation from Fugro. I thank everyone for your questions and for your attention. And yes, look forward to the next update.