Fugro N.V.

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 excited Mark Rembold Frodo 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. 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 what we can control ourselves, including the rationalization of our fleet to right-size our cost base to the current market conditions, targeting also an analyzed saving on top of the earlier savings of 50 million. with obviously a continued focus and emphasis on cash generation. 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 million. 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 million and relates to spoofing, jamming of our GPS signals, GNSS, Global Navigation Satellite Systems. 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 in 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 impact us. 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, 213 million of wind work. That is 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 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 key countries there are developing these new licenses and the new license rounds. And you see a few things listed here in France. There's 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, 6-7, 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 there is a gap for most of the companies. They're trying to accelerate things. 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, still ongoing developments in South Korea. 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 near-shore environment. 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 million 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, 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, and we'll come back to the backlog, we see also a small decline in the backlog in oil and gas, which is, I think, 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 the OPEX graphs there. It's slightly higher than what we showed you before, because 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 UK is looking at it again, as we picked up in the news. Norway is a pretty steady development with exploration activity there. But 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 deep water 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 America, 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 projects. Thank you very much. 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 everyday operational because at some days we do not have navigation signals. Obviously, yeah, 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 would be great. 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 deep water work coming up in India. If we then look at the infrastructure market, again, bottom right, you see the split there between the various regions. I'll click through them. Obviously large 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. 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, a huge ambition there, and this is obviously happening also in Europe, America, 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. And you see a kegger 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%, 7%, something like that. So that's the infrastructure market. It will 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 2, basically adjacent markets that we can serve with our current expertise and we can basically do similar work than we do in our traditional markets. Coastal Resilience and Ocean Health, it's captured in water. 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 the developments in Europe, also the wind developments, where they have really high Mark Rembold Frodo Heine And I think everybody is following the news. 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, yeah, 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... Thank you very much. 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 is not happening anymore. So also in the Americas, in Canada, US, 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 a thousand Russian dark vessels sailing around on the North Sea, trying to inspect and also probably influence our infrastructure that is out there, map it. 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, in mapping the conditions, but also the situation on the North Sea. and also in the US 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. 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, yeah, this is really going to be significantly smaller for Fugro and over a very short timeframe. 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. Mark Rembold Frodo Heine, Barbara Geelen Thank you very much. A couple of things to say there. You see 8% drop in oil and gas, which is fully attributed to the project that we do in Indonesia, where we had it in the full backlog, 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 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. What is important to note there as well is the different dynamics in these markets. So offshore wind projects are larger in size, and 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. 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 million annualized savings. A large part of that is related to the assets that you see here on the board. We're doing several things. and some of these things are really related to scenarios that we already spoke about before. 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. 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, cold layup of one or two more vessels. Those are owned vessels that we will lay up 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. Mark Rembold Frodo Heine, Mark Rembold Frodo 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. And that's, as I said, a move that will gradually be implemented in the upcoming months, 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 and 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. 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 the ambient noise, so no active noise, but noise that the ground emits, Transcription by CastingWords Rick, go to the particular sites, then you can calibrate this whole 3D model. And what you see on the left in the animation is how we actually get to this 3D 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. 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 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 Mark Rembold Frodo Heine, Barbara Geelen 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 Bechtel in Rio Grande LNG terminal that we have done. This is basically gathering information in a very fast way. and really helped 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 centers in Europe here, or a near-shore cable survey. which is very interesting because this was in the surf zone. So this is even in the near shore area where we can also deploy when the water was gone, we could very quickly actually have some measurements done with the same system. 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 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. 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 Defence, where we basically analyse 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 geodata, determine where are the critical infrastructure, which pipelines are more exposed, which could be maybe dragged from the seabed by anchors from dark vessels, 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 DTACT. 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 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, and this is very critical for Fugro to further develop the area that we have always announced as our pillar-free 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 on one of the other strategic agendas that we have is advancing the capabilities we have on the USV side. You see a few projects mentioned here. You see also different USVs on the screen here. In the middle, you see our larger 18-meter platform, the Eclipse. We brought that to the market recently. End of last year. And it has been working very steadily on multiple projects. 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 which is not shown are the geophysical use fees on this picture. We have five boats that we're building, 17 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. 17 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 boats. You can see that in the middle, the yellow robot there, they can do inspections, 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 startup 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 the end of the second quarter, during the course of the second quarter, we were working in the Bass Strait, Mark Rembold Frodo Heine, Barbara Geelen Mark Rembold Frodo Heine, Barbara Geelen Mark Rembold Frodo Heine, Barbara Geelen Mark Rembold Frodo Heine, Barbara Geelen 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. Yeah, 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 percent. 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, also helping us for the first half of the year. Operating cash flow, as you see on the bottom left graph, also significantly better. 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 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 million 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's first half If we then go into marine, then we see that marine grew by 4.2%. 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 Subtitles by the Amara.org community 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's no offshore wind in the Americas anymore. We had a little bit last year, 20 million still in there, nothing now anymore, and obviously in Europe-Africa. If we talk about acid integrity, then results both in Europe, Africa 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 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, a touch wood, working really well. We have two vessels working on it, the Aquarius 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. 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 dry dock when we brought it to the shore. So that took time. In the meantime, Europe and 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 exploration. Mark Rembold Frodo Heine, Barbara Geelen Mark Rembold Frodo Heine, Barbara Geelen They also mobilized a new vessel a little bit later than we normally operate in Europe. So that is the EDT Hercules. That was operational at the end of May. It's now full force ahead. So the Hercules as well as 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, we 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. 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 near shore area in Japan in offshore wind. We do expect that there are opportunities again in Japan near shore 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 at the 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 see in the backlog Thank you very much. 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 million net result, including discontinued operations. Basically two clear blocks mentioned on the right side, specific items. You all picked it up. We have done impairments of 36 million. That is 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. But we had quite a bit of issues there with the yard executing this. And basically we had halfway during the work taking the vessel apart. That went well. Thank you very much. There's also 9 million in writing down a bad debt provision in Asia-Pacific. We're obviously still going after it, but at the moment we have taken that hit. And the remainder relates to restructuring expenses, which is a relatively small 2 million. Then the second block, which is obviously also affecting the net result, is all to do with income tax expense. And then the current tax expense is only 7 million, or is 7 million, I should say. And the rest is all related to 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 million. All in all, ugly picture because then you get to 62 million negative net result. Luckily some of it is non-cash but that is always a little bit of an unimportant one because it is basically reducing your balance sheet position. Then, if we go to free cash flow, this slide is showing, then overall free cash flow amounted to minus 38 million, as I said, negative. 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 85 or operating cash flow before working capital movements was 85 million and that is up from the 58 mostly due to higher EBITDA. So the seasonal working capital build-up consumed 59 million of cash, an improvement compared to last year where it consumed 81 million of outflow in the first half of 2025. And I will get back to the working capital in the next slide. Capital expenditure is 81 million for the first half of the year, representing a decrease, 87 million decrease from last year, 168 million, which is obviously a big drop. If we then get to working capital, Working capital amounted to 310 million in June 2026, compared to H1 2025, this is an increase of 46 million. 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. At 16.6% of the 12-month revenue, working capital is lower than the previous two quarters, but still outside of our range that we have communicated before between 10% and 15%. That bandwidth is important. We want to drive that back into that, obviously. And we really focused on getting this done. And also, yeah, Marijn, a group controller, and Kees, 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, day's revenue outstanding improved to 78, coming down from the, what is it, the 87 last, no, 85 last year. So that's a positive side. Then if we go to the balance sheet, Then net debt amounted to 473 million at the end of June Up from the 383 million 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 1.7 times which is down from the 1.8 times previous quarter. We're still above the 1.5, the self-imposed target that we have of 1.5. We want to be below 1.5 leverage. 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 their working capital in the revenue, compared to revenue. In July 2026, we have added a bank to our banking group. D&B, which basically gave us an additional 50 million to our credit facility. That now is 400 million, 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. And that brings me to the last slide, the outlook of 2026. 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 a little bit shorter term backlog And that is more uncertainty in the backlog And that's also driving the backlog down now in the short term or the 12 months Because you have less work beyond the 6 to 9 months Which is normally what we also see in our backlog And as it says here, we have taken the previously expected margin improvement. 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. 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 to 165, now to the lower band, around 150 million. And yeah, 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's looking at what is happening in the second half of the year and early next year. 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. 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 Kees and Marijn, which are here only a few meters away. Who can I give the word first? Luc. Luc.

Good morning. 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 27, and also the maintenance CAPEX level? I think last year it was slightly above 100 million. Will that come down to what level, approximately? Then a question about the change in this type of orders that you mentioned from the shift 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 a smaller project 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 can combine several services, and you mentioned an example with GroundIQ, 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?

Yeah, 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 the maintenance CAPEX for the first half of the year was 36 million, if I'm not mistaken. And Yeah, if you would double that, then you're lower than 100 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, these 17-meter USVs. 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 and sustaining down. And that has also to do with less maintenance on the vessels this year. and that is always difference between the various years we expect in 27 we have again maybe a few more vessels going into dock or into special survey as you know every 5 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 2 years so this is on the CAPEX side Yeah, wind is absolutely 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 Mark Rembold Frodo Heine, Barbara Geelen Mark Rembold Frodo Heine, Barbara Geelen Mark Rembold Frodo Heine, Barbara Geelen 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, 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 US 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 Thank you very much. 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 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. 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 ground 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 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.