In late December Boskalis and Kotug International B.V. signed a Memorandum of Understanding (MoU) to merge their European harbour towage operations. The companies will establish a 50/50 joint venture for this purpose, combining the European harbour towage activities of SMIT with those of Kotug. This merger is the concluding step in Boskalis’ strategy aimed at establishing regional partnerships for its harbour towage activities, as is the case with Smit Lamnalco, Keppel Smit Towage and, most recently, SAAM SMIT Towage. By joining forces opportunities are created to achieve cost and market synergies as well as a more efficient capital structure. The MoU will be implemented subject to customary conditions, such as due diligence and regulatory approval. In anticipation of this transaction, and in accordance with IFRS, the assets and liabilities that will be brought into the joint venture have been presented as Assets Held For Sale.
In mid-December Smit Lamnalco, which is 50% owned by Boskalis, substantially strengthened its position on the Australian market with the acquisition of PB Towage Australia. Following this transaction Smit Lamnalco is active in eight ports in Australia with a total of 29 vessels offering a combination of harbour towage, terminal and FPSO-related services.
After the balance sheet date, on 11 February 2015, Boskalis sold its road maintenance company Aannemingsbedrijf De Jong en Zoon Beheer B.V. and the associated De Jong subsidiaries (De Jong). Boskalis’ strategy in the Netherlands is focused on large and medium-sized integrated infrastructure projects and an independent maintenance company does not fit within this strategy. In the 2014 financial statements the assets and liabilities of De Jong have been presented as Assets Held for Sale. The proceeds from the divestment are approximately EUR 30 million and have no material impact on Boskalis’ result.
Boskalis entered the 2014-2016 Business Plan period with a sound balance sheet and a healthy cash flow. This starting position not only provides scope for necessary and desired investments, but also gives the company the option of responding to interesting opportunities in the market. It is against this background that Boskalis acquired a 19.9 per cent interest in Fugro in late 2014. Early January 2015, this was increased to 20.01 per cent. Boskalis’ strategy is aimed at the offshore and (maritime) infrastructure markets, leveraging the company’s combination of high end know how and maritime assets. This fits very well with the activities of Fugro. The two companies have much in common in terms of assets, knowledge, capital intensity, global spread and customer base, and are both global leaders in niche markets.
Share buy-back program
On 14 August 2014 Boskalis launched a share buy-back program of up to 10 million shares. The program is subject to the development of results and to the desired balance sheet ratios being maintained. To date 629,123 shares have been repurchased for a total sum of EUR 27.7 million. In light of the uncertain market conditions and the acquisition of the interest in Fugro we consider it prudent to suspend the share buy-back program for the period of one year.
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