Financial targets and strategy

Financial targets
Fugro's target is to achieve, under comparable economic circumstances, a structural increase in earnings per share for its shareholders. Fugro's long-term policy is aimed at generating a steady growth in net result based on increasing revenue.

Important financial targets are:

• growth in earnings per share averaging 10% per annum;
• strong cash flow with an average annual growth per share of 10%;
• maintaining a healthy balance sheet and solvency (30 to 35%);
• interest cover (EBIT/Interest) of more than 5.

Fugro's financial strategy is aimed at the utilisation and/ or optimisation of:

• the ratio between risk and return of the various business activities;
• the ratio between shareholders' equity and short-term/long-term borrowings;
• the use of both public and private capital markets;
• the duration and phasing of the different financing components.

Strategy
Fugro aims at achieving equilibrium between its various activities in order to be able to meet its targets. Fugro strives for a balance between services related to exploration, development and production activities for the oil and gas industry, and those related to other markets, such as mining and construction. This also results in a balance between offshore and onshore activities. Moreover, Fugro strives for a good geographical spread. This diverse range of related activities reduces Fugro's sensitivity to market fluctuations in a particular sector. As an independent service provider, Fugro provides a broad spread of services to its clients. This also contributes to a good control of business risks.

Fugro strives for growth, both organically and through acquisitions. To achieve organic growth Fugro invests in equipment and human capital. Organic growth is also achieved by actively developing new technologies and services.

In the most important market sector - oil and gas - the spread of Fugro's services across the exploration, development and production phases is a key factor. This means Fugro provides services in many phases of the (20 - 30 year) life-cycle of an oil or gas field. Avoiding dependence on one phase of this market or single group of clients is an essential component of Fugro's strategy. The result is a business that is less cyclical.

Profit margins vary per activity depending on the specific market circumstances. The target profit margin for the more risky or capital intensive activities is higher than the overall company average.

The long-term aim is to achieve robust but controlled profit growth through:

• a broad but cohesive services portfolio;
• the manner in which Fugro is financed;
• the market-oriented international organizational structure;
• continuous development and training of employees;
• specific investments in equipment and technology;
• management focus on increasing net result.

Fugro strives to improve profitability with a focus on core activities and niche markets by:

• increasing operational scale;
• building strong market positions;
• continuing research and development;
• cooperation and development for and with clients;
• being selective about the projects that are taken on;
• acquiring companies with a high added-value.

"Financial targets and strategy" covers the following topics:

• Financial targets
• Strategy
• Market positions
• Acquisitions
• Research and development
• Cooperation and scale advantages

Financial targets and strategy