Beneficial interest AvH: 60.40% (control: 100%)
AvH Contact: Koen Janssen
DEME reported a net profit of 155.3 million euros in 2016. DEME was unable to match its record year 2015 (with, among other things, the large-scale works on the Suez Canal): the (economic) turnover eventually came to 1,978.2 million euros (2015: 2,351.0 million euros). The start-up of some major projects for the construction of offshore wind farms during the second half of the year, along with the other activities of the DEME group, already resulted in a marked increase in the level of activity: the turnover in 2H2016 reached 1,175.1 million euros, and DEME expects to continue this positive trend in 2017.
The execution of the many projects in which DEME is involved generally progressed well, leading to an operating cash flow (EBITDA) of 450.1 million euros (22.8% of turnover). Even though this figure is lower than in 2015 (558.4 million euros, 23.8%), it is clearly better than expected and above the historical range of 16% to 20% EBITDA margin.
DEME was able to add 2,593 million euros worth of new contracts to its order backlog in 2016 for the construction of offshore wind farms (Merkur (Germany), Hornsea1 (UK), Horns Rev (Denmark), Rentel (Belgium)), in traditional dredging activities (renewal of maintenance dredging contract for the Belgian coast, Port Louis Mauritius) and in the environmental sector (Blue Gate remediation works in Antwerp). The order backlog increased to 3,800 million euros at year-end 2016 (2015: 3,185 million euros).
In order to execute this sizeable order backlog, DEME continued its investment programme. Six new vessels are currently under construction (the self-propelled jack-up vessel Apollo, the multipurpose and cablelaying ship Living Stone, the self-propelled DP2 crane vessel Gulliver, and three hoppers), together representing an investment of approximately 500 million euros. Despite some delay at the shipyards building those vessels, the majority will be completed in 2017 and will be deployed immediately. This delay has led to a number of payments that were planned for 2016 being deferred to 2017. Consequently, the total investment is limited to 194.7 million euros in 2016, which naturally had a positive impact on DEME’s net debt position, which improved to 154.6 million euros at year-end 2016 (2015: 266.7 million euros).
In February 2017, DEME confirmed the additional order of two new vessels, for a total amount of 500 million euros: Spartacus, the most powerful state-of-the-art cutter suction dredger in the world (44,180 kW) for dredging works in the hardest and most compact rock and soil types also in offshore conditions, and Orion, an offshore crane vessel (44,180 kW) with dynamic positioning and a lifting capacity of 3,000 tonnes at more than 50 m for construction work out at sea, such as offshore wind farms, services for customers in the offshore oil and gas industry, and the dismantling of old offshore structures.
DEME consolidated its position with a number of new contracts and the continuation of several long-term projects.
In Belgium, maintenance dredging continued in 2016 in the ports of Zeebrugge, Ostend and Blankenberge, and the fairways in the North Sea and the river Scheldt. DEME was also involved in the renovation of the quay wall of the PSA container terminal in the port of Antwerp. A number of breakwaters on the Belgian coast were demolished for the construction of the landfall point for power cables from the offshore wind farms. In the Netherlands, DIMCO (DEME Infra Marine Contractors) carried out deepening and soil improvement works for the construction of the new quay of the Offshore Terminal Rotterdam. In June, DEME finished the coastal protection works for the 290 ha Waterdunen project in Breskens. Also in the Netherlands, DEME finished the final phase of the beach replenishment works in Dishoek, Zoutelande and Goeree- Westhoofd. In 2016, de Vries & van de Wiel, together with a Dutch partner, realized the Kooyhaven site, an approximately 21 ha industrial zone connected with the waterways, and the dredging works on the Waddenzee were completed. In Germany, Nordsee Nasbagger- und Tiefbau carried out maintenance works on the Weser under a twoyear contract; water injection maintenance works on the Elbe and the Kiel Canal continued, and a contract was won to extend the Europe Quay in Cuxhaven. In France, SDI (Société de Dragage International) was active in Bayonne, on the Seine between Le Havre and Rouen, and on the coast in Wissant. On La Réunion, DEME continued work on the ‘Nouvelle Route du Littoral‘, a 13 km coastal road built offshore. DEME handles the dredging of the foundation pits for the viaduct of the new road. In Italy, maintenance dredging works were carried out in the port of Livorno. On Yard Belleli di Taranto, SIDRA (Societa Italiana Dragaggi) built a sheet pile wall and a wastewater treatment plant.
Thanks to the deployment of state-of-the-art equipment and techniques, work on the Tuas Terminal Phase 1 mega project in Singapore has reached full speed. In a joint venture with the South Korean company Daelim Industrial, DEME is building 21 deepwater quays with an annual container capacity of 20 million TEU. An important milestone was the successful installation in April 2016 of the first of a total of 222 caissons that will form the structure of the quay. The Jurong Island Westward Extension project is progressing according to plan and will be finished by 2018. The project involves the reclamation of around 38 million m³ of land on Jurong Island, Singapore’s petrochemical hub. In Papua New Guinea, works to remove potentially contaminated mine-derived sediments from the Lower Ok Tedi River were resumed in March 2016 after a period of slack activity due to unusually low water levels caused by El Niño. The present contract runs at least until 2020.
The La Mer Jumeirah Open Beach project in Dubai, which presented a major challenge in geotechnical terms, was successfully completed in 2016. This project involved the reclamation of 2.9 million m³ of new land for residential, commercial and leisure purposes. The New Port project in Doha was fully completed at the beginning of 2016. The works involved dredging the fairway and land reclamation for the economic zone and the new naval base. In 2016, DEME forged ahead with its activities in Egypt. The works for the second contract awarded by the Suez Canal Authority to dredge the eastern access channel to Port Said were completed well ahead of schedule. DEME also carried out dredging works in the port of Alexandria, dredging and land reclamation works to enlarge the Ras Al Teen naval base, and dredging and pipeline installation works for the Burullus Combined Cycle Power Project. In Turkey, DEME finished widening and deepening the navigation channel, turning basin, port basin and access channel in the port of Mersin.
In 2016, Dredging International returned to Panama to continue widening and deepening the Pacific Access Channel; these works were finished sooner than planned. DEME will still be engaged on the Panama Canal in 2017 with dredging works near the Cocoli Locks. Also in Panama, DEME widened and deepened the turning basin and access channel of Manzanillo International Terminal. In addition, DEME was also active in Mariel Port (Cuba), Barranquilla and Cartagena (Colombia), the port of Montevideo (Uruguay), the port of Santos and on the Rio Grande (both in Brazil).
Through its subsidiary International Seaport Dredging (ISD), DEME remains a prominent player in India with, among other projects, the expansion of the port of Kamarajar and dredging works at the ports of Dhamra, Salaya and Kakinada. At the end of 2016, DEME started a land reclamation project in Emboodhoo Lagoon, in the Maldives. Ten paradisiac islands will be developed there for tourism.
In 2016, DEME was still working on the large-scale EKO Atlantic City project in Nigeria. Maintenance dredging works continued on the Bonny River as part of a concession agreement with the Nigerian National Ports Authority. Also in Nigeria, DEME was involved in the extension of the port of Onne and in a land reclamation project on Ilubirin Island. A contract was also awarded for dredging works on the access channel to the Lagos Deep Offshore Logistics base. DEME also won contracts for port extensions in Sierra Leone, Mauritius and Guinea, as well as a maintenance contract in Ivory Coast. Maintenance dredging works were also carried out in Angola. In Congo, the PPP with the local company La Congolaise des Voies Maritimes continued for maintenance works on the Congo River.
2016 was a very busy year for offshore energy. Work on the German Nordsee One offshore wind farm was completed at the beginning of 2016. GeoSea also installed 91 foundations for the Race Bank wind farm and in December installed the first foundation for the Galloper wind farm, both in the United Kingdom. Tideway, another subsidiary of DEME, will protect the foundations against erosion. GeoSea won a major contract for Hornsea Project One in the United Kingdom, the world’s biggest offshore wind project, and was awarded a contract for Borkum Riffgrund 2 in Germany. GeoSea also won EPCI contracts for Merkur (Germany) and Rentel (Belgium), work on which is due to begin in 2017. In Denmark, GeoSea landed a contract for the 400 MW Horns Rev 3 wind farm. In the fourth quarter, GeoSea was involved in the construction of the unique MeyGen tidal energy plant in the far north of Scotland, installing the foundations for a first series of four underwater turbines. GeoSea was also awarded the EPCI contract for Hohe See in Germany, of which the financial close took place in the first quarter of 2017.
In October, a unique partnership agreement was signed between DEME and the Chinese company COSCO Shipping for the joint development of offshore wind power in China.
Under a maintenance contract, GeoSea Maintenance carried out maintenance works for C-Power on the Belgian coast. Maintenance works were carried out using the jack-up vessels ‘Neptune’ and ‘Thor’ for various customers in the Irish Sea and the North Sea. GeoSea Maintenance will provide logistic and maintenance services for Rentel using its fast crew vessels and jack-up vessels.
EverSea, DEME’s subsidiary specializing in complex offshore marine engineering projects, successfully carried out the installation of the unmanned gas platform P11-E for the Dutch company Oranje-Nas sau Energie. For the dismantling of the Thames gas platform in the North Sea, EverSea took part in the removal and transportation of a ventilation tower and a crane boom.
Despite the challenging conditions in the oil and gas industry, Tideway managed to maintain a high level of activity in 2016, partly thanks to projects in the offshore wind sector. In Germany, Tideway arranged the cable crossings for the DolWin 3 and Veja Mate offshore wind farms. Tideway also protected the foundations of the Nordsee One and Galloper wind farms against erosion, and replaced the infield power cable of the C-Power wind farm off the Belgian coast. Rock placement works were carried out for the Godewind I and II offshore wind farms in Germany, as well as for the Lower Churchill project in Canada.
In 2016, the joint venture Combined Marine Terminal Operations (CTOW) continued the contract for the provision of harbour towage services in the port of Onne in Nigeria. Two new tugs, ‘CTOW Bieke’ and ‘CTOW Lala’, joined the fleet.
Scaldis salvaged the wreck of the ‘Flinterstar’, which had sunk off the Belgian coast in 2015. Scaldis also transported and installed the substations for the Nordsee One and Rampion offshore wind farms and the transformer station for Nobelwind. It performed hoisting operations as part of the decommissioning of the Viking Bravo gas platform in the North Sea. Preparatory work was carried out on several platforms that will be dismantled between 2017 and 2020.
In 2016, financial close was reached for the Merkur (Germany) and Rentel (Belgium) offshore wind farms, in which DEME Concessions Wind has a stake of 12.5% and 18.9% respectively. Besides Rentel, DEME Concessions holds concessions for the Belgian offshore wind farms Seastar and Mermaid. The stake in the Coentunnel in Amsterdam and half of the stake in the offshore wind farm C-Power have been sold.
DEME Concessions acquired a minority interest in Tidal Power Scotland Limited (TPSL) which, together with Scottish Enterprise, owns MeyGen, the world’s first tidal energy plant. Besides its stake in TPSL, DEME is also, through DEME Blue Energy (DEME Concessions 70% - ParticipatieMaatschappij Vlaanderen 30%) and in association with Nuhma, a partner (50%-50%) in BluePower, another development company in the field of tidal energy. DEME develops, in association with the Irish company DP Marine Energy, the West Islay Tidal Energy Park (30 MW - Scotland) and Fair Head (100 MW - Northern Ireland) projects.
Global Sea Mineral Resources is a subsidiary of DEME active in sustainable deep-sea mining. A state-of-the-art pre-prototype vessel, the ‘Patania’, has been developed and will be tested in 2017 on an expedition in the Pacific at a depth of more than 4 km.
At the beginning of 2016, DIMCO, in joint venture with a Dutch partner, won the contract for the construction of a 460 m quay wall for the new Offshore Terminal in the port of Rotterdam. The first 150 metres of the quay became operational in December 2016. In January, DIMCO also won the contract for the installation of six dolphins and 27 mooring buoys in the port of Rotterdam, and won contracts for the construction of a new wharf at the Maasvlakte Oil Terminal and the extension of the Caland wharf. DIMCO continued work on the Spoorzone Delft project, where it is involved in the design and construction of the 2.3 km Willem van Oranje rail tunnel. Together with two partners, DIMCO is engaged on the extensive renovation of the dam complex on the river Lek.
DEC (DEME Environmental Contractors), DEME’s environmental division, worked on different remediation projects in Belgium: Carcoke in Zeebrugge, Rhodia in Ghent, Bayer in Rieme, Electrabel in Evergem, and Eandis in Kortrijk and Veurne. For Blue Gate in Antwerp, soil surveys were completed as part of the remediation works that will begin in 2017. DEC also continued the operation of Amoras, where dredged material from the port of Antwerp is processed. DEC carried out remediation works in the United Kingdom for Avenue Coking Works in Chesterfield, and finished a project in Staveley Goyts for the removal and treatment of contaminated sediments. In 2016, DEC, in partnership with the Norwegian company Veidekke Entreprenør, started the remediation of a former Norwegian refinery site for ExxonMobil.
In the autumn, de Vries & van de Wiel started soil remediation works on the former NAF site in Alphen aan den Rijn.
Ecoterres, DEME’s environmental subsidiary in Wallonia, treated around 450,000 tonnes of contaminated soil and sediments at its specialized recycling plants in Belgium and France.
Purazur, a subsidiary of DEME specializing in wastewater treatment, started building a new wastewater treatment plant in 2016 for the waste processing firm Indaver in Antwerp. Purazur is responsible for the design, construction and commissioning of the new plant.
Despite the slowdown seen in recent years in the European construction industry, DEME Building Materials reported a marked growth in business in 2016, particularly in the first six months, with full occupancy of the gravel suction hopper dredgers ‘Charlemagne’ and ‘Victor Horta’. This was due in large measure to the growing demand in the United Kingdom. In the Netherlands, DEME Building Materials supplied approximately 50,000 tonnes of sand and gravel for the new Offshore Terminal Rotterdam, built by DIMCO.
DEME’s strong order backlog, which has increased to a new record level, enables the company to keep up the momentum of the closing months of 2016. This should lead to a markedly higher level of activity (turnover) with margins in line with the historical range.