Boskalis abandons takeover bid and Smit profits are up

The Executive and Supervisory Boards of Smit had frequent contact with shareholders, joint venture partners and other parties regarding the intended offer by Boskalis and were aware that during that period Boskalis acquired a stake of more than 20% in Smit.

In view of an imminent stalemate, preliminary discussions were held between Members of the Boards of Smit and Boskalis, during which it was investigated whether agreement could be reached on a transaction that would be in the interests of the company and its stakeholders and on financial terms that would fairly reflect the value of Smit. No such agreement was achieved.

Shortly after that announcement Smit issued profit upgrade for 2008. Smit’s profit for the second half of the financial year 2008 is set to exceed the expectations given at the presentation of the company’s half year results in August. The company is expected to obtain net profit for 2008 that will be equal to that achieved in 2007. The profits of the Transport & Heavy Lift Division, in particular, exceeded expectations for the second half of the year thanks to good utilization rates and the successful completion of a number of projects. The other divisions performed in line with expectations. In this forecast an average dollar exchange rate of around 11% lower compared to that of last year was taken into account. The accounts for the financial year 2008 also include an increase in amortisation and depreciation charges of some €13m following the acquisition of URS. This is a consequence of the revaluation of the assets.

SMIT CEO Ben Vree explained, ‘After experiencing a strenuous period, we are all relieved that the pressure of a hostile takeover is gone. We have managed to continue to operate at full speed in spite of this period of unrest. On account of the strong mutual synergies and the high level of stability we have established over the past few years, we feel we can face the longer term future with confidence. We think we can absorb the impact of the coming recession on our existing operations by achieving growth in new areas such as the Baltic States, Taiwan and through continued growth in Brazil. At the same time we expect that the present economic developments offer us opportunities for our strategy of worldwide growth.’

The delivery of approximately 46 vessels (in both the group companies and the joint ventures) marked the peak of the investment programme in 2008. The investment plan for the next few years will be implemented unchanged and can be financed using the existing credit facilities.

Among the vessels put into service in 2008 are large numbers of new Damen ASD 2810 tugs that continue to be introduced to harbour fleets in many ports around the world where Smit provide harbour towage services. Fifteen of the 28.67m tugs were listed in the most recent order with Damen Shipyards, with over one third delivered by the end of 2008. The ‘compact’ ASD tug, with its 60 tons bollard pull, has proved to be a highly effective workhorse for the majority of shiphandling duties. Damen are constructing ASD 2810 harbour tugs in their yards in Romania and Vietnam and delivering them for use in ports as far apart as Western Europe, the Caribbean and Singapore.

Further information regarding Smit’s 2008 results will be provided in the presentation of the company’s annual results on 5 March 2009.