Dordrecht, December 3, 2021
Preface
In our previous press release we already mentioned the steps that management had taken to intervene in the organization and capital structure. These steps proved necessary because it quickly became clear that Covid-19 would affect our performance for longer than initially expected. The international nature of our business makes us vulnerable to travel restrictions, quarantines and other international restrictions that have a significant impact on the performance of our businesses. The measures in Asia and Australia in particular have not gone unnoticed. Travel restrictions, lock-down situations and countless other restrictive measures have significantly affected the Van Aalst Group's results in 2020, as is also evident from the recently published annual figures for 2020.
Van Aalst Group has already responded to this and made significant adjustments to the organization and structure. We can report that these adjustments have had a favorable effect on recent performance. We will report on this in more detail in this press release.
Impact
The results in 2020 were negatively affected by a number of things:
1) Underutilization in the rental fleet due to lock down situations around the world
2) Lack of investment decisions by customers and prospects due to the Covid pandemic
3) Higher costs because services had to be outsourced to local parties due to travel restrictions; As a result of the travel restrictions, relations and prospects have postponed investment decisions, the organization has been confronted with higher costs because services have to be outsourced to local parties because our engineers did not have access to our customers' ships due to the travel restrictions.
4) (Occasional) losses due to higher development costs of our new gangway model, the Osprey
The 2021 annual accounts will also be negatively affected by a number of these causes.
After the successful issuance of the NPEX bond at the end of 2019, we, with the support of the shareholders, made investment decisions and entered into commitments for the further expansion of our rental fleet. Meeting these obligations became a serious challenge due to the pandemic.
However, with the support of all stakeholders, we have managed to overcome this challenge. A number of obligations have been placed in time and shareholders have expressed their support by making additional resources available to properly fulfill all obligations. Now that we have a positive cash flow again, we will consider the strategic steps we need to take in the coming period.
Current situation
As previously reported, we successfully achieved a turnaround in 2021. We are still confronted with travel restrictions, quarantines and higher costs in our operation. As of Q4 2021 there is a positive cash flow and from Q2 2022 an occupancy rate of above 80% has been achieved on our rental fleet. We have already become the market leader in the challenging waters around Taiwan and with the applications currently being processed, there is a prospect of a fully rented out situation.
At the time of writing this message, Van Aalst Group BV is profitable. Q4 of 2021 will close with a profit, but that profit is insufficient to cover the losses incurred in the first 9 months. 2021 will also close with a loss, but that loss will be significantly lower than the reported 2020 result. EBITDA will be positive.
Outlook
The management of Van Aalst Group looks to the future with confidence. The recent developments are more than challenging but surmountable. It has become clear that our Seagull gangway outperforms the market under challenging conditions and that gives us a lot of confidence for the future. The unit is very successful in offshore wind projects in Taiwan and will be present in that region for some time to come. New projects to be developed in Asia and the United States are also extremely suitable for this type of gangway.
As indicated, we have achieved the turn-around and we will continue this trend in 2022. We will be profitable again for the whole of 2022 and report a solid EBITDA, based on our current order book,
The occupancy rate of our rental fleet will increase further in 2022 and we will be forced to further expand the fleet to meet increasing demand. Due to the high occupancy rate, the gross margin will also increase further.
The volume of investment in infrastructure is increasing worldwide. This undeniably offers opportunities for our group company Van Aalst Marine & Offshore BV, which supplies cement systems to ensure clean and efficient cement transport worldwide. The company has a good track record, name and fame worldwide and continues to perform despite the challenge.
Summary and conclusion
Van Aalst Group suffered heavily from the consequences of the Covid pandemic in 2020 and 2021. The international restrictions have resulted in lower occupancy rates, long periods of “off hire”, higher costs and the lack of investments. The management has adapted the organization to the economic reality and, with the support of shareholders, a successful reorganization has taken place.
We have worked hard on the sales side and the distribution strategy has also been tightened. We are successfully collaborating with international parties who now appreciate the value of our product and can successfully convey this to the market. This has led to a substantial increase in the occupancy rate of the fleet.
As a bond investor you are undoubtedly curious about the financial position of your debtor. It is evident that the losses were at the expense of equity, but shareholders have now contributed €2.8 million in subordinated capital to strengthen the financial position. Furthermore, the borrowed capital at the leasing companies has been repaid and the creditor position has also been further reduced. Now that there is positive EBITDA again, management is confident that all obligations can be met correctly.
Based on the positive feedback from our clients, management expresses its confidence in the market and the competitive position of our products. The high occupancy rate objectifies this trust. With the support of all stakeholders and the confidence of the market and the prospects of the offshore wind market, there is a solid basis for further growth in turnover and profit.
Cees Zuur – CFO Van Aalst Group
