Annual Report 2003 Rosmolenweg 20 Annual Report 2003€¦ · Annual Report 2003 Rosmolenweg 20...

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Rosmolenweg 20

3356 LK Papendrecht

The Netherlands

P.O. Box 43

3350 AA Papendrecht

The Netherlands

Telephone +31 (0)78 69 69 000

Telefax +31 (0)78 69 69 555

E-mail [email protected]

Internet www.boskalis.com

We move the ea r th to a be t te r p l ace We move the ea r th to a be t te r p l ace

An

nu

al Rep

ort 2003

Ro

yal Bo

skalis Westm

inster n

v

Compiled and

coordinated by Royal

Boskalis Westminster nv

Design and realisation

Photography

Lithography and printing

Corporate Communications Department

Handelskade, Rotterdam

H.H.G. Been, A.D. van Gool, A. van Gutter, Van der Kloet Fotografie, G.W.L. Koejemans,

Klaas Laan, Norman Childs, R.A. Snoep and others

PlantijnCasparie Capelle a/d IJssel

Colophon

1 Roya l Boska l i s Wes tm ins te r nv

Annua l Repor t 2003

-00148_JV1_TekstENG 07-04-2004 09:26 Pagina 1

2

‘Mak ing the d i f f e rence ’

Annua l Repo r t 2003

Boskalis offers its employees flexibility, clear-cut objectives, effective management and frequent

feedback. And provides them with the tools to do their jobs well. The people at Boskalis are deeply

committed to their work; they are entrepreneurial, solutions-orientated, and always ready to take on

an exciting challenge. These elements characterize the passion of Boskalis. The passion to want and

to be able to make the difference.


Table of contents

Tab le o f con ten ts


Company profile 6

Mission, objectives and strategy 9

Corporate social responsibility 12

Statement of General Business Principles of Royal Boskalis Westminster nv 14

Basic principles of the corporate strategy 18

Corporate Governance 24

Management 26

Key figures 30

Investor Relations 31

Message to shareholders 33

Report of the Board of Management on 2003 38

Report of the Supervisory Board 50

Financial statements 2003 56

Principles of financial reporting 56

Consolidated balance sheet before profit appropriation 60

Consolidated profit and loss account 61

Consolidated cash flow statement 62

Explanatory notes to the consolidated balance sheet and profit and loss account 63

Company balance sheet before profit appropriation 74

Company profit and loss account 75

Explanatory notes to the company balance sheet and profit and loss account 76

Other information 79

Provisions in the articles of association relating to profit appropriation 79

Proposed profit appropriation 80

Auditor’s report 80

Stichting Continuïteit KBW 81

Report 81

Declaration of Independence 81

Ten years Boskalis 82

‘Making the difference’ 4

Risk management makes the difference; safe dredging around active gas pipeline 10

New technology for installing pipelines safely and accurately 22

Developing the best equipment 28

Modified dredging method and innovative monitoring system protect the environment 36

From fragmentation to cohesion: ICT as lynchpin 48

Public-Private Initiatives lead to greater efficiency 54

Investing in people 84

Legal structure 83

The world of Boskalis 86

Organization 87

Offices around the world 89

Glossary 94

Equipment 99

Unless stated otherwise, all amounts in this report are in euros (€).

Some of the projects referred to in this report were carried out in joint venture or in a sub-contractor role.

This is a translation of the official Annual Report in the Dutch language.


4 Annua l Repo r t 2003

The people at Boskalis are deeply committed to

their work; they are enterpreneurial, solutions-

orientated, and always ready to take on an exciting

challenge. The maxim ‘there’s no such thing as

can’t’ is put into practice with enthusiasm,

creativity, and a strong dose of perseverance.

At Boskalis, the focus is on practical solutions that

benefit the customer.

Boskalis gives its employees the flexibility they

need. Since they are the ones working on the

projects, often far from home and under difficult

conditions, they must be self-reliant and decisive

and have the ability to work as part of a team and

use high-tech equipment. Resourcefulness,

cooperation, and expertise are the core values of

the Boskalis culture. In addition, ingenuity runs in

our blood, as do a sense of responsibility, knowing

when to take action, and risk management.

What distinguishes a company for its customers, competitors, business partners, employees, work

environment, suppliers, and for its shareholders? First of all, it must have the will to stand out, and

this ambition has to be embedded in the personnel, culture, and objectives of the company.

‘Making the difference’

Risk management makes the difference;

safe dredging around active gas pipeline.

Developing the best equipment.

Public-Private Initiatives

lead to greater efficiency.

“At Boskalis, the focus is on

that benefit the customer.”

9513023_JV1_TekstENG 15-04-2004 14:03 Pagina 4 macuser Jaarverslagen:B:BOSKALIS:9513023%0:JV1_ENG/NED:

Roya l Boska l i s Wes tm ins te r nv

Boskalis is a company of people willing to win in the broadest sense, considering

all the battles there are to be fought and won. These can range from winning a

contract to solving a technical problem or negotiating a solid legal position.

The competition is always on the alert, and the market is tough.

All of this is only possible with quality employees, quality resources, and quality

systems. And over the last several years, Boskalis has invested heavily in all of

these. Management-development programs, training initiatives and courses,

fleet renewal, state-of-the-art ICT systems – these are all tools that allow our

employees to do their jobs well.

Despite the strong growth of the company over the last fifteen years, our

structure has remained transparent, lines of communication direct and

responsibilities well defined. Boskalis offers its employees flexibility, clear-cut

objectives, effective management and frequent feedback.

These elements characterize the passion of Boskalis and our people:

we can and want to make the difference.

Modified dredging method and

innovative monitoring system

protect the environment.

From fragmentation to cohesion:

ICT as lynchpin.

Investing in people.

practical solutions

New technology for installing

pipelines safely and accurately.


6

Company profile

Company p ro f i l e


We move the earth to a better place. Boskalis, a leading international dredging company with a unique

market position.

Royal Boskalis Westminster nv is an international dredging company active in the area of maritime

infrastructure. Its core activities include the construction and maintenance of harbors and water-

ways, the creation of land in water, and coastal defense and riverbank protection. The company also

operates in numerous home markets in a wide range of related activities such as sand and gravel

production, soil improvement, dry earth movement, environmental activities, marine offshore services,

munitions clearance and tunnel building. Boskalis has a wide spread of operations worldwide. It has

a unique market position with ten home markets that together generate some 60% of turnover.

In addition, Boskalis has operations in over 50 countries on five continents.

The company has grown at an average annual rate of more than 10% in the past decade. This growth

was achieved both autonomously, and by takeovers and participating interests in other companies.

The company has a solid financial basis and a healthy cash flow.

Core activities

The global market for maritime infrastructure is driven by long-term economic factors such as increases

in the global population, the growth of the global economy and international trade volumes. The prospects

in the long term with respect to these factors are positive, despite the current global stagnation in economic

growth and the uncertainties in various countries. Its global spread and operational flexibility mean that

Boskalis can respond to changing opportunities in different markets. The world picture is currently

dominated by political and economic uncertainties. In the short term, this will have an effect on some

Boskalis markets.

Construction and maintenance of harbors and waterways. The growth in the volume of global trade has

increased the demand for container ports on international shipping routes. Not only are the ports

becoming larger and deeper as a result of the scaling up of container ships, the number of ports is also

increasing as more and more countries get involved in the global production and exchange of goods.

The established ports are competing with each other for regional leadership, as we can see in Asia

(Singapore, Hong Kong, Pusan), Western Europe (Rotterdam, Antwerp, Hamburg, Felixstowe) and

North America (New York, Halifax). Ports are also being built or scaled up in numerous industrially-

developing countries such as India, Malaysia, and Mexico. The increasing demand for larger and

deeper ports is accompanied by the need for keeping them at depth. This results in increases in

maintenance volumes, particularly in areas with strong currents or tidal variations.

Strong growth in container turnover (in million TEU).


Company profile


Creation of land in water. The global population continues to increase and economic centers are

congested and overpopulated. Solutions for the increasing scarcity of available land are being sought

in the creation of new land. Boskalis plays a prominent role here. It uses innovative, large trailing suction

hopper dredgers to generate a favorable ratio of cost price to market price per square meter of new land.

Coastal defense and riverbank protection. Here also, Boskalis expects continuing market growth given

the intensification in the global focus on environmental protection. The market will also benefit from the

ongoing growth of tourism.

Related activities

In addition to these core activities, Boskalis is involved in a range of related activities (the ‘dredging-

plus’ activities) such as offshore services, gravel and sand trading, soil improvement, dry earth moving,

environmental activities, munitions clearance, underwater rock fragmentation, pipeline construction

and hydraulic engineering. These activities are an extension of the range of services, and the margins

are generally attractive.

Markets

The global dredging market consists of numerous submarkets with individual development patterns.

This means that the market as a whole is heterogeneous, with varied patterns of market dynamics. The

annual volume of sales on the global dredging market is approximately € 7 billion. Half of these sales

(approximately € 3.5 billion) are made to reasonably open markets. Four large Western European

dredging companies account for approximately 60% of operations in these open markets, with roughly

40% of the ‘free sales’ going to large numbers of smaller regional and local players. With a share of

approximately 20%, Boskalis is the market leader in the open market segment. In less open markets,

dredging work is generally done by local players or state companies and there are no openings for

private international dredging companies like Boskalis.

The last decade saw extensive deregulation of global trade and economic development in traditionally

closed markets. As a result, the free market has expanded in favor of professional dredging companies,

which can provide economies of scale and competitive cost levels.

Major factors in terms of access to the global dredging market are scale, professional staff, technical

know-how, a flexible fleet, cost leadership and financial strength.

The trailing suction hopper

dredger Coastway in the

morning mist in Estonia.

The Coastway is at work

here on the Muuga Coal

Terminal Project, where

Boskalis is reclaiming a

harbor area and dredging

out an entrance channel

and harbor basin.


The cutter suction dredger Edax

at work in Point Fortin, Trinidad.

In addition to land reclamation,

the contract also includes

dredging out the harbor,

widening the entrance channel

and bank protection. The project

will continue until late 2004.

8

Company profile


However, the broad geographical spread means that a global player such as Boskalis can achieve

balanced growth. The main Boskalis clients are governments (national, regional and local), harbor

operators, international project developers, oil companies, mining companies and other contractors.

Boskalis offers its customers high-quality products and services at competitive prices.

Home markets. For many years now, Boskalis has had a home market strategy which distinguishes it

from its competitors. A home market means that Boskalis has a permanent presence in countries

where this presents commercial advantages. The strengths of the concept are the stable flow of projects

and the opportunities to extend the range of activities.

The home market organizations have local marketing profiles, as well as their own fleets and infra-

structures. They also know that they have the support of the financial and technical resources of the

global Boskalis organization. Particularly in the home markets, there are opportunities to generate

additional margins with associated activities. Boskalis now has ten home markets in Europe and else-

where which together account for approximately 60% of group turnover: The Netherlands, the United

Kingdom, Germany, Finland, Sweden, the Iberian Peninsula, Italy, Nigeria, the United States and Mexico.

In some home markets, Boskalis collaborates with strong local partners. The home markets constitute

a stable and healthy basis for the group.

International projects market. Approximately 35% of turnover is generated in the international projects

market, which focuses primarily on dredging and on coastal and riverbank projects. These are generally

larger works involving investments in construction activities and/or extensions. In addition, there are

projects which regularly involve cooperation with third parties. This makes it possible to provide clients

with optimal services and to share risks.

Specialist niche markets. Approximately 5% of turnover comes from specialist niche markets like the

offshore market and the market for underwater rock fragmentation.


Mission, objectives and strategy

Miss ion , ob jec t i ves and s t ra tegy


Transparent, consistent and result-driven

Mission

Boskalis is always aiming to maintain and strengthen its leading position in the global dredging market.

The company is committed to giving its shareholders excellent profitability and value creation.

Boskalis wants to be an attractive employer, the customer’s first choice and a responsible citizen in

those countries where it operates.

Boskalis aims for an optimal balance in its services between functionality and the effects on people

and the environment.

Objectives

For the next one to two years the key objectives will be to maintain the market position and strong

cash flow generation. The central objectives for the longer run are solid growth (both in the core

activities and through broadening of activities) and the realization of above-average profitability*).

Strategy

The core Boskalis activity is dredging. The company also engages in related - ‘dredging-plus’ -

activities, particularly in the home markets. These activities fit in with the core activities and core

competences of the company.

The corporate strategy consists of growth in the core activities and in the ‘dredging-plus’ activities,

both autonomously and by means of acquisitions.

Strategy for the core activity of dredging

• maintain and, where possible, increase market share;

• broaden and extend home market positions;

• improve the competitive position, for example through investments in cost leadership.

Strategy for the ‘dredging-plus’ activities

Active portfolio management in both home markets and specialist niche activities, for example by:

• extending and expanding activities that contribute to the achievement of the growth target;

• making the most of home market positions in the core activity for the extension of ‘dredging-plus’

activities.

In most markets where Boskalis is active, there will be even more emphasis in the future on the

competitive position. The lead given by its competitive position therefore plays a major role in the

Boskalis strategy. The key to this position is continued innovative investment in:

• staff quality, primarily in the form of training and competence management;

• fleet innovations and fleet rationalization;

• processing technology;

• improvements in business processes;

• the development and optimization of modern ICT systems.

*) We consider profitability to be above average if the annual return on capital employed exceeds the cost

of capital (WACC) relevant for Boskalis.



Dredging near a gas pipeline containing natural gas

at high pressure is an extremely risky undertaking.

Knowing exactly where you are is a matter of life and

death; one false move can mean disaster. Boskalis

has developed software that prevents the grab from

rupturing the gas line.

“Because of erosion, the Eemszinker gas line in the

north of The Netherlands was continually exposed.

The long-term solution was to dig the pipeline further

into the seabed. After a year and a half of research,

the project has been implemented successfully”, says

Dieuwertje Klazinga, project engineer at Hydronamic.

“When an invitation to tender like that comes in, you sit

down with your project team and brainstorm about

possible solutions based on the experience you’ve

gained on other projects. But these are set off against

the conditions stipulated by the customer — the unin-

terrupted flow of natural gas and the ability to monitor

the procedure — and the natural conditions in the area.

This unique combination of factors makes it impossible

to adopt a particular procedure without adapting it.

An innovative approach is the only way to provide a

customized solution that a complex job of this kind

requires.”

“Additional soil investigation and in-depth safety

analyses led us to the conclusion that suspending the

pipeline in slings and dredging underneath it was the

best approach”, says project manager Frank Stikkel.

“This project involves enormous safety risks, which you

have to be able to manage. We succeeded by building

in as many controls as possible. We developed a colli-

sion-avoidance system — software that takes over if

the operator gets too close to the gas line with his

equipment. This system has increased productivity

dramatically. Operators now know that an extra check

is in place and, for that reason, are no longer afraid of

getting close to the gas line with the grab. Other adjust-

ments to the equipment were made to ensure that the

work would be done as efficiently as possible and to

minimize human error. This type of innovation increases

employees’ confidence in their own ability.”

Left Frank Stikkel, project manager

and right Dieuwertje Klazinga,

project engineer Hydronamic.

Risk management makes the difference;

safe dredging around active gas pipeline



The backhoe Rocky has been

fitted with the collision-avoid-

ance system making it possible

to dredge down to depths of

22 meters alongside and under a

steel gas pipeline at a pressure

of approximately 60 bars, even

when there are fast currents.

“We have reduced the enormous risks involved

in this project to a manageable level.”

View of the work from

the backhoe Rocky. In the

foreground, the screens

of the collision-avoidance

system.

One of the screens of

the collision-avoidance

system.


12

Corporate social responsibility

Corpora te soc ia l respons ib i l i t y


Boskalis has a clear view of its role in society and its responsibilities towards the global community.

Code of conduct

Boskalis has a Statement of General Business Principles that applies to all the relationships it maintains

throughout the world. This document is the guide for the company in the area of social responsibility

and is freely available from the company website. The basic idea behind corporate social responsibility

is that Boskalis is a decent company where respect for people and the community is an accepted

value. Boskalis accepts responsibility for matters that it can influence. However, the world is large and

Boskalis is only one of many actors. Boskalis respects local rules and customs: ‘so many countries,

so many customs’. How those rules and customs evolve is a matter for governments and peoples

and Boskalis plays only a very minor role in that respect.

The responsibility of Boskalis

Boskalis has its own standards for its organization.

Boskalis has a direct responsibility for, among other things, its own workforce, suppliers and sub-

contractors, safety and the environment.

Boskalis acts like a responsible member of society: decently and properly. That means complying with

local legislation, being a good employer for the workforce and working on enduring relationships with

suppliers and sub-contractors.

Boskalis does its utmost to meet quality, safety and environmental standards covering dredging and

other company activities. Initially, these standards are set by clients (often governments) but Boskalis

also brings its professional know-how and commitment to their implementation. Boskalis also assumes

responsibility for the proper disposal of the work spoils, such as waste and contaminated material.

Boskalis in the world

National laws and rules apply in countries where Boskalis works. The company does not make cultural

judgements. Boskalis conducts itself like a responsible member of society or a good guest. National

laws and rules are the guidelines for Boskalis activities, in combination with Dutch norms that cover

international dealings.

Boskalis does not get involved in national politics, nor does it state opinions about political issues.

These are the responsibility of national government. Boskalis also follows the guidelines of the United

Nations, WHO and the Dutch government for travel to, or business dealings with, certain countries.

Contribution to sustainable development

The nature of the services supplied by Boskalis means that the company is closely involved in sustain-

able developments in society. Maritime infrastructure is for many countries a precondition for structural

economic development and increasing prosperity. Because Boskalis works on the basic infrastructure,

the company is involved directly and positively in the social benefits of its services.

Sometimes, economic interests can clash with other community interests. It is the responsibility of

local governments to make the appropriate choices. It is up to Boskalis to work as professionally as

possible within the resulting framework.


Corporate social responsibility


An important aspect of dredging is the impact it has on the ecology. Boskalis has the expertise to

advise clients how to measure environmental impact and keep it to a minimum. Furthermore, Boskalis

always makes its own assessment to determine the best working method for the environment. The

company develops its own systems for precise monitoring of the dredging work. In that way, clients

understand the environmental impact of the work; working methods can also be adapted if there is a

possibility of tolerances being exceeded.

Environmental monitoring in

Chile, near Mejillones, where

Boskalis International and

Dragamex worked together on

the dredging work for a new

harbor. Very strict environmental

requirements applied to the work.


14

Statement of General Business Principles


Statement of General Business Pr inciples of Royal Boskal is Westminster nv

1. Mission

Royal Boskalis Westminster nv (‘Boskalis’) is an international dredging company with worldwide opera-

tions. Its core activities are the creation, construction and maintenance of harbours and waterways,

land reclamation, coastal defence and shore protection. In addition, the company operates in various

home markets in a wide range of related activities such as sand and gravel production, dry earth

movement, environmental clean-up, marine aggregate dredging, marine offshore services, munition

clearance and tunnel building.

Boskalis is focused on continuity and retaining its leading position in the world market for dredging

services. The company is committed to excellent profitability and value creation for its shareholders.

Boskalis wants to be an attractive employer, the customer’s first choice and a responsible citizen in

those countries in which it operates. Boskalis adheres to internationally agreed conventions insofar

as these supersede applicable legislation and regulations in the countries of operation.

In addition, Boskalis operates this company code for all relationships that it maintains everywhere in

the world.

Boskalis distinguishes the following principal area’s of conduct to:

• society;

• the environment;

• employees;

• quality;

• clients;

• capital providers;

• suppliers.

2. Obligations to society

Society provides Boskalis with the social and physical infrastructure to be entrepreneurial.

Boskalis therefore will:

• not do business in countries subject to international and relevant national embargoes;

• respect human rights;

• not undertake commercial activities in countries where it is made impossible, in our own activities,

to adhere to this code;

• strive for fair competition by respecting tangible and intellectual property rights of competitors and

respecting the relevant competition laws.

3. Obligations to the environment

Boskalis often operates in environmentally sensitive areas. Boskalis therefore adheres to:

• complying with the applicable statutory environmental provisions and regulations and, where

possible, going further than required;

• focusing policy on the permanent prevention or limitation, as far as possible, of pollution of soil,

water and air, noise creation, creation of waste products and use of dangerous materials;

• collecting and having waste processed separately, and using water and energy efficiently;

• translating policy into clear practical guidelines and, furthermore, ensuring that the policy and the

guidelines are implemented in practice;




• permanently ensuring that the environmental awareness and motivation of the employees and others

who work on the premises of Boskalis is such that environmental protection – although primarily the

management’s responsibility – is everybody’s concern.

4. Responsibilities towards employees

Employees make a considerable portion of their time, knowledge and expertise available to Boskalis,

all over the world. Boskalis therefore has the responsibility for:

• adhering to applicable national and international employment standards;

• creating a climate of motivation, work-pleasure and satisfaction;

• pursuing a personnel policy in which the best possible use is made of each person’s skills and where

personal development is encouraged;

• offering good and competitive terms of employment and safe and healthy working conditions;

• preventing undesirable conduct such as discrimination, intimidation and abuse of authority;

• communicating in an honest and clear manner;

• being open to suggestions, ideas and criticism;

• preventing, as far as possible, problems of conscience in the performance of their work and striving

to find a proper solution to them where these arise;

• creating a climate in which employees are encouraged to embody this code.

5. Focus on quality assurance

Boskalis must conduct its business at the highest level of quality. Boskalis therefore focuses on:

• ensuring, where applicable, the implementation and compliance with the safety rules and codes and

ISO 9001 and ISO 9002 codes;

• upholding a Quality Assurance programme;

• employing qualified personnel;

• ensuring that the Central Plant Department complies with the International Safety Management

Code;

• building state of the art equipment;

• maintaining an up to date Research and Development programme;

• employing efficient Integrated Information and Communication Technology.

6. Conduct towards clients

Clients rely on Boskalis for the realisation of their expectations. Boskalis therefore adheres to:

• supplying high quality services;

• performing our contracts to the highest standards;

• providing a competitive market price;

• meeting agreed deadlines;

• showing respect for the wishes, interests and ethical standards of clients, in all aspects

of the business;

• supporting clients by the development and design of projects;

• informing clients properly and in good time.


16



7. Commitment to capital providers

Capital providers enable Boskalis to finance its activities. Boskalis is therefore committed to:

• ensuring the continuity of the company;

• achieving, also in the long term, a competitive return on the capital employed, which is in fair

proportion to the degree of risks in the line of business;

• the timely provision of relevant information;

• taking all necessary measures to prevent insider trading.

8. Conduct towards suppliers

Suppliers provide Boskalis with the products and services that Boskalis subsequently uses.

Boskalis therefore adheres to:

• selecting suppliers on the basis of generally accepted market considerations;

• paying competitive market prices and making reasonable demands;

• striving for long-term stability in the relationship, in exchange for value, quality, competition

and reliability;

• paying suppliers on time, according to agreements made;

• being open and reliable in all our activities;

• not accepting any invitations or favours that could affect the integrity of the business relationship.

9. Dilemmas

Because of the highly demanding and complex environment in which Boskalis conducts business, the

above mentioned rules can at times conflict with each other. This may create dilemmas, which shall be

resolved within the applicable legal and generally accepted Business Principles.

10. Accountability

Everybody who is addressing Boskalis, on the basis of actual involvement for and understanding of

the activities and position of Boskalis, about observing the above-mentioned principles can expect

an open attitude.

Furthermore, where appropriate, Boskalis is accountable for observation of this code. We take all

sincere requests, suggestions and complaints seriously.

This Statement of General Business Principles shall every 2 years be evaluated by Boskalis.


In 2003, Boskalis was at work

in the Ketelmeer lake in

The Netherlands, where it

completed the construction of

a number of islands for nature

development.



18

Basic principles of the corporate strategy


Bas ic p r inc ip les o f the corpora te s t ra tegy

The key success factors for a leading international service company in the area of maritime

infrastructure are:

• enterprise and risk management;

• transparency in corporate governance;

• employee efficiency;

• professional expertise and skills;

• a large and versatile fleet;

• efficient organizational and communications structures.

Enterprise and risk management

Enterprise means dealing every day with uncertainties, opportunities and risks. International enterprise

is highly developed at Boskalis and is encouraged by the top of the company on the basis of freedom

and discipline. Extensive decentralization for marketing operations and work contracting is linked to

regular feedback, coordination and reporting. As an international dredging company, Boskalis has to

deal with risks on a day-to-day basis. There are three kinds of risks:

Economic and market risks. The Boskalis markets are heterogeneous and often develop in different ways.

Boskalis is well placed to respond to both positive and negative developments in individual market

segments because of its global spread of activities, its broad-based, versatile and internationally-based

fleet and its occupation of strong positions in the home markets. The dredging industry also focuses

to a major degree on the maintenance and development of infrastructure. This means that long-term

economic developments are more important than short-term economic fluctuations.

The dredging industry is a capital-intensive industry with high entry and exit barriers. Price competition

for large projects is often fierce. Cost leadership is a key success factor. It receives a great deal of

emphasis in terms of both investment strategy and as a critical component of operational management.

In Dubai, Boskalis collaborated

with its partner Archirodon on

the crescent, the protective dike

around the ‘Palm Island I’

project. The project included

the construction of an additional

coastline of 120 kilometers in

the form of a palm tree. Eighty

luxury hotels, 2,000 villas, ports,

water parks, restaurants,

shopping malls and cinemas will

be built on this island.


19 Roya l Boska l i s Wes tm ins te r nv19

Operational risks. Various risks must be taken into account when calculating costs and carrying out

projects. These range from unexpected soil conditions and variable weather conditions to the technical

suitability of equipment. Boskalis seeks to control risks by means of thorough project preparation and

activities such as soil research, maintenance of easily-accessible databases with information about

past experience and the use of detailed risk analysis techniques. In addition, a lot of work goes into

staff training, a certified Quality Assurance program and equipment maintenance. Risks are also

insured where possible. The key to Boskalis’ professionalism and skills lies in its ability to prepare for

these risks effectively and responsibly.

Financial risks. Boskalis has a strict acceptance and hedging policy for political and payment risks.

Payment risks are hedged by means of bank guarantees, insurance, etc., except in the case of credit-

worthy, first-class debtors. A large proportion of projects are contracted in foreign currency. Generally,

positions in foreign currency are fully hedged, usually with forward contracts.

The development of the US dollar rate to the euro is particularly relevant. Firstly, a large proportion of

the contracts is dollar related. Secondly, the key associated companies (Archirodon, Bean Stuyvesant

and Lamnalco) are fully dollar denominated. These associated companies are long-term investments.

Therefore, their transaction risks are not hedged, under the assumption that currency fluctuations even

out in the longer run. Real committed cash flows between Boskalis and its associated companies are

hedged. On balance, the currency risk for Boskalis is limited.

In addition, contract prices can be affected in dollar-related markets and this may affect margins.

Financial derivatives (forward contracts, options, swaps, etc.) are not used unless there is an

underlying real transaction.

As is usual in the contracting industry, Boskalis also has large amounts outstanding in the form of bank

guarantees, usually in favor of customers. Adequate credit, and particularly bank guarantee facilities,

are essential for the uninterrupted conduct of business so the Boskalis financing policy is conservative.

At the end of 2003, the company had extensive and largely unused credit and bank guarantee facilities

at its disposal.

Transparency in corporate governance

Boskalis considers clarity and openness in supervision and accountability to be the cornerstones of good

management and business practice. So the company has a sound corporate governance system. As this

annual report shows, the objectives are clearly defined and the company has a clear strategy.

Future prospects and associated risks have been identified as thoroughly as possible. Boskalis is aware

of the interests of all the company stakeholders. A great deal of attention is paid to investor relations and

dealings with shareholders.

Boskalis has a Statement of General Business Principles, which sets out the duties and responsibilities

with respect to society at large, the environment and all Boskalis stakeholders. This Statement can be

found on pages 14, 15 and 16 of this annual report.

Given developments and discussions in society as a whole with respect to proper company management,

as well as the publication of the Dutch Corporate Governance Code of the Tabaksblat Commission, this

annual report includes a separate chapter on this subject on pages 24 and 25.



20



Employee efficiency

At Boskalis, the workforce is central. They are the critical success factor of the company. They are the

people who, in day-to-day operations, deal with changing circumstances and challenging operational

situations. The company works globally with high-grade technical production resources, dealing with a

very wide range of physical and cultural conditions.

There are many other nationalities involved alongside the Dutch, both onshore and offshore. It is vitally

important in a complex environment of this kind for people to collaborate and develop.

Boskalis aims to provide an attractive working environment in which employees can make the most of

their abilities. To this end the company has an active human resources policy in which the personal

development of employees takes priority. The policy is based on the continuous matching of the

requirements of the company and the quality of the workforce. This takes the shape of a coordinated

program for Human Resources Development consisting of long-range forecasts, planning, development,

training and rewards. An important HR tool in this context is the competence management program,

which focuses specifically on the systematic development of employees on the basis of their talents

and competences.

Professional expertise and skills

Research and development. Unremitting efforts to develop new techniques and extend our under-

standing are of major strategic importance. The Research & Development department (R&D) at Boskalis

has an experienced workforce, simulation and computer models and laboratory facilities. The R&D staff

are regularly to be found at projects and on board ships both in the Netherlands and abroad. A steering

group, that includes representatives from the Board of Management, the operational units and the

technical staff departments, determines priorities and appraises the longer-term plans for R&D.

Engineering capacity. More and more large infrastructure works are being tendered as Design &

Construct projects. Here, the engineering capacity of Boskalis and its own engineering consultancy,

Hydronamic, are of major importance. The working methods and possibilities afforded by available

equipment are taken into account at the design stage. As a result, solutions can be proposed that are

efficient in terms of costs and construction time. Boskalis’ engineering capacity is also deployed during

the implementation stage.

A large and versatile fleet

Boskalis has a large and versatile fleet. It includes every variety of dredging equipment so that the

right tool can be used at all times. Innovations in the fleet and modifications to existing units keep the

fleet in line with modern requirements. Fleet automation is a highly-developed area, and this means that

productivity during dredging work is high. Meticulous maintenance work is carried out on the fleet and

auxiliary equipment, with modernization and improvements where necessary.

With the exception of the basic equipment in the home markets, all Boskalis equipment is managed

centrally by the Central Technical Department in Papendrecht. The Central Technical Department makes

its units available for operating companies in The Netherlands and abroad. A lot of attention is paid to

the quality of the services provided by the department. The organization is ISM-certified. A Plant

Management System creates the conditions for the optimal deployment and structured management of

the ships. In fleet management, an important element is the safety of the ships and the crews.




Efficient organization and communications

Health, safety and the environment. Boskalis’ policy is to provide the entire workforce with healthy,

safe and environmentally-friendly working conditions. The prevention of hazardous and/or unhealthy

working conditions applies to all workers, including those from subcontractors and suppliers.

This principle is expressed in the Boskalis slogan: ‘Safety matters’.

In order to raise safety awareness and increase the understanding of safety risks, Boskalis organizes

training courses and information meetings, both at offices and on works. In addition, safety audits

are carried out as the first step towards reducing risks. Concern for environmental protection is a

component of quality control, and of day-to-day thinking and working at Boskalis. The company is

continuously looking at dredging processes in order to make them more environmentally-friendly.

It develops techniques for reducing environmental loads during dredging work.

These activities result in a structural, systematic and transparent approach in the area of safety, health

and the environment. Healthy, safe and environmentally-acceptable working methods require cooperation

and communications, not only within the company but also with third parties, partners and service

providers.

Quality assurance. One of the basic principles of quality assurance at Boskalis is the wish to meet

customer requirements efficiently and as planned. Another involves the continued professionalization

of the internal organization. A lot of work goes into continuous improvements in the quality of the

preparation, execution and evaluation of the projects. The same applies to the availability of equip-

ment, as well as staff planning and supervision: they are all critical success factors. The quality

systems in place are structured around the Boskalis core business: contracting and executing

dredging and dredging-related work. These systems are certified in accordance with ISO-9001.

Information and communications technology. Boskalis sees information and communications technology

as an instrument for improving efficiency and management information. But ICT is also a way to make

work easier and, above all, to operate more effectively in the market. Boskalis has an integrated ICT sys-

tem which covers the entire business process worldwide, at all levels of the organization; from projects,

through country organizations, to the head office in Papendrecht. The use of modern standardized soft-

ware, hardware and communications technology is vital here.



On the seabed off Singapore, Boskalis and Archirodon

are using an innovative approach to lay outlet pipes

from a wastewater treatment plant.

“The total length of the pipes - eleven kilometers - and

the depth at which they had to be positioned - down to

50 meters - meant that it would have been inefficient and

risky to work with divers here”, explains Ab van Gool, the

desk coordinator for the project. “So we went looking for

an alternative approach that would be cost-effective for

the client. It took the project team a month to establish

the broad outlines. To be able to innovate, you must have

a team in which every member makes a contribution.

Bringing together knowledge and experience in this way

led to the development of a high-grade, automated idea:

a pontoon carrying a specially designed portal crane.

Beneath the crane, there is a framework specially built

for this project that lowers the pipes in a controlled way.

And the system includes a high-tech measurement and

control system that makes it possible to link up the pipes

very precisely from the control room.”

The measuring equipment and the control system are

the brainchild of Jürgen König, manager Electronics &

Instrumentation. “The complexity of this job was in part

the result of the customer’s strict requirements for the

positioning of the pipes. To meet them, we developed an

advanced measuring system. We purchased a number

of software components and then linked them up but we

also had components made to our specifications. This

allowed us to achieve the level of control needed and we

can now position the pipes with a degree of precision we

couldn’t before. We are using new technology to extend

the boundaries of what is possible.”

Left Ab van Gool, desk coordinator

and right Jürgen König, manager

Electronics and Instrumentation.

New technology for installing pipelines

safely and accurately



The pipe installation pontoon

Arta leaving the production site

in Singapore. This pontoon can

install wastewater pipes over a

distance of eleven kilometers

and at depths up to 55 meters

without using divers.

“We are using new technology to extend

the boundaries of what is possible.”

Artist’s impression of

the pipe installation

pontoon Arta.

Trailing suction hopper

dredger Cornelia dredging

the trenches for the waste-

water pipes.


24

Corporate Governance

Corpora te Gover nance


Dutch Corporate Governance Code in place from 1 January 2004 onwards

The Dutch Corporate Governance Code drafted by the Tabaksblat Commission (the ‘Code’) came into

effect as at the beginning of the financial year starting on 1 January 2004.

The Code applies to Dutch listed companies and includes a system of norms for proper and respon-

sible management, and for the proper supervision of that management, including accountability for

the supervisory activities.

The basic principle underlying the Code is that a company is a long-term collaboration between various

parties involved with that company.

The stakeholders are the groups and individuals who have a direct or indirect effect on the achievement

of the corporate objectives or who are affected by them, such as employees, shareholders and other

financiers, suppliers and customers. Equally, stakeholders may include the government or community

organizations.

The Board of Management and the Supervisory Board of the company have full responsibility for taking

these interests into consideration, generally with the emphasis on the continuity of the company and

the creation of shareholder value in the long term.

The norms consist of about twenty principles and a large number of associated best-practice provisions.

As a whole, the principles can be thought of as modern, general views about good Corporate

Governance that now enjoy broad support.

Listed companies are expected to describe the broad outlines of their Corporate Governance structure

for the first time in their annual report on the 2004 financial year, together with an indication of the

extent to which they deviate from the norms of the Code (i.e. ‘comply or explain’).

The Boskalis approach to implementation and compliance

Boskalis agrees that a sound and transparent system of checks and balances is an important instrument

in terms of establishing confidence in companies operating on the capital market.

The safeguards for proper corporate governance at Boskalis consist primarily of the open corporate

culture characterized by enterprise, technical professionalism and normal civil behavior.

In 1998, the Board discussed this issue extensively with shareholders against the background of

the report ‘Corporate Governance in The Netherlands: the Forty Recommendations of the Peters

Commission’.

In addition, on 29 May 2001, Boskalis already said farewell to the system of depositary receipts for

shares, a system that is not generally thought to benefit shareholders.

Many of the best-practice provisions in the Code are in line with the principles and codes of conduct

that are already in place at a focused dredging contractor such as Boskalis. A small number of best-

practice provisions are less applicable to Boskalis.


Corporate Governance


All things considered, Boskalis finds that the company already fulfils the requirements of the Code in

many respects. Where adjustments are required, they will be addressed during the course of 2004.

Examples are the appointment of committees to assist the Supervisory Board and the amendment and

elaboration of procedures. A detailed review will also be conducted to determine whether amendments

are required to the Articles of Association of the company in order to make compliance with the Code

possible.

This is also necessary given the introduction of the Act on the Alteration of the Regime for Dual-Board

Entities that has now been adopted by the Lower House and that is expected to come into effect in

late 2004.

Boskalis expects to be in a position to implement most of the best-practice provisions. Where the

company deviates from these provisions, it will give reasons for doing so.

Any departures will mainly be linked to the specific nature and character of Boskalis as a specialist

dredging contractor with global operations using high-grade technology, specific expertise and

experience, and very capital-intensive equipment.

Sometimes, transitional arrangements will be required but, in general, major problems are not anticipated

with the implementation of the Code in our company.

The approach described above to the implementation of, and compliance with, the Code will be

discussed at the Annual General Meeting of Shareholders on 17 May 2004.

In the annual report for the 2004 financial year, the Board will explain the broad outlines of the

Corporate Governance structure of Boskalis and explain any deviations from the best-practice

provisions of the Code. The Annual General Meeting of Shareholders in 2005 will then be able to

state its opinion of the Corporate Governance policy adopted by the company.



Management

Management

Supervisory BoardS.D. de Bree, chairman (1937)• former chairman of the Board of Management of DSM N.V.• chairman of the Supervisory Board of Stork N.V.• chairman of the Supervisory Board of Norske Skog Parenco B.V.• member of the Supervisory Board of ‘Fondation Maison de la Chimie’, Paris• member of the Supervisory Board of Siemens Nederland N.V.• director of Entergy Corp, New Orleans, USA• first appointment: 1998, current term: 2002-2006

M.W. Dekker (1938)• former general director of NPM Capital N.V.• chairman of the Supervisory Board of Algemeen Trust Kantoor N.V., Amsterdam• member of the Supervisory Board of Arklow Shipping Ltd, Ireland• member of the Supervisory Board of Solvus N.V., Antwerp • chairman of the Supervisory Board of Dutch Flower Group B.V.• member of the Supervisory Board of FinAce B.V.• member of the Supervisory Board of Fugro N.V.• member of the Supervisory Board of IHC Holland N.V.• member of the Supervisory Board of JSI N.V.• member of the Supervisory Board of F. van Lanschot Bankiers N.V.• member of the Supervisory Board of Van Wijnen Holding N.V.• member of the Supervisory Board of Belron SA• first appointment: 1989, current term: 2001-2005

M. van der Vorm (1958)• chairman of the Board of Management of HAL Holding N.V.• member of the Supervisory Board of Anthony Veder Group N.V.• member of the Supervisory Board of Koninklijke Vopak N.V.• member of the Supervisory Board of Univar N.V.• first appointment: 1993, current term: 2003-2007

A.A. Westerlaken (1955)• chairman of the Board of Management of ’s Heeren Loo Zorggroep• member of the Supervisory Board of the Free University of Amsterdam (VU) and the Medical Center

of the Free University of Amsterdam• member of the Supervisory Board of the Netherlands Institute for Care and Welfare (NIZW)• member of the Supervisory Board of Coöperatieve Bloemenveiling FloraHolland U.A.• first appointment: 1999, current term: 2003-2007

J. Aalberts (1939)• chairman of the Board of Management of Aalberts Industries N.V.• member of the Supervisory Board of Stork N.V.• member of the Supervisory Board of Van der Moolen Holding N.V.• first appointment: 2001, current term: 2001-2005

All members of the Supervisory Board are Dutch. They do not hold shares in Royal Boskalis Westminster nv or associated option rights.



Management

From left to right:

A.H.A. Hoevenaars,

Dr. P.A.M. Berdowski,

R. van Gelder BA,

K.G. van Nes.

Board of Management R. van Gelder BA, chairman (1945)• member of the Board of Management since 1985• chairman of the Board of Management since 1993• member of the Supervisory Board of HES Beheer N.V.• member of the Supervisory Board of Brunel International N.V.• member of the Supervisory Board of Rodamco Asia N.V.• chairman of the International Association of Dredging Contractors• member of the Advisory Board of ABN AMRO Bank N.V.• member of the Board of Management of Nederland Maritiem Land

Dr. P.A.M. Berdowski, vice-chairman (1957)• member of the Board of Management since 1997• vice-chairman of the Board of Management since 2001• chairman of the Supervisory Board of Amega Holding B.V.• member of the Supervisory Board of Scope Publishing B.V.• former Managing Partner of Krekel Van der Woerd Wouterse

K.G. van Nes (1944)• member of the Board of Management since 2000• former managing director of Boskalis bv in Rotterdam• a range of previous management positions with CB, CSB, NVWB and CUR

A.H.A. Hoevenaars (1949)• member of the Board of Management since 2003• member of the Supervisory Board of Schouwburg Orpheus• member of the Supervisory Board of Nijenrode University• member of the Supervisory Board of Atlant Zorggroep• chairman of the Board of Het Gelders Orkest• member of the Supervisory Board of Escador

All members of the Board of Management are Dutch.One member of the Board of Management has shares in Royal Boskalis Westminster nv. This is discussed in further detail in the explanatory notes to the company balance sheet and profit and loss account.

SecretaryM.J. Kielstra (1972)

The above information is valid as at 9 March 2004.



At Boskalis, we don’t just order a ship ‘off the shelf’.

Using our employees’ expertise and experience, we

have ships designed and built that are cost leaders

in their class – ships that make the difference.

“Traditionally, Boskalis has had both a strong Construction

Department and a strong Research & Development

Department”, says Hendrik Postma, manager of the

Dredging Department. “These departments combine

shipbuilding and dredging know-how. But to be a cost

leader, you have to be familiar with the economic per-

formance of the ships – the costs per cubic meter of

dredged material. This input is provided by the Dredging

Department. Since we encourage our engineers to look

beyond their field of expertise, innovations result.

Combining the best technical and economic options is

one of our strengths.

“Cost leadership is essentially determined by various

factors. For the mega and jumbo trailing hopper suction

dredgers, which are used primarily in large land reclama-

tion projects, these mainly involve hopper capacity,

sailing distance, and dredging depth. Increasingly, sand

winning is done at remote locations; in these cases,

a large hopper capacity is the most economic solution.

We capitalized on that with the lengthening of the

W.D. Fairway. After an increase in the hopper volume

of 12,000 m3, this vessel is once again at the forefront

in this particular market segment.”

“For the medium-sized trailing hopper suction dredgers,

the optimum length-to-width ratio is the key to cost

leadership”, says Jan Eygenraam, manager of the

Research & Development Department. “In the 1970s, a

16- or 18-meter-wide ship was thought of as big. The

Barent Zanen and the Cornelis Zanen, which we built in

the early 80s, were the first dredgers that measured 23 m

wide. They will be replaced by the Prins der Nederlanden

and her sister ship the Oranje, both 28 m wide. With these

new ships, which once again are first in their class,

Boskalis has met market demand.

“We focus extensively on developing equipment that will

allow us to do our jobs as effectively and as cost-efficient-

ly as possible. By thinking creatively and capitalizing on

our expertise, we stay one step ahead of the competition.”

Left Jan Eygenraam, manager

Research & Development Department

and right Hendrik Postma,

manager Dredging Department.

Developing the best equipment

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The mega trailing suction hopper

dredger W.D. Fairway at work in

Malaysia. “Increasingly, sand

winning is done at remote

locations; in these cases, a

large hopper capacity is the

most economic solution.

We capitalized on that with the

lengthening of the W.D. Fairway.

After an increase in the hopper

volume of 12,000 m3, this vessel

is once again at the forefront in

this particular market segment.”

“You can make the difference if your people are not

afraid of looking beyond their field of expertise.”

Her Majesty the Queen

during the naming of the

Prins der Nederlanden on

26 August 2003. To her left,

Mr. Rietdijk, director of

Merwede Shipyard. To her

right, Mr. Van Gelder,

chairman of the Board

of Management.

The launch of the trailing

suction hopper dredger

Prins der Nederlanden.

“Both the Prins der

Nederlanden and her sister

ship the Oranje are

28 meters wide. With

these new ships, which

once again are first in

their class, Boskalis has

met market demand.”

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Key figures

30

Turnover completed contracts – 1,124

Turnover work done 1,046 1,035

Orderbook (work to be done) (3) 1,124 1,273

EBIT (4) 77.9 109.3

EBITDA (5) 157.2 175.9

Net result 70.9 82.1

Depreciation 79.3 66.6

Cash flow 150.2 148.7

Shareholders’ equity (3) 455.2 413.0

Average number of outstanding shares (x 1,000) (9) 26,630 25,949

Number of outstanding shares (x 1,000) (10) 27,256 25,970

Personnel (number of persons) (3) 3,186 3,285

Ratios ( in percentages)

Operating result as % of the turnover completed contracts 6.7 8.9

Return on capital employed (6) 16.0 20.3

Return on equity (7) 16.3 20.8

Solvency (3/8) 42.5 41.6

Figures per share ( amounts x € 1.00 )

Profit (9/11) 2.66 3.16

Cash flow (9) 5.64 5.73

Shareholders’ equity (3/10) 16.70 15.90

Dividend 1.04 1.26

Share information Euronext Amsterdam

Ordinary shares ( amounts x € 1.00 )

• Price range 16.51/23.15 17.80/35.55

• Closing price at year-end 20.91 19.27

• Price/earnings ratio 7.9 6.1

(1) Figures taken from the respective financial statements.

(2) Results on work in progress from 2003 onwards based on work done, and up to and including 2002

based on completed contracts.

(3) As at 31 December.

(4) Consists of earnings before interest and taxation.

(5) Consists of earnings before interest, taxation, depreciation and amortization.

(6) Net result + interest paid on long-term loans as % of the average capital employed (shareholders’

equity + long-term loans).

(7) Net result as % of the average shareholders’ equity.

(8) Shareholders’ equity as % of the balance sheet total (fixed assets + current assets).

(9) Weighted average number of outstanding ordinary shares less the number of shares owned

by the company.

(10) Number of outstanding ordinary shares less the number of shares owned by the company

as at 31 December.

(11) The dilution effect was practically nil up to the financial year 2003.

Key f igu res(1)


(amounts x € 1 million, unless stated otherwise) 2003(2) 2002



Investor Relations

I nves to r Re la t ions

Boskalis values good communications with its existing and potential shareholders, institutional

investors and financial analysts. The key objective is to provide transparency about value creation

within the company, so that the valuation of Boskalis shares reflects as accurately as possible the

developments and prospects in the markets and the company’s performance in those markets.

Intensive communications with media and investors

Boskalis has an active investor relations policy which involves open communications with analysts,

shareholders, investors and media. A steady flow of information provides a picture of day-to-day

matters and strategy, business drivers and the company’s critical success factors. Boskalis communi-

cations primarily target investors interested in the long-term potential of small cap stocks. New contacts

are established regularly with investors in Europe, the United States and Canada. There is a strong

emphasis on private investors as well as institutional investors. The Boskalis share is monitored with

great interest in international circles.

Boskalis has its own website (www.boskalis.com), providing financial information as well as general

company information, vacancies, fleet composition, projects and the latest press releases.

Presentations for analysts are also published on the site. The website is maintained and improved

continuously.

Increase in share price of more than 8%

Despite the uncertainties in the short term, there was still considerable interest in Boskalis shares from

analysts and investors. This was primarily true of investors with a longer-term investment strategy.

The share price went up in 2003 by more than 8%, from € 19.27 to € 20.91.

Share price in euros, closing prices (1 January 1999 through 31 December 2003).

The Boskalis share price followed the market in 2003:

2003 2002 2001 2000 1999-2003

Boskalis share price: +8% -36% +14% +47% +52%

AEX index: +5% -36% -20% -5% -37%

AMX index: +15% -35% -20% -8% -45%

On the basis of the closing rate as at year-end 2003, the dividend yield for Boskalis shares in the past

year was 5.0% (€ 1.26 per share).

40

35

30

25

20

15

101999 2000 2001 2002 2003



Investor Relations

Large shareholders

As at 9 March 2004, the following shareholders are known to have a holding of at least 5% in Boskalis:

HAL Holding N.V. 31%

Delta Lloyd N.V. 5%

Egeria Luxembourg S.A. 5%

In addition to the holdings of these ‘regular’ shareholders, most Boskalis shares are in foreign hands.

An estimated 20% are held in the United States and Canada, with 25% being held in the United

Kingdom and the remainder in some ten European countries.

Dividend policy

The main principle underlying the Boskalis dividend policy is to distribute 30% to 40% of the net result

from normal operations in the form of dividend. A proposal will be submitted to the General Meeting of

Shareholders on 17 May 2004 for a dividend of € 1.04 per share in accordance with the dividend policy.

Shareholders may opt to take this dividend entirely in shares or entirely in cash. This dividend is payable

as from 9 June 2004.

Euronext listing

Royal Boskalis Westminster nv shares are listed on the Euronext Exchange and are traded there

continuously. The share is listed on the Next 150 Index and the AMX index in Amsterdam.

Financial agenda

Agenda in 2004

10 March Publication annual figures for 2003

mid-April Publication annual report 2003

17 May Annual General Meeting of Shareholders

19 May Shares go ex-dividend

19 May through 3 June Option period stock dividend or cash dividend

4 June Fixation of stock dividend conversion ratio

9 June Dividend payment for 2003

17 August Publication of 2004 half-year results

Information

Investor Relations

R.T. Berends

Telephone +31 (0) 78 69 69 822

Telefax +31 (0) 78 69 69 805





Message to shareholders

Message to shareho lders

Dear shareholders,

2003 has been a difficult year for Royal Boskalis Westminster nv. Worsening market conditions, the

malaise of the American dollar and the stagnation of the works in Singapore have put the dredging

sector under pressure. Nevertheless, Boskalis performed well in 2003 given the circumstances.

The company is fighting fit: it has a broad, versatile market position and a strong financial base.

Uncertainty will persist in the coming period. Our expectations are not high for 2004.

Group turnover was comparable to last year, with the volume of our dredging activities declining

both in the home markets and in large international projects. The operating margins were under

pressure in this segment and fleet utilization was down. Earnings per share fell by 16% to € 2.66.

Caution was the keyword when it came to the acquisition of new orders, particularly in the markets

for larger, multi-year land reclamation projects. The orderbook decreased to € 1,124 million.

New orders were acquired in 2003 amounting to € 897 million.

As in the past year, the focus in 2004 will be on a selective market approach. In recent years, the com-

pany has made major investments against a backdrop of favorable market conditions and put a lot of

energy into the quality of its workforce, fleet and ICT systems. It is precisely when market conditions

are less favorable, as we expect in the period to come, that quality and cost leadership will make the

difference in the market. In 2004, certain parts of our organization will be tightened up even further

given the expectations referred to here. We expect the costs associated with this to be charged to

the result on a one-off basis in 2004. The positive effects of this operation are expected to emerge to

a lesser extent in 2004 and to a greater extent in 2005.

Corporate Governance has, in the last year, been the focus of attention from the media, public opinion,

the financial markets and regulators. The safeguards for proper Corporate Governance at Boskalis

consist primarily of the open corporate culture characterized by enterprise, technical professionalism

and normal civil behavior. The Dutch Corporate Governance Code (‘Tabaksblat’) was published on

9 December 2003. The reader can find a review of our approach on pages 24 and 25 of this annual

report.

Boskalis communicates intensively with the financial markets; the company has an active investor

relations policy and is the target of much interest from investors. In the past year, we saw interest

continuing to spread to shareholders with a long-term focus.

Although the result for 2003 is lower than in the previous year and although expectations for 2004

are not high, we continue to expect developments in the longer term to be positive. Boskalis will also

continue to have a healthy cash flow in the longer term. In the first six months of 2004, the level of

investments will continue to be high. Given the uncertainties relating to trends in demand in our

markets, the current continuation of the impasse relating to sand supplies in Singapore and a one-off

charge taken in 2004 for the margin enhancement program, we cannot at present make any firm

statement about expected profits. We propose the distribution of a dividend of € 1.04 per share

from the results for 2003 (2002: € 1.26), to be taken in stock or in cash.

R. van Gelder BA, chairman of

the Board of Management.




In 2002, there was a chill in the air; in 2003, the international dredging industry really started to feel the

cold of worsening conditions.

In the past year, the picture in our markets was determined, on the one hand, by a fall in demand in most

of our home markets and, on the other hand, by temporary or enduring price pressures in the segment

of the multi-year land reclamation projects. The latter was a result of the stagnation that continues for the

time being to affect the land reclamation projects in Singapore. The decline in the American dollar also

had a negative effect on market demand and on margins in countries with currencies linked to the dollar.

It is difficult to predict how these factors will develop in the short term. As far as the large land

reclamation projects in Singapore are concerned, Boskalis only expects the current impasse to be

resolved in the second half of the year. Furthermore, we are certainly not counting on market recovery

in 2004 for our Western European home markets and are assuming that the American dollar will

continue to fluctuate at its present low level.

Despite the current uncertainties, the longer-term prospects remain favorable. The demand for maritime

infrastructure is driven by the increasing global trade volume, the growth of the global population and

the shortage of space in densely-populated coastal areas. Furthermore, the energy sector (offshore) and

the tourist industry (land reclamation) have generated steadily rising demand for our services. The world

still needs building and, in the long term, dredging is a profession with a future.

Boskalis has made major investments in recent years in the development of its workforce, modern

systems and fleet innovation. As a result, it is precisely at this time that we make the difference

with our competitors because of our considerable innovative capacity and cost leadership. Modern,

cost-leading ships will push out older, more expensive equipment, especially on the market for

one-off large international projects.

In the market, price levels are under pressure. We have adopted a selective approach to price cuts. On

balance, this has led to a fall in the orderbook. At present, we are targeting smaller and medium-sized

projects with reasonable margins more than larger multi-year projects with poor margins. Alertness and

a focus on the market are essential. Our strategy aims to provide our clients with both the best and the

most price-effective solution. That is only possible by linking quality and resourcefulness to a strict

costs policy.

The turn in the tide is a good moment to take a critical look to see where the organization can be

optimized. Any adjustments will be made in accordance with the current prospects for work volumes.

Utilization levels for the hopper fleet are uncertain for 2004. This is because of the situation in Singapore

as well as the opportunities for alternative projects elsewhere. Higher utilization levels than last year are

expected for the cutter fleet.

We believe that a capital-intensive company like Boskalis should have sound capital ratios. Our fleet

innovation program, that started in 1996, will continue until mid-2004. More than half a billion euros

have been invested during this time in, among other things, renewal of our fleet of trailing suction hop-

per dredgers. This segment focuses primarily on maintenance work for ports, fairways and coastlines

on the one hand, and on large-scale land reclamation on the other. All investments are financed from

the company’s own funds and cash flow. After termination of this program in mid-2004, we can count

on a healthy, positive cash flow. We propose the distribution of a dividend of € 1.04 per share from the

results for 2003, to be taken in stock or in cash. The dividend yield is high.

Worsening conditions

meant that 2003 was

a less successful year

Uncertainties of 2003

persist in 2004

The prospects for the longer

term remain favorable

Innovation and cost

leadership make

the difference

Price levels in the market

are under pressure;

Boskalis is selective

Size of fleet and organization

being reviewed critically

Fleet utilization for hoppers

uncertain in 2004; improvement

for cutters compared to 2003

Capital ratios remain firm;

dividend € 1.04 per share




We must be realistic about the coming year: 2004 will not be a fantastic year. In terms of turnover and

fleet utilization, we do not expect it to be, on balance, an improvement on 2003. For the time being,

we are seeing a tendency towards tighter margins.

It will also be necessary to take € 15 – 20 million into account for our margin enhancement plans.

This will be offset by a structural enhancement of the margin in time of more than € 20 million a year.

At this time, given all the uncertainties, it is not possible to state what the concrete impact will be on

profitability.

Our efforts in 2004 will be directed towards improving our basic position still further and to achieving

sound performance for the year, this time in worsening circumstances.

On behalf of the Board of Management,

R. van Gelder

No high expectations

for 2004



In Gothenburg, Boskalis bv and Boskalis Nordic have

widened and deepened the fairways to the harbor.

To protect valuable nature areas in the vicinity, the

work was subject to strict environmental standards.

Hydronamic, Boskalis’s own engineering consultancy,

developed a reliable environmental monitoring system.

Boskalis was able to make the difference by working

alongside the customer and participating in the

decision-making process.

Hans Lindström, general manager of Boskalis Sweden:

“We got the contract, even though our price was not the

lowest one. Our proposals and measures for limiting the

negative effects on the environment in the vicinity made

the difference for the client.”

“Because of the environmental risks involved, this was

a politically sensitive project”, explains Henk Smink, area

manager of Boskalis bv. “For this reason, it was important

to work alongside the client and to interpret correctly the

information they provided. Our specialized knowledge

enabled us to come up with practical solutions which

actually protected the environment – for example, limiting

hopper overflow by stopping dredging earlier than usual

and making adjustments to the dredge head.”

To ensure that the procedure implemented did in fact pro-

tect the environment adequately, Hydronamic developed

an environmental monitoring system that also gives the

customer a reliable and up-to-date picture of the situation.

The specifications included the parameters that had to

be measured - for example, the concentration of sus-

pended matter in the water within a 1,000-meter radius

of the site 24 hours a day. Hydronamic used this to work

out how to take the measurements. Once that was

decided, among other things by on-site testing, the

necessary equipment was purchased. Hydronamic also

developed certain components itself. For example, it

developed software that collected all the measurements

in a database. This ensured that all the measurements

were interpreted correctly. That kind of software is not

available off the shelf. It had to be custom-made for the

equipment used for this project. The advantage is that

Boskalis now has a program and a measuring system

that it can build on - a blueprint for environmental

monitoring in the future.

Left Hans Lindström, general manager Boskalis Sweden

and right Henk Smink, area manager Boskalis bv.

Modified dredging method and innovative

monitoring system protect the environment



View of a part of the dredging

area in the port of Gothenburg

from the bridge of the trailing

suction hopper dredger

Coastway.

“Our specialized knowledge enabled us to make

the difference and come up with practical solutions

which actually protected the environment.”

The environmental

monitoring vessel with the

measuring equipment on

board. Hydronamic

developed a monitoring

system for measuring the

concentration of suspended

matter 24 hours a day in

a radius of 1,000 meters

around the working area.

Diagram showing environ-

mental monitoring system.

In addition to the

parameters shown in the

diagram, the database also

includes noise, vibration

and the weather conditions,

together with the amount

of dredged and blasted

material.


38

Report of the Board of Management on 2003


Turnover work done

(x € 1 million)

200220012000199919981997199619951994

582

493

569

697

801851

960

1,0831,035

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

2003

1,046

383838

Repor t o f the Board o f Management on 2003

INTRODUCTION

The adverse developments in the markets in 2003 have been reflected in less positive financial

results. Boskalis looks back at a difficult year in which the results have been pleasing given the

circumstances. In 2004, it will continue to sharpen up the organization. The company is fighting

fit in financial terms and in good condition to compete in the market. In the last year, Boskalis

has also made considerable investments in its market punch, with quality people and quality

equipment. The Board of Management is pleased to report to you on the past year.

FINANCIAL MATTERS

Headlines in 2003 were:

• net profit € 70.9 million;

• margins and fleet utilization under pressure;

• very strong cash flow generation;

• net profit per share € 2.66; dividend per share € 1.04;

• financial position remains strong;

• orderbook € 1.1 billion.

Turnover and orderbook

Turnover work done, which is the basis for the published net profit with effect from the 2003 financial

year, was € 1,046 million in that year (2002: € 1,035 million). In Europe, turnover was stable on

balance. Outside Europe, turnover increased in the Far East, Mexico and the Caribbean, whereas

volume in Nigeria fell compared to 2002.

Turnover work done by market

(x € 1 million)

Home markets 2003 2002 2001 2000 1999

• The Netherlands 230 254 283 223 160

• Rest of Europe 181 166 177 181 228

• Outside Europe 173 186 167 190 108

584 606 627 594 496

International projects market ‘hit and run’ 371 377 400 302 285

Specialist niche markets 91 52 56 64 70

1,046 1,035 1,083 960 851




Home markets. On the home markets, turnover decreased in 2003 to € 584 million (2002: € 606 million).

The share of the home markets in group turnover was 56% (2002: 59%).

The Boskalis home markets are:

The Netherlands Iberian Peninsula

Germany Italy

United Kingdom Mexico

Finland United States

Sweden Nigeria

In Europe, turnover in The Netherlands remained reasonably equal, despite the difficult market conditions

there. Turnover improved in Scandinavia, with a major contribution from the successful deepening of

the entrance channel to Gothenburg harbor. In Germany, turnover fell due to the sale of the inland

canal-construction activities. Volumes in the United Kingdom were lower because of cautious govern-

ment spending. Volumes on the Iberian Peninsula were stable.

Outside Europe, turnover in Nigeria was well down on 2002, when work was still in full progress on a

large contract for Chevron. Turnover in the United States and Mexico was slightly up on 2002.

Turnover work done according to geographical area

(x € 1 million)

2003 2002 2001 2000 1999

The Netherlands 230 254 283 223 160

Rest of Europe 219 189 208 234 276

Australia / Asia 223 207 265 148 146

Middle East 113 132 61 64 66

Africa 106 115 77 103 55

North and South America 155 138 189 188 148

1,046 1,035 1,083 960 851

International projects market. On the international projects market, turnover in 2003 was € 371 mil-

lion (2002: € 377 million). Turnover in the Far East was slightly higher because of large works in

Malaysia (Pelepas harbor extension), Singapore (land reclamation with local sand, wastewater

drainage system, gas pipeline in sea) and South Korea (Pusan harbor extension). Turnover in the

Middle East fell after the completion of the dredging work in early 2003 for ‘Palm Island 1’ in Dubai

(a tourist island in the sea), because of the war in Iraq and the loss of the cutter suction dredger Oranje.

The company reclaimed land for an LNG plant in Trinidad on behalf of Bechtel, extended the harbor

of Le Havre in France and made preparations in Kazachstan for the construction of islands in the sea

for oil production platforms. For the first time in its history, Boskalis succeeded in deploying equip-

ment in China.The participating interest in Archirodon increased from 30% to 40% in the fourth quar-

ter. This was one reason why the share in turnover of Archirodon in 2003 increased to € 70 million

(2002: € 53 million). The activities and results of this company, which is included in consolidation on

a proportional basis, developed favorably.

Turnover work done

by market

Home markets (56%)

Specialist niche markets (9%)

International projects markets (35%)


40



Acquired work and orderbook

as at 31 December

(x € 1 million)

2002200120001999

886820

1,354

1,214

1,093

1,224

1,084

1,273

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

1400

2003

acquired work orderbook

897

1,124

4040

Specialist niche markets. In the specialist niche markets, the volume of activities for the offshore

industry increased. Turnover was € 91 million (2002: € 52 million). An important project was the

dredging work for the construction of a gas pipeline between Libya and Italy.

The total amount of acquired orders in 2003 was € 897 million (2002: € 1,084 million). Important new

assignments were the PFI project for widening the A59 freeway in The Netherlands, the construction of

islands for oil drilling in the Caspian Sea (Kazachstan), expansion of the ports of Le Havre (France) and

Coega (South Africa) and land reclamation for an LNG plant in Trinidad. On balance, the orderbook fell

from € 1,273 million at year-end 2002 to € 1,124 million as at 31 December 2003. € 361 million of this

is for uncompleted land reclamation work in Singapore. The share in the orderbook accounted for by

Archirodon increased from € 93 million at year-end 2002 to € 182 million as at 31 December 2003.

Orderbook by market as at 31 December

(x € 1 million)

Home markets 2003 2002 2001 2000 1999

• The Netherlands 143 199 241 243 231

• Rest of Europe 61 89 71 75 99

• Outside Europa 38 131 83 91 166

242 419 395 409 496

International projects market ‘hit and run’ 819 761 781 765 256

Specialist niche markets 63 93 48 40 68

1,124 1,273 1,224 1,214 820

Results

Earnings before interest and tax (EBIT) fell to € 77.9 million (2002: € 109.3 million).The operating result

of € 69.6 million was lower than in 2002 (€ 99.5 million). The ratio of operating result to turnover was

6.7% (2002 – on the basis of completed contracts: 8.9%).

Equipment utilization in 2003 was lower than in recent years. The average utilization rate of the hopper

fleet of 37 weeks was less than in 2002 (40 weeks), mainly because a mega and a jumbo hopper were

not fully available in the first six months of the year: the W.D. Fairway was undergoing extension work

prior to March 2003 and the Queen of the Netherlands went in for major servicing. In addition, the fall

in market demand was seen in a lower utilization rate for the medium-sized and smaller hoppers.

The cutter fleet was in use for 26 weeks on average (2002: 31 weeks). During the first six months of

the year, the Taurus went in for extensive servicing, and utilization of the smaller cutters was down

due to reduced market demand.

2002200120001999

29

40

30

40

29

43

31

40

0

5

10

15

20

25

30

35

40

45

2003

cutter suction dredgers trailing suction hopper dredgers

26

37

Equipment utilization

(in weeks per year)




The operating result for 2003 benefited from a number of incidental items amounting on balance to

€ 1.6 million. In particular, there was a positive result of € 26.7 million from the change in the valuation

system of work in progress to a full ‘percentage of completion’ method, a one-off charge as a result of

an additional payment into the Dutch company pension fund (€ 18.0 million), as well as an additional

depreciation item of € 7.1 million due to writing off a number of older units for the purposes of fleet

rationalization. The taxation of the incidental items in the operational result amounted to € 3.3 million.

In addition, the settlement of a number of tax disputes and the resulting increase in clarity in the fiscal

position of the company meant that it was possible to include deferred tax claims in the year under

review to an amount of € 17.7 million.

On balance, the incidental items had a positive effect on the net result for 2003 amounting to € 16.0 million.

The result from associated companies was € 8.3 million (2002: € 9.8 million). The largest associated com-

pany, Lamnalco, which is primarily active in the Middle East and Nigeria in harbor and offshore services,

had another excellent year, even though the result was lower in euros as a result of the fall in the dollar

rate.

The tax burden in 2003 was relatively low as a result of the incidental items referred to above.

Excluding one-off items, the tax burden fell to € 21.5 million (2002: € 27.9 million). This is equivalent to

28.2% (2002: 25.4%). This higher tax percentage is linked to the spread of the results over the many dif-

ferent countries where the company works and the way in which the results are taxed in those countries.

Cash flow rose in 2003 to € 150.2 million (2002: € 148.7 million).

In line with the net profit, net profit per share fell to € 2.66 (2002: € 3.16). For 2003, the return on

average capital employed was 16.0% (2002: 20.3%) while return on equity was 16.3% (2002: 20.8%).

Investments and balance sheet

Capital expenditure was high again in 2003, mainly because of the fleet extension and modernization

program for 2001-2004. An amount of € 149 million (2002: € 152 million) was invested in tangible fixed

assets. The main investments were the construction of two trailing suction hopper dredgers, both with

a capacity of 16,000 m3, the extension of the mega trailing suction hopper dredger W.D. Fairway (to

more than 35,000 m3), the modification of the cutter suction dredger Cyrus that was acquired in 2002,

and the modification of the trailing suction hopper dredger Cosmos I.

The book value of the divestments was € 7 million (2002: € 12 million). A major book profit (€ 13.3 million)

was generated by the insurance payment for the cutter suction dredger Oranje, that sank in January 2003.

Net result

(x € 1 million)

40

3228

37

47

58

67

7882

0

10

20

30

40

50

60

70

80

90

2003

71

200220012000199919981997199619951994

Cash flow

(x € 1 million)

200220012000199919981997199619951994

88

7871

8593

112

122

140149

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

2003

150

2002200120001999

86

10

99

9

124

10

140

12

0

20

40

60

80

100

120

140

160

2003

divestmentsnet investments

142

7

Investments

(x € 1 million)


42



A start was made in 2003 on a critical evaluation, mainly of older fleet units, with a view to the rationali-

zation and modernization of the fleet. This will lead to the scrapping or laying up of a number of older

units during 2004. The book value of the units in question was therefore readjusted during the year

under review to the estimated residual value.

The market position for soil improvement activities was improved in late 2003 by the merger of these

activities with those of the Cofra group, the global leader in vertical drainage and foundation engineering.

Boskalis has a participating interest of 51% in the new company.

As a result of the exercising of an option acquired at the same time as the original 30% interest, the

participating interest in Archirodon was increased in the fourth quarter to 40%.

The capital tied up in the associated companies fell by € 4.2 million to € 52.1 million, mainly as a result

of currency translation differences. Working capital (stocks, work in progress, receivables less short-

term liabilities) continued to be very negative: € 224 million as at year-end 2003 (2002: € 167 million

negative).

Provisions fell to € 64 million as at year-end 2003 (2002: € 76 million). The principal components of this

item are maintenance of equipment and deferred tax liabilities. Another major repairs program was carried

out in the financial year. This led to both a reduction in the repairs provision and an increase in fleet

quality.

All capital expenditure was financed from company funds. Nevertheless, the large cash flow from oper-

ations pushed up liquidity to € 161 million at the end of the financial year (year-end 2002: € 109 million).

A part of this cash, € 61 million, was held by projects being executed in cooperation with third parties

(2002: € 47 million).

Equity, before inclusion of the proposed profit distribution, increased to € 455 million at the end of the

financial year (year-end 2002: € 413 million).

Equity to total assets as at 31 December 2003 was 42.5% (year-end 2002: 41.6%).

Proposed profit appropriation

In accordance with the dividend policy, it is proposed to appropriate 40% of the result after taxation, in

other words € 28.3 million, for a dividend payment of € 1.04 per share, to be taken in stock or in cash.

The remainder of € 42.6 million will be added to other reserves.

POLICY AND OPERATIONAL MATTERS

Emoluments for directors and members of the Supervisory Board

For company policy with respect to emoluments for directors and members of the Supervisory Board,

the reader is referred to the Report of the Supervisory Board.




Personnel & Organization

With their expertise and skills, the employees are a critical success factor for Boskalis. Some years ago,

Boskalis initiated a process of change and development in which knowledge transfer and employee

development play an important role. Concrete initiatives in this context are competence management,

the Boskalis Leadership Development program, the International Dredging Academy and the Dredging

in Practice training program.

In 2003, Boskalis continued to work on the implementation of competence management. The benefits of

the system have now become apparent within the organization. A better picture has been established

of individual employees, allowing the company to make the most of their knowledge and experience.

In addition, shortcomings in the workforce can be identified at an early stage and employees them-

selves get a good idea of their current situation and how they can develop further.

The Boskalis Leadership Development program has now been completed twice and it has made a

positive contribution to the development of about forty promising employees. A large number of them

have now been appointed to positions at the middle and senior management levels.

The International Dredging Academy for fleet crews has been in operation successfully for the third

year in succession. More than 150 Dutch, Russian, Baltic and Philippine employees have participated

in the various modules.

The Dredging in Practice course developed by the company itself for Dutch and foreign superintendents

has been well received. A total of approximately 100 employees have now followed this course in six

sessions.

In late 2003, the first implementation stage was completed for Prinses, the new records and information

system for human resources. The second stage was launched in early 2004. After completion, Boskalis

will have a modern and complete human resources management tool.

Workforce size. In 2003, the average size of the workforce was 3,202. At year-end 2003, the number of

employees was 3,186 (3,285 at the end of 2002).

During the year, there were regular consultations about a variety of subjects with the Works Council

and its Committees. The active approach of the Works Council and the way in which it fulfilled its

duties were felt to be constructive.

Health, safety and the environment

The concern for safe and healthy working at Boskalis has been an important component of policy for

many years. The ongoing encouragement of safety awareness within the organization plays a central

role here. Against this background, 2003 saw an intensification of communications about safety in the

periodical safety publication ‘Safety Matters’ and the introduction of a ‘Safety Newsflash’ for the ships

covering safety issues of various kinds throughout the fleet. 2003 also saw the launch of on-site safety

inspections by senior managers and safety awareness training was also given to managers. Individual

safety performance is an integral component of the rewards policy at Boskalis.

Average workforce

3,246 3,233 3,257 3,192

2002200120001999

3,202

0

500

1000

1500

2000

2500

3000

3500

2003


44



Given terrorist threats to shipping, the implementation began in the year under review of the ISPS Code

(the International Ship & Port Facility Security Code) of the International Maritime Organisation.

Seagoing ships must meet these requirements from July 2004 onwards. Boskalis is on schedule; all the

plans for implementation have been completed and all ships will be inspected and certified on time.

In 2003, Boskalis companies received two awards from outside the company for safety performance.

Westminster Dredging Company Ltd in the United Kingdom won the National Safety Award 2002 of the

British Safety Council, one of the world’s largest independent organizations in the field of safety, health

and environmental protection. The award was given for excellent performance in the area of safety, and

in particular the reduction in the number of accidents. Boskalis Westminster International bv in Nigeria

received the President’s Praise Award from Chevron Texaco Overseas Petroleum for the Escravos Gas

to Liquids Project. More than a million man-hours were spent on this project without absenteeism

caused by accidents.

The number of accidents in 2003 was down slightly compared to 2002, as was the number of hours

worked. On balance, the accident rate (LTIF, the number of accidents per million hours worked)

increased slightly in 2003. The policy objective is a continued reduction in LTIF.

In addition to the unremitting emphasis on safety and health, the development of environmental dredging

techniques is an important aspect of policy. Clients regularly ask for practical advice about designing

dredging projects on environmentally acceptable lines. Boskalis has a team of environmental experts

for providing its clients with professional assistance. Within the company, the expertise in this area is

maintained and used for the continuous improvement of working procedures. In 2003, work took place

on ISO-14001 environmental certification for the organization in Singapore. Certification will go into

effect from July 2004. Preparations were also launched there for certification in accordance with the

safety and environmental standard OSHAS-18001.

Equipment

Cost leadership is essential for the competitive position of Boskalis. In recent years, the company has

made considerable investments in an extensive fleet program, increasing capacity in accordance with

market developments and replacing older tonnage with highly efficient, state-of-the-art ships.

The extension of the mega trailing suction hopper dredger W.D. Fairway was completed in early 2003,

increasing her capacity from 23,000 m3 to 35,500 m3. Immediately thereafter, the W.D. Fairway was

successfully used for phase II of the ‘Port of Tanjung Pelepas’ project in Malaysia. In August, the trailing

suction hopper dredger Prins der Nederlanden was named and launched by Her Majesty the Queen of

the Netherlands. This is the first of two new innovative ships measuring 16,000 m3 each, that are being

built as part of the multi-year Boskalis fleet plans. The second ship will be launched on 20 March 2004.

Both ships will be completed in 2004.

In January 2003, one of the three largest cutter suction dredgers of Boskalis, the Oranje, sank. To replace

it, the cutter suction dredger Cyrus, that was acquired in 2002 from the liquidation of the Italian dredging

company Dragomar, was refitted to meet Boskalis standards. This vessel has now been operational

since mid-2003.

The trailing suction hopper dredger Cosmos I, with a capacity of 6,000 m3, was also purchased and

went into service in 2003.

0

2

4

6

8

10

12

14

16

2003200220012000

11.411.1

12.2

14.3

Number of accidents per

million hours worked




Research and development

At Boskalis, research and development for dredging equipment and techniques enjoy a high priority.

The company has a great deal of expertise and experience in this area. These things are the basis for

continuous innovations. For many years, Boskalis has been engaged in research, partly on its own and

partly in joint projects with other companies working in the branch and with knowledge institutions.

For example in the past year the company has conducted its own research project into a new way

of removing sand in an environmentally friendly way from beneath a contaminated or unusable layer

without affecting that layer. This is known as ‘selective dredging’. A range of improvements to working

methods were also introduced, with practical experience being at the root of structural innovations.

A number of innovations were also developed in-house for the fleet. Examples are the dredging unit

of the new hopper Prins der Nederlanden and an advanced pontoon for the installation in sea of large

wastewater pipelines in Singapore. In collaboration with The Netherlands Organization for Applied

Scientific Research (TNO), work took place on the optimization of the dredging process on a trailing

suction hopper dredger. This study will continue in 2004.

Information and communications technology (ICT)

The major investments it has made in ICT infrastructure in recent years mean that Boskalis has the

right tools to operate efficiently in this area. Innovations continued during the year under review. For

example, Prinses, the new records and information system for human resources, went into operation.

The system will be extended further in 2004, finally being transformed into a fully integrated Human

Resources Management system. From that point onwards, it can be used effectively in the area of

competence management. The ERP system was implemented in Germany in 2003 and all office com-

puter systems were upgraded throughout the world to the present generation of software systems (XP).

The development and implementation were also completed of the new generation of production report-

ing systems for trailing suction hopper dredgers and cutter suction dredgers. Production levels can

now be reported on, analyzed and validated on board these ships. This makes it possible to tighten up

production processes and adjust them in good time.

In 2003, access protection in the Boskalis central systems was tightened up so that the systems are

now available to employees throughout the world.

Boskalis received the ‘ICT Boardroom Award’ in May 2003. This is a prestigious award for the most

innovative and successful use of ICT in the Dutch corporate sector. The award is an initiative of the

Ministry for Economic Affairs.

Prospects for the coming year

In 2004, capital expenditure will be lower than in 2003. The current extension and modernization

program for the fleet will be completed in mid-2004. It is expected that the capital expenditure will

be financed from the company’s own funds. This does not take into account the possibility of major

expansion opportunities.

In 2004, Boskalis will continue to focus on maintaining and, where possible, strengthening its market

position. This will involve tightening up the organization further, an operation involving the preparation

of a broad package of measures that will, over time, generate a structural margin enhancement of more

than € 20 million a year. The measures focus on sharper purchasing, the rationalization of equipment

and the organization, as well as better portfolio management for the home markets. Worldwide,

they will lead to a reduction in the workforce of approximately 450, roughly 200 of which will be in

The Netherlands. For this package of measures, a one-off charge is foreseen for the result for 2004

(order of magnitude € 15 – 20 million).


46



Boskalis does not have high expectations for the results for 2004. On balance, turnover and fleet utilization

are not expected to be an improvement on 2003, and margins are tending to tighten. Given all the

uncertainties at present, a specific profit forecast for 2004 is not feasible.

In conclusion

In 2003, the Boskalis workforce demonstrated its commitment and professionalism. They have responded

to challenges presented by the adverse market conditions and their contributions have allowed Boskalis to

achieve a good result in 2003. The Board of Management is grateful to the workforce for their contribution

and wishes to express its sincere thanks to them.

Papendrecht / Sliedrecht, 9 March 2004

Board of Management

R. van Gelder BA

Dr. P.A.M. Berdowski

K.G. van Nes

A.H.A. Hoevenaars



The cutter suction dredger

Tejo busy with maintenance

work on the entrance channel

in the Bahía de Cadiz,

San Fernando, Spain.



Winning the prestigious ICT Boardroom Award, given

for the most innovative and successful implementation

of information and computing technology in the Dutch

corporate sector, was the crowning glory of the ICT

Department in May 2003. In five years’ time, this

department transformed the fragmented ICT infra-

structure into an up-to-date and coherent whole.

“The jury was impressed by management’s courage in

jumping in at the deep end to reorganize and streamline

the entire infrastructure, which consisted of numerous

applications and systems”, was the comment made by

ICT manager Sjaak Stam about the award, “especially

because of the project-based approach of our company,

our sites all over the world, and the complex logistics

that these involve. This transformation would never have

succeeded without the commitment of management,

who realize that ICT is a cornerstone of business

operations in today’s world.

“With the old system, data interchange, which is vital if a

company wants to operate efficiently and be competitive,

was cumbersome. We now have a system that links all

the different business units, thereby optimizing internal

procedures. We’ve also built a global network that gives

our employees access to the information essential to

the planning and implementation of their work no matter

where they are in the world – on land or at sea.”

“We’ve been working with the ERP-system Baan since

1 January 2002”, says Kees Wielaart, financial manager

of Boskalis bv. “The people who use the system every

day have invested a great deal of energy to get this far,

and their efforts are paying off now. We’ve also laid the

foundation on which future improvements to the system

can be made.

“I personally think that the reports generated by the

system offer the greatest advantage. In the past, each

person had his or her own way of doing it. Now there’s

a standard that everyone must adhere to, which means

that the data is more reliable and that we have a better

tool for managing the organization.”

Left Sjaak Stam, ICT manager

and right Kees Wielaart,

financial manager Boskalis bv.

From fragmentation to cohesion:

ICT as lynchpin



“We’ve also built a global network

that gives our employees access

to the information essential to

the planning and implementation

of their work, no matter where

they are in the world – on land

or at sea.”

“Our ICT infrastructure makes the difference;

it is one of the lynchpins of our business operations.”

The establishment of a

global network makes the

exchange of data possible

and optimizes the internal

working procedures.

The sites around the world

and the complex logistics

this involves are the

daily challenge for the

purchasing department.



Report of the Supervisory Board

Repor t o f the Superv i so ry Board

Financial statements

In accordance with Article 26 of the Articles of Association of Royal Boskalis Westminster nv, the

Supervisory Board presents the Annual Report for 2003 to the Annual General Meeting of Shareholders.

The Annual Report 2003, including the financial statements for the same year, was presented to the

Supervisory Board by the Board of Management. The financial statements, which have been audited

and approved by KPMG Accountants N.V., have been adopted unchanged by the Supervisory Board.

We recommend to the Annual General Meeting of Shareholders:

• the adoption of the annual accounts, including the proposed profit appropriation;

• the discharge of the members of the Board of Management in respect of their management activities;

• the discharge of the members of the Supervisory Board for their supervision of management during

the year 2003;

• the distribution of a dividend to shareholders of € 1.04 per share.

Membership of the Board of Management

There was a change to the Board of Management in the year under review. Mr. A.H.A. Hoevenaars was

appointed by our Board to the Board of Management of the company with effect from 1 July 2003 after

the General Meeting of Shareholders had been informed of his nomination during an Extraordinary

General Meeting of Shareholders on 30 June 2003. The Board of Management now consists of

four members.

Membership of the Supervisory Board

Messrs. M. van der Vorm and A.A. Westerlaken retired by rotation on 14 May 2003 and were

reappointed with effect from the same date for a period of four years.

Mr. S.D. de Bree, whose current period of office ends at the 2006 Annual General Meeting of Shareholders,

has decided to resign his position at the end of the next Annual General Meeting of Shareholders.

The reason for this step is that both the Tabaksblat Code and the Sarbanes Oxley Act have generated

an excessive increase in his workload. The Supervisory Board intends to appoint Mr. M.W. Dekker as

chairman and to fill the resulting vacancy in the near future.

Activities of the Supervisory Board

The Board had six meetings with the Board of Management during the period under review.

Preparations for the meetings were made by the chairman of the Supervisory Board and the chairman

of the Board of Management. Permanent items on the agenda were the results and the balance sheet,

as well as industry and market developments. Other subjects discussed included strategic positioning,

corporate budget, liquidity, continuity, acquisition and investment proposals, organizational structure,

internal control and risk management, as well as the personnel policy, health, safety and the environ-

ment. It was decided, subject to approval from the shareholders, to distribute a dividend for 2003 of

€ 1.04. Shareholders may opt to take this dividend entirely in stock or entirely in cash.




Furthermore, the Supervisory Board was interested to take note of the publication on 9 December 2003

by the Tabaksblat Commission of the Dutch Corporate Governance Code (the ‘Code’). The principles of

sound corporate governance and best-practice provisions stated both in the Code and in the draft version

were discussed during joint meetings of our two boards. The Supervisory Board is of the opinion that

the company already acts in accordance with a large number of the recommendations or that simple

steps will be adequate to achieve compliance. Nevertheless, the Board believes that a critical appraisal

of the recommendations is appropriate. For a further provisional discussion of the Code of the

Tabaksblat Commission, the reader is referred to the Corporate Governance section in the report of

the Board of Management on pages 24 and 25.

The Board discussed membership and the allocation of duties within the Board of Management.

Possible succession options for the Board of Management and top management were also discussed.

The chairman of the Supervisory Board has had regular discussions at other times with the chairman of

the Board of Management and with other members of the Supervisory Board.

The Supervisory Board determines the remuneration for the members of the Board of Management

pursuant to the recommendations of the Remuneration Committee. The policy focuses on the success-

ful recruitment and retention of qualified managers for a listed company with international operations

and a global presence that uses specialized technological activities and capital-intensive equipment.

The remuneration includes a fixed salary, a variable salary and a pension plan. The amount and compo-

sition of the package is determined on the basis of the Dutch labor market and also on the basis of a

reference group of companies that are comparable to Boskalis in terms of size and complexity.

In addition to the fixed salary, there are bonus arrangements for the short term (i.e. 1 year) and the long

term (i.e. 3 years). The short-term bonus can amount to a maximum of 60% of the fixed annual salary.

There are two types of criteria that determine the amount of the short-term bonus. One half is linked to

the return on capital employed, the other half to clearly defined personal targets. The long-term bonus

can also amount to a maximum of 60% of the fixed annual salary. One half depends on the criterion

‘creation of shareholder value’; the other half is determined by two other criteria linked to long-term

policy objectives.

For an overview of individual payments to the members of the Board of Management, the reader is

referred to page 71 of the annual report. The variable payment awarded in 2003 relates to the 2002

financial year. In addition, one of the members of the Board of Management, Mr. P.A.M. Berdowski,

received an additional payment of € 633,000. This is linked to an agreement made between

Mr. Berdowski and the Supervisory Board upon his appointment in 1997 with respect to his long-

term incentive. He has, for good reasons, not participated in the option scheme currently in place.


52



In addition, the Supervisory Board, pursuant to the recommendations of the Remuneration Committee,

has examined the payments made to the members of the Supervisory Board. The current arrangements

were adopted at the Annual General Meeting of Shareholders in 1992 and they have not changed since.

The Supervisory Board will submit a proposal to the shareholders at the 2004 Annual General Meeting

of Shareholders for the updating of payments for the chairman and members of the Board.

The Supervisory Board has met twice without the Board of Management. A range of subjects were

discussed on those occasions. Items on the agenda included the performance of the Board and of

individual members of the Supervisory Board as well as that of the Board of Management, and appoint-

ments to cover expected vacancies. Decisions were also taken about the remuneration policy and its

practical implementation.

Members of the Supervisory Board were also interested participants at consultative meetings of the

Works Council. There were also discussions between the members of the Supervisory Board and the

Works Council.

All activities of the Supervisory Board were carried out in accordance with its standing rules.

The Board extends its compliments to the company’s employees and the Board of Management for the

results achieved and for the policy pursued in 2003 – a year dominated by difficult market conditions –

and expresses its special appreciation for the dedication and commitment shown by all.


The Supervisory Board

S.D. de Bree 1)

J. Aalberts

M.W. Dekker 1)

M. van der Vorm

A.A. Westerlaken

1) Members of the Remuneration Committee


In 2003, the crane vessel Kreeft

used an environmental grab

with a horizontal action to

dredge the polluted harbor

of Urk in The Netherlands.




Increasingly, infrastructure projects are being imple-

mented by means of Public-Private Initiatives (PPI).

Boskalis also stands out by offering customized

financing solutions for such projects.

“PPI is an umbrella term for various types of projects in

which the government joins forces with the business

community. The objectives are to capitalize on the

qualities and potential of both parties and jointly manage

risks intelligently,” says Jelke Jan de With, manager of

Boskalis bv. “Over the last several years, the first such

initiatives in The Netherlands have been carried out –

the construction of the Betuwe line and the RW 11 and

A59 freeways, for example. PPI actually increases the

chances of success of complex projects like the Tweede

Maasvlakte and coastal defense works.

“PPI allows us to participate with the client in the

decision-making process and to propose innovative

solutions, leading to greater efficiency both in terms

of design and implementation. Basically, it’s a win-win

situation, not least for the ‘real’ customers like those who

use the roads, which can be laid faster thanks to PPI.

“The success of a Public-Private Initiative depends on

trusting each other and sharing the passion for creating

the best product possible are the keys to a fruitful part-

nership.”

“Boskalis is also active in the most progressive form of

PPI,” says Group Treasurer Frank Rousseau. “In this type

of initiative, the business community is responsible for

financing the project. We have many years’ experience

in project financing abroad. With this expertise, we can

offer customers a comprehensive package – the techni-

cal solution, implementation, project management, and

access to funding. In The Netherlands, the role of the

business community in financing projects is becoming

increasingly important as a result of greater demand for

new infrastructure and limited government budgets.

It is important to take advantage of this development.

Clearly, these kinds of innovative contracts are a means

of generating work.”

Left Frank Rousseau, Group Treasurer

and right Jelke Jan de With,

manager Boskalis bv.

Public-Private Initiatives lead

to greater efficiency


Work on the A59. The first DBFM

(Design, Build, Finance & Maintain)

contract for road infrastructure in

The Netherlands was drawn up

for this restructuring of the N50

road between Rosmalen and

Geffen.

“PPI allows us to participate with the client in the

decision-making process. So we can make the difference.”

Work on the N11 road

between Alphen aan

den Rijn and Bodegraven,

carried out under a pioneer-

ing Design, Build, Maintain

& Finance contract.

The PFI (Private Financing

Initiative) coastal defense

project in Pevensey Bay in

the United Kingdom, that

has now received 2 awards.


56

Financial Statements 2003


General

The financial statements on pages 56 to 78 have been prepared on the basis of historical cost. Unless

stated otherwise, assets and liabilities have been included at nominal value less such provisions as are

considered necessary. Profits are accounted for when realization is sufficiently certain; losses are provided

for as soon as they are foreseen.

Change in accounting principles

In previous years, the result on work in progress was based on completed contracts, with the exception

of major long-term projects (with a contract value in excess of € 25 million). If the result could be deter-

mined reliably, the profit on these projects was taken in proportion to the progress of work on the basis

of costs spent. With effect from the 2003 financial year, results on all work in progress will be stated on

the basis of the expected result on completion of the work, and in proportion to progress made on the

basis of the cost price of the work done during the period under review. The profit will not be taken on

work in progress until a reliable estimate can be made of the result on completion of the work. Provi-

sions will be made for expected losses as soon as they are foreseen and deducted from the cost price.

Turnover consists of the cost price of the work done during the period under review, plus the result

determined in accordance with the system described here. This procedure is usual in the contracting

world and is the method preferred by the Dutch Guidelines for annual reporting. This system is also

required by the International Financial Reporting Standards (IFRS), which the company will meet with

effect from the 2005 financial year. The change has been implemented through the profit and loss

account. The result for the financial year has been determined using the new system. The one-off

cumulative effect for the position as at 1 January 2003 has been entered under other operating

income in the operating result. The effect on the comparative figures for 2002 has been explained in

the explanatory notes.

Change in estimation principles

The settlement of a number of tax assessments that have been outstanding for some time now and of

associated tax disputes have made the tax position of the company clearer. Consequently, on the basis

of the prevailing reporting standards, deferred tax claims have been included in the balance sheet for

the 2003 financial year.

These deferred tax claims, which are in part offset by related deferred tax liabilities, consist

primarily of:

• a higher tax valuation of equipment;

• provisions not formed for tax purposes;

• timing differences relating to costs and revenues;

• future recapture foreign branch losses.

The balance of the deferred tax claims has been entered at nominal value. Given the fact that the timing

of the settlement of these deferred tax claims coincides to a large extent with the timing of the settle-

ment of the tax liabilities included in the long-term liabilities, the two amounts have been netted.

Principles of f inancial report ing

-00148_JV2_CijfersENG 07-04-2004 10:04 Pagina 56



Consolidation

The consolidated statements include Royal Boskalis Westminster nv and its group companies. Group

companies are those companies in which Royal Boskalis Westminster nv, either directly or indirectly,

solely or on the basis of an agreement with other shareholders, holds more than 50% of the voting

shares and has a decisive management influence. The statements for these group companies are

fully consolidated.

The key consolidated group companies are listed in note 1. of the explanatory notes to the consolidated

balance sheet and profit and loss account. Joint ventures are consolidated in proportion to the interest

held therein, in so far as the activities are identical or complementary to those of the group. Jointly

controlled entities are also consolidated in proportion to the interest held therein.

Goodwill

The difference between acquisition cost and net asset value, based on the accounting principles of

Royal Boskalis Westminster nv, arising from the acquisition of group companies or from investments in

associated companies, is capitalized and consistently amortized through the profit and loss account

during the estimated economic lifetime.

Foreign currencies

All assets and liabilities of foreign group companies are translated at the rates of exchange prevailing at

the end of the year, with the exception of tangible fixed assets used internationally, which are translated

at the rates of exchange prevailing at the time of acquisition of the assets concerned. The results of

foreign group companies are translated at the average rates of exchange prevailing during the year,

with the exception of the amounts charged for depreciation, which are translated at the same rates of

exchange as the assets concerned.

Currency translation differences resulting from the application of these principles are directly credited

or charged to other reserves.

In principle, contracts for projects which are denominated in foreign currencies are fully hedged by

means of financial derivatives, usually forward exchange contracts. Valuation of these contracts and

the relevant assets and liabilities is based on the prevailing forward rate. Financial derivatives are not

used when there are no real underlying transactions.

Other assets and liabilities denominated in foreign currencies are translated at the rates of exchange

prevailing at the end of the year. Exchange differences relating to transactions in foreign currencies are

included in other operating income.


58



Tangible fixed assets

The book value of tangible fixed assets is calculated by deducting the accumulated depreciation charges

from the cost of acquisition. Interest paid during construction is not capitalized. Investment grants

received as subsidies for the building of sea-going vessels are deducted from the acquisition cost.

Large equipment commissioned since 1996 is depreciated on the basis of acquisition cost. The depre-

ciation charges are based upon the expected economic lifetime of the assets. For the fleet, life expect-

ancy is in general 15 - 18 years. For other construction equipment, it is an average of 5 years. Large

equipment commissioned before 1996 is depreciated using the declining balance method on the basis

of a fixed percentage of the book value, taking into account an estimated residual value. Investments in

floating and other contract-related construction equipment are depreciated over a shorter period of time.

The remaining assets are depreciated on the basis of a fixed percentage of the acquisition cost, based

upon a period of use of 10 - 50 years for buildings, and 4 years for furniture, fixtures and fittings, etc.

Land is not depreciated, with the exception of land for sand production, which is depreciated according

to the tonnage principle.

The long-term operational lease agreement for the trailing suction hopper dredger Stuyvesant concluded

by a foreign group company has not been capitalized due to the fact that Royal Boskalis Westminster

nv is not the economic owner of this vessel. The financial commitments relating thereto are accounted

for under Commitments and contingent liabilities.

Financial fixed assets

The valuation of associated companies is based upon the Royal Boskalis Westminster nv share in the

net asset value, in accordance with the balance sheets prepared by the companies concerned, less such

provisions as are deemed necessary. Profits made in countries with weak currencies and/or transfer

restrictions are only accounted for when conversion into hard currency has been secured. The valuation

of other financial fixed assets is based upon nominal value or acquisition cost, less such provisions as

are deemed necessary.

Inventory

The inventory consists mainly of consumables and spare parts and is valued at average cost less such

provisions as are considered necessary.

Work in progress

Work in progress is valued at the cost price of work done, plus a part of the expected results on completion

of the work in proportion to the progress made. Provisions are made for expected losses on work in pro-

gress as soon as they are foreseen and deducted from the cost price. The cost price includes direct project

costs, consisting of direct payroll costs, materials, costs of subcontracted work, other direct costs and

rates for equipment used. The progress of a project is determined on the basis of the cost of the work

done in relation to the expected cost price of the project as a whole. The profit will not be taken on work

in progress until a reliable estimate can be made of the result on completion of the work. Progress pay-

ments invoiced and advance payments received are deducted from work in progress.




Provision

Provisions are made for commitments of uncertain size or uncertain timing which relate to the activities

of the company. The provision for deferred taxation results mainly from temporary differences between

the commercial and taxable results and is calculated at nominal value by using the applicable rate of

corporate income tax.

The provision for repairs is made for regular and overdue maintenance of plant and equipment, in order

to achieve a fair allocation of the repair costs over the years.

The provision for pensions relates to pension liabilities for past service costs not yet paid of a foreign

group company and has been discounted at the rate of 6%.

Net turnover

Net turnover consists of the cost of the work done during the period under review, plus a part of the

expected results on completion of the work in proportion to the progress made during that period, and

including and/or deducting the provisions formed, used or released during the period under review for

expected losses.

Operating result

The operating result consists of:

• actual results from the work done during the period of review in proportion to progress made;

• additions to, use or release of provisions for expected losses on work in progress;

• deferred profits from contracts completed in earlier years, realized during the reporting year;

• operational results of equipment, determined as the difference between the hire charges to projects

and the operational costs of equipment, including depreciation;

• general overhead costs;

• all other income and expenditure resulting from normal operations, including book profits on the sale

of tangible fixed assets and currency profits and losses.

Result from associated companies

This is the share of Royal Boskalis Westminster nv in the results after tax of associated companies.

Taxation

Corporate income tax is accounted for on the basis of the results reported, taking into consideration

the applicable fiscal rules and rates. Temporary differences are valued as deferred tax claims and/or

commitments, in so far as it is probable that tax profits will be available for settlement in the future.

The carrying forward of tax losses is not generally taken into account given the project-based approach

to activities in most countries.

Cash flow

The consolidated cash flow statement has been drawn up using the indirect method. Cash is defined

as bank deposits, cash and short-term bank debts.


60



Fixed assets

Tangible fixed assets (2) 607,756 544,700

Financial fixed assets

• associated companies (3) 52,051 56,271

• other financial fixed assets (4) 995 4,152

53,046 60,423

Total fixed assets 660,802 605,123

Current assets

Inventory 30,842 25,769

Work in progress (5) ( 112,329 ) ( 126,938 )

Debtors and prepayments (6) 331,682 380,771

Bank deposits and cash (7) 161,159 108,574

Total current assets 411,354 388,176

Current liabilities

Creditors and accruals (8) 474,115 446,521

Repayments and bank debts (9) 8,823 8,807

Total current liabilities 482,938 455,328

Net current assets ( 71,584 ) ( 67,152 )

Total assets less current liabilities 589,218 537,971

Long-term loans (10) 9,028 8,707

Long-term liabilities (11) 61,345 40,571

Provisions (12) 63,604 75,703

Shareholders’ equity (13) 455,241 412,990

589,218 537,971

(1) The figures in brackets outside the columns refer to the explanatory notes (see pages 63 - 73).

Consol idated balance sheet before prof i t appropriat ion(1)

( in € 1,000 ) 31 December 2003 31 December 2002




Net turnover (16) 1,045,523 1,123,510

Movement in work in progress – ( 88,704 )

Other operating income (17) 41,356 983

Total operating income 1,086,879 1,035,789

External costs (18) ( 745,756 ) ( 703,746 )

Wages and salaries (19) ( 144,586 ) ( 139,069 )

Social security costs (20) ( 47,640 ) ( 26,814 )

Depreciation of tangible fixed assets (2) ( 79,296 ) ( 66,649 )

Total operating costs ( 1,017,278 ) ( 936,278 )

Operating result 69,601 99,511

Interest received 3,019 4,497

Interest paid ( 3,016 ) ( 3,778 )

Result from associated companies (3) 8,337 9,758

Net financial income 8,340 10,477

Result before taxation 77,941 109,988

Taxation (21) ( 7,087 ) ( 27,892 )

Net result 70,854 82,096

Profit per share (€ 1.00) *) 2.66 3.16

Profit per share, fully diluted (€ 1.00) **) 2.66 3.16


*) Net profit for the financial year divided by the weighted average number of outstanding ordinary shares.

**) Profit for the financial year divided by the weighted average number of outstanding ordinary shares,

adjusted for all potential ordinary shares which will cause dilution effects.

Conso l ida ted p ro f i t and loss account(1)

( in € 1,000 ) 2003 2002


62



Cash flow from operations

Net result 70,854 82,096

Depreciation 79,296 66,649

Cash flow 150,150 148,745

(Increase) / decrease working capital 59,377 ( 12,360 )

(Increase) / decrease financial fixed assets 124 ( 6,653 )

(Decrease) / increase long-term liabilities 18,829 ( 10,649 )

Decrease provisions ( 8,667 ) ( 15,119 )

Direct movements in reserves and other movements 495 ( 54 )

Net cash flow from operations 220,308 103,910

Investments

Net investments in tangible fixed assets ( 148,257 ) ( 140,089 )

(In) / out of consolidation – ( 1,774 )

Acquisitions and disposals of group companies

and associated companies (7,807 ) 1,231

Total investments ( 156,064 ) ( 140,632 )

Financing

Decrease long-term loans + repayments on long-term loans ( 3,757 ) ( 2,866 )

Payment of dividend previous financial year ( 9,810 ) ( 30,960 )

Total financing ( 13,567 ) ( 33,826 )

Net cash flow from investments and financing ( 169,631 ) ( 174,458 )

(Decrease) / increase in bank deposits and

cash / other short-term bank debts 50,677 ( 70,548 )

Bank deposits and cash / other short-term bank debts

As at 1 January 103,047 173,595

As at 31 December 153,724 103,047

(Decrease) / increase in bank deposits and

cash / other short-term bank debts 50,677 ( 70,548 )

Conso l ida ted cash f low s ta tement

( in € 1,000 ) 2003 2002




1. General

Unless stated otherwise, all amounts in these explanatory notes are in thousands of euros. The consol-

idated balance sheet was drawn up before profit appropriation. The most important group companies

and proportionally consolidated participating interests included in the consolidation of Royal Boskalis

Westminster nv are:

The Netherlands

Aannemersbedrijf M. de Haan bv,

Drachtstercompagnie

Aannemingsmaatschappij Markus bv,

Halfweg

Archirodon Group NV, Dordrecht (40%)

Baggermaatschappij Boskalis bv,

Papendrecht

Baggermaatschappij Holland bv,

Papendrecht

Boskalis Cortlever Holding bv,

Amsterdam (51%) (new)

Boskalis Dolman bv, Dordrecht

Boskalis International bv, Sliedrecht

Boskalis Markus bv, Papendrecht

Boskalis Offshore bv, Papendrecht

Boskalis bv, Rotterdam

Boskalis Westminster Dredging bv,

Papendrecht

Boskalis Westminster International bv,

Papendrecht

Boskalis Finance bv, Papendrecht

BW Soco bv, Sliedrecht

A.H. Breijs & Zonen Onroerend

Goed bv, Rotterdam

A.H. Breijs & Zonen bv, Rotterdam

J. van Vliet bv, Wormerveer

Hydronamic bv, Sliedrecht

The complete list of consolidated group companies, joint ventures and associated companies has been filed at the Chamber of

Commerce in Rotterdam. Section 403, Part 9, Book 2 of the Netherlands Civil Code is applicable to a number of group companies

included in this list.

Other areas

Boskalis Westminster Ltd, Fareham

(United Kingdom)

Rock Fall Company Ltd, Ayrshire (United Kingdom)

Westminster Dredging Company Ltd, Fareham

(United Kingdom)

Irish Dredging Company Ltd, Cork (Ireland)

Boskalis Sweden AB, Gothenburg (Sweden)

Atlantique Dragage SARL, Nanterre (France)

Boskalis Offshore A/S, Randaberg (Norway)

Terramare Oy, Helsinki (Finland)

Sociedad Española de Dragados SA, Madrid (Spain)

Dragapor Dragagens de Portugal S.A., Alcochete

(Portugal)

Bagger- und Bauunternehmung Delta GmbH, Bremen

(Germany)

Heinrich Hirdes GmbH, Hamburg (Germany)

Heinrich Hirdes Wasser- und Tiefbau GmbH, Duisburg

(Germany)

Boskalis Westminster Middle East Ltd, Nicosia (Cyprus)

Beaver Dredging Company Ltd, Toronto (Canada)

Boskalis Westminster Inc., Wilmington

(United States of America)

Bean Stuyvesant LLC, Delaware

(United States of America) (50%)

Coastal and Inland Marine Services Inc., Ancon (Panama)

Dragamex SA de CV, Coatzacoalcos (Mexico) (50%)

Boscampo, Douala (Cameroon)

Boskalis Taiwan Ltd, Taipei (Taiwan)

Boskalis International (S.) Pte Ltd (Singapore)

Riovia SA, Montevideo (Uruguay)

Zinkcon Marine Singapore Pte Ltd (Singapore)

Explanatory notes to the consolidated balance sheet and profit and loss account


64



2. Tangible fixed assetsLand and Floating Other Fixed assets Tangible Total

buildings and other fixed not engaged fixed assets

construction assets in normal under

equipment operations construction

Balance as at 1 January 2003

Cost 56,552 1,048,523 33,830 452 101,305 1,240,662

Depreciation ( 22,788 ) ( 651,258 ) ( 21,745 ) ( 171 ) – ( 695,962 )

Net book value 33,764 397,265 12,085 281 101,305 544,700

Movements

Additions 1,564 22,139 12,463 – 113,081 149,247

In / (out of) consolidation ( 57 ) 4,966 ( 134 ) – – 4,775

Taken into service 2,399 92,061 ( 12 ) – ( 94,448 ) –

Disposals at net book value ( 17 ) ( 4,959 ) ( 1,778 ) – 82 ( 6,672 )

Depreciation ( 2,871 ) ( 70,905 ) ( 5,505 ) ( 17 ) 2 ( 79,296 )

Currency translation differences

and other movements ( 908 ) ( 2,673 ) ( 952 ) ( 30 ) ( 435 ) ( 4,998 )

Total movements in 2003 110 40,629 4,082 ( 47 ) 18,282 63,056

Balance as at 31 December 2003

Cost 61,050 1,094,917 38,494 392 119,587 1,314,440

Depreciation ( 27,176 ) ( 657,023 ) ( 22,327 ) ( 158 ) – ( 706,684 )

Net book value 33,874 437,894 16,167 234 119,587 607,756

Depreciation includes an additional item for a number of older units as a result of fleet rationalization

(€ 7.1 million). The current value of floating and other construction equipment considerably exceeds

the book value, which is based on historical cost and related depreciation. For land and buildings it is

reasonable to assume that the current value exceeds the net book value to some extent. An amount

of € 1.0 million, representing land used for sand production, has been accounted for under land and

buildings (2002: € 1.5 million).

3. Associated companies

The key associated companies are:

Bean Meridian Holding LLC, Delaware, United States of America 25%

Bean Excavation LLC, Delaware, United States of America 25%

Bean Meridian LLC, Delaware, United States of America 25%

Lamnalco Ltd, Nicosia, Cyprus 50%

RW Aggregates Ltd, Dorking, United Kingdom 50%




Movements during 2003 were as follows:

Book value as at 1 January 2003 56,271

Share of results 8,337

Dividends received ( 2,239 )

Investments / divestments ( 2,361 )

Currency translation differences and other movements ( 7,957 )

Book value as at 31 December 2003 52,051

4. Other financial fixed assets



Other movements ( 3,157 )

Book value as at 31 December 2003 995

5. Work in progress 2003 2002

Work in progress 1,048,091 894,607

Progress payments ( 1,160,420 ) ( 1,021,545 )

( 112,329 ) ( 126,938 )

Work in progress includes contracts of which the value of work done exceeds

customer progress payments. At year-end 2003, the total amounts of the value

of work done and the customer progress payments of these contracts were

€ 400.8 million and € 356.6 million respectively (2002: € 427.2 million and

€ 374.0 million respectively).

As a result of the change in the system for profit-taking on work in progress,

the value of the work in progress was increased with effect from 1 January

2003 by the accumulated profit on work in progress before taxation in

proportion to progress.

6. Debtors and prepayments 2003 2002

Trade debtors 183,770 196,003

Amounts due from associated companies 14,955 22,077

Other debtors and prepayments 132,957 162,691

331,682 380,771

Included in Other debtors and prepayments as at the end of 2003 are

receivables amounting to € 2.1 million which do not fall due within one

year (2002: € 4.7 million).


66



7. Bank deposits and cash

This includes € 60.6 million (2002: € 46.9 million) of joint-venture funds.

In addition, at year-end 2003, € 6.3 million was in restricted cash (2002:

€ 6.2 million). The remaining funds at the end of 2003 are at free disposal.

In order to hedge exchange and interest rate risks related to lease obligations

for the trailing suction hopper dredger W.D. Fairway, a currency swap has been

concluded and two deposits are held.

The commitments related to this swap have been fully paid in advance. The dis-

counted value of these lease obligations, amounting to € 67.9 million as per

31 December 2003 (2002: € 69.0 million), is offset against the value of the cur-

rency swap and the related deposits, which also amounts to € 67.9 million.

8. Creditors and accruals 2003 2002

Trade creditors 94,700 85,544

Amounts due to associated companies 4,356 8,426

Corporate taxes 28,736 55,334

Other taxes and social security payables 40,218 29,422

Pensions 6,000 –

Other creditors and accruals 300,105 267,795

474,115 446,521

9. Repayments and bank debts 2003 2002

Repayments on long-term loans 1,388 3,280

Other debts 7,435 5,527

8,823 8,807

With respect to an amount of € 0.3 million in other bank loans, securities have

been provided by means of the assignment of debts, a mortgage on equipment

and silent pledge for the same amount.

10. Long-term loans

As at 31 December 2003, the average interest rate for the long-term loans was

2.7%. The average remaining maturity period of these loans is approximately

2.5 years. Long-term loans with a remaining term in excess of five years are

approximately nil. The repayments due in 2004 are accounted for under repay-

ments and bank debts. By means of a mortgage on equipment and silent

pledge, securities have been provided in respect of € 0.5 million of the long-

term loans outstanding as at year-end 2003.



11. Long-term liabilities 2003 2002

Taxes 19,134 16,142

Pensions 12,000 –

Other creditors and accruals 30,211 24,429

61,345 40,571

Long-term taxes payable consist of taxes that are due after one year but expected

to be due within five years. Pension liabilities elapse within five years. No interest

is due on creditors and accruals and payment is expected to be due after

five years.

12. Provisions

Deferred Maintenance Pensions Other Total

taxation and repair

Balance as at 1 January 2003 22,811 45,837 3,810 3,245 75,703

Additions 5,292 71,572 90 22 76,976

Withdrawals – ( 80,333 ) – – ( 80,333 )

Released / Change in

estimation principles ( 4,580 ) – ( 96 ) ( 272 ) ( 4,948 )

Currency translation

differences ( 1,075 ) ( 2,430 ) – ( 289 ) ( 3,794 )

Balance as at

31 December 2003 22,448 34,646 3,804 2,706 63,604

The provision for deferred taxation mainly refers to temporary differences

between the fiscal and commercial valuation of equipment lasting more than

one year. The provision for pensions relates to pension liabilities involving

employees and former employees of a foreign group company. These liabilities

are not reinsured except for the widow’s and orphan’s pensions. Included under

Other provisions are provisions for warranties, current legal proceedings and

submitted claims. The provisions are predominantly long-term in nature, with

the exception of the provision for maintenance and repair, of which an

estimated € 25 million is short-term in nature.

13. Shareholders’ equity

Reference is made to notes 3. - 5. of the explanatory notes to the company

balance sheet and profit and loss account.



68


14. Financial instruments

General. Pursuant to a financial policy agreed by the Board of Management, Royal Boskalis Westminster

nv and its group companies use several financial instruments in the ordinary course of business. These

are financial instruments that are accounted for under assets and liabilities as well as instruments not

accounted for on the balance sheet. A large proportion of projects are contracted in foreign currencies.

In principle, positions in foreign currency are fully hedged, usually by means of forward contracts. Financial

derivatives (forward contracts, options etc.) are not used unless there is an underlying real transaction.

In respect of controlling interest risks, the premise is that, in principle, interest rates for loans payable

are fixed for the entire maturity period. This is achieved by contracting loans that carry a fixed interest

rate or by using derivatives such as interest rate swaps.

Given the nature of the activities and the corresponding strongly fluctuating cash flows, the available

cash funds are usually not tied up for periods longer than one year.

Royal Boskalis Westminster nv has a strict acceptance and hedging policy for political and payment

risks. In principle, payment risks are hedged by means of bank guarantees, insurance, etc., except in

the case of credit-worthy, first-class debtors. These procedures and the geographical diversification of

the group companies’ activities reduce the risk carried by Royal Boskalis Westminster nv with regard to

credit concentration and market risks.

Financial instruments accounted for on the balance sheet. Financial instruments accounted for under

assets and liabilities are financial fixed assets, cash and accounts receivable, as well as short- and long-

term liabilities. The estimated real value of these financial instruments resembles the nominal value.

Off-balance-sheet financial instruments. The real value of the off-balance-sheet financial instruments as at

31 December 2003 reflects the unrealized result at revaluation of the contracts against calculated forward

exchange rates. As at 31 December 2003, the unrealized positive result amounts to € 28 million (2002:

€ 39 million positive). These unrealized results have been taken into account in the determination of the

book value of the underlying balance sheet items or the estimate of the results for ongoing projects and

acquired orders. The nominal value is € 406 million (2002: € 362 million).





15. Commitments and contingent liabilities

The guarantee commitments as at 31 December 2003 amount to € 501 million

and can be specified as follows (x € 1 million):

Guarantees provided by third parties on behalf of: 2003 2002

• associated companies 25 30

• contracts and joint ventures 441 475

• lease obligations and other financial obligations 35 46

501 551

For the above guarantees outstanding at the end of 2003, counter-guarantees

have been provided to financial institutions for approximately € 501 million

(2002: approximately € 551 million). Two key group companies are jointly and

severally liable in respect of several guarantees. In respect of credit facilities, it

has been agreed that no further securities on existing tangible fixed assets will

be provided.

Group companies are jointly and severally liable for the non-consolidated part

of the liabilities of their joint ventures, in total € 275 million. In addition, certain

recourse obligations exist in respect of project financiers. Where deemed nec-

essary, provisions have been made. In some countries, local group companies

have concluded long-term lease agreements on which the annual instalment

payments total approximately € 5 million. In respect of some matters, legal

proceedings and investigations have been instituted against Royal Boskalis

Westminster nv or group companies. Where deemed necessary, provisions

have been made. Investment commitments as at year-end 2003 amounted to

approximately € 75 million.

16. Net turnover

For the net turnover in respect of contracts completed and specified per geo-

graphical region, reference is made to note 22. of these explanatory notes.

The turnover in respect of work done, defined as the total value of work done for

third parties in 2003, amounted to € 1,046 million (2002: € 1,035 million).


70



17. Other operating income

Other operating income includes, in addition to currency results and book results,

the one-off cumulative effect of the change in the revenue recognition for work

in progress. The book result consists mainly of the book profit pursuant to the

insurance payment for the sunken cutter suction dredger Oranje (€ 13.3 million).

The cumulative effect of the change to the system, consisting of the accumulated

profits on work in progress in proportion to progress made in previous years,

amounts to € 26.7 million (the balance of the net turnover of € 301.2 million

and external costs of € 274.5 million). The inclusion of this item and associated

tax burden is, together with the pro forma results for the financial year 2002,

shown on the basis of the new system below in so far as there have been

changes.

One-off cumulative Pro forma

effect of change to system results

1 January 2003 2002

Net turnover – 1,037,845

Movement in work in progress – –

Other operating income 26,694 983

External costs – ( 710,028 )

Operating result 26,694 96,268

Taxation 7,235 ( 26,882 )

Net result 19,459 79,863

18. External costs

This includes costs related to the turnover and general operations, either paid

or payable to outside parties. Furthermore, this item includes the balance of

additions to, and withdrawals from, the provisions, excluding the provision for

deferred taxation and the provision for pensions.




19. Wages and salaries

The emoluments for directors and members of the Supervisory Board of Royal Boskalis Westminister nv

for 2003 were as follows:Periodical Payments Profit share and Total 2002

payments due bonus payment

Members of the Board of Management

R. van Gelder 377 82 166 625 666

P.A.M. Berdowski 322 55 759 1,136 534

K.G. van Nes 266 47 104 417 450

A.H.A. Hoevenaars (from 1.7.2003 onwards) 149 27 – 176 –

1,114 211 1,029 2,354 1,650

Members of the Supervisory Board

S.D. de Bree 25 – – 25 25

J. Aalberts 18 – – 18 18

M.W. Dekker 18 – – 18 18

M. van der Vorm 18 – – 18 18

A.A. Westerlaken 18 – – 18 18

97 – – 97 97

Total 1,211 211 1,029 2,451 1,747

The bonuses were given in part for the achievement of certain targets during the 2002 financial year.

These targets have been achieved. In addition, one of the members of the Board of Management, Mr.

P.A.M. Berdowski, received an additional payment of € 633,000. This is linked to an agreement made

between Mr. Berdowski and the Supervisory Board upon his appointment in 1997 with respect to his

long-term incentive. He has, for good reasons, not participated in the option scheme currently in place.

No loans or guarantees have been provided to, or on behalf of, the managing and supervisory directors.

At the end of 2003, the group companies included in the consolidation had a total of 3,186 employees

(2002: 3,285), of whom 1,680 (2002: 1,804) were paid on a weekly basis. The average number of

employees in 2003 was 3,202 (2002: 3,192).

20. Social security costs

These include an amount of € 31.1 million for pension costs (2002: € 11.4 million).

This figure also includes an additional charge for pensions of € 18 million resulting from a new financing

agreement entered into in 2003 with the Boskalis Westminster Nederland Pension Fund.

In that agreement, the company has undertaken to make an additional payment in three-year instalments

as part of the Recovery plan for the improvement of the financial position of the Pension Fund drawn up

in consultation with the Pensions and Insurance Supervisory Board.


72


21. Taxation

The operational activities of Royal Boskalis Westminster nv are subject to various

tax regimes with tax rates varying from 10% to 46%. These different tax rates, in

connection with fiscal facilities in various countries, results not subject to taxation

and non-deductible costs, lead to an effective tax rate in the reporting period of

9.1% (2002: 25.4%).

The average effective tax rate is calculated by dividing the taxation by the result

before taxation shown in the consolidated profit and loss account. The reconciliation

between the weighted average tax rate and the effective tax rate is as follows

(in percentages):

2003 2002

Weighted average tax rate 32.0 28.1

Tax effect of:

Utilization of non-capitalized losses carried forward ( 1.8 ) ( 4.9 )

Non-capitalized future losses carried forward 10.1 3.9

Results not subject to taxation and non-deductible costs ( 6.7 ) ( 5.2 )

Non-deductible and exceptional regimes ( 1.8 ) 3.5

Change in estimation principles ( 22.7 ) –

Effective tax rate 9.1 25.4

In addition to taxes on profits from operating activities, taxation includes the

effect of the change in estimation principles made during the financial year with

respect to deferred taxation claims. This effect amounts to € 17.7 million.

22. Segmentation

Royal Boskalis Westminster nv is a dredging contractor with international

operations and a strong focus. The necessary assets are generally not region-

specific and can be deployed worldwide. Given the nature of the activities, each

individual project at Royal Boskalis Westminster nv has its own risk and return

profile. A correct picture can only be obtained by evaluating the activities jointly

as a complete portfolio. To understand the risk and return profile of Royal

Boskalis Westminster nv, it is therefore less relevant to provide detailed infor-

mation on the various activities and geographical regions. Although not decisive

for the risk and return profile, the organizational and management structure of

the corporation and the internal system of financial reporting to the Board of

Management are mainly based on geographical regions. These regions are

therefore used as a secondary segmentation basis.





The consolidated information per geographical segment can be specified

as follows (2003: turnover work done, 2002: turnover completed contracts)

(in € 1 million):

2003 2002

Net Total Total Net Total Total

turnover book value investments turnover book value investments

work tangible tangible completed tangible tangible

done fixed assets* fixed assets* contracts fixed assets* fixed assets*

The Netherlands 230 311

Rest of Europe 219 174

Australia / Asia 223 209

Middle East 113 162

Africa 106 114

North and South America 155 154

1,046 608 149 1,124 545 152

*) The tangible fixed assets of Royal Boskalis Westminster nv mainly consist of equipment used

globally on a project basis. As a consequence this equipment could not be allocated to the individual

geographical segments.


74


Annua l Repo r t 20037474747474

Fixed assets

Investment in group company (2) 458,602 414,705

Total fixed assets 458,602 414,705

Current assets

Amounts due from group companies – –

Total current assets – –

Current liabilities

Amounts due to group companies 3,361 1,715

Total current liabilities 3,361 1,715

Net current assets ( 3,361 ) ( 1,715 )

Total assets less current liabilities 455,241 412,990

Shareholders’ equity

Issued and fully paid share capital (3) 65,415 63,520

Share premium reserve (4) 14,635 17,650

Other reserves (5) 304,337 249,724

Non-distributed profit 70,854 82,096

455,241 412,990


Company ba lance sheet before prof i t appropr ia t ion(1)

( in € 1,000 ) 31 December 2003 31 December 2002




Company result ( 281 ) ( 1,512 )

Result of group company (2) 71,135 83,608

Net result 70,854 82,096


Company pro f i t and loss account(1)

( in € 1,000 ) 2003 2002


76


Annua l Repo r t 20037676767676

1. General

Unless stated otherwise, all amounts in these explanatory notes are stated in

thousands of euros. The company balance sheet was drawn up before profit

appropriation. The company profit and loss account is limited in accordance

with Section 402, Part 9, Book 2 of the Netherlands Civil Code.

2. Investment in group company

This refers to the 100% investment in Boskalis Westminster Dredging bv,

Papendrecht.



Dividend received 2002 ( 16,000 )

Changes in ownership of own ordinary shares 8,050

Currency translation differences ( 19,288 )

Result of group company 71,135

Book value as at 31 December 2003 458,602

3. Issued and fully paid share capital

The authorized share capital of € 240 million is divided into 50,000,000 ordinary

shares and 50,000,000 cumulative protective preference shares of € 2.40 par

value each.

Movements of the issued and fully paid share capital were as follows:

2003 2002

Balance as at 1 January 63,520 63,520

Stock dividend 1,895 –

Balance as at 31 December 65,415 63,520

Movements in the number of ordinary shares

owned by the company were as follows: 2003 2002


Exercised option rights ( 30,000 ) ( 53,500 )

Stock dividend ( 466,744 ) –

Balance as at 31 December – 496,744

The issued and fully paid share capital as at 31 December 2003 consists of

27,256,249 ordinary shares of € 2.40 par value each and consequently amounts

to € 65.4 million. In 1997 and 1998, option rights were granted to twenty senior

managers of Royal Boskalis Westminster nv and its group companies.

The remaining rights were exercised in 2003.

Furthermore a stock dividend was distributed for 2002 and charged to the share

premium reserve. For that purpose, 789,396 new shares were issued in addition

to 466,744 ordinary shares owned by the company. Of the issued and fully paid

share capital as at 31 December 2003, no ordinary shares were owned by Royal

Boskalis Westminster nv.

Explanatory notes to the company balance sheet and profit and loss account




The number of outstanding options as at 31 December 2003, with one option

entitling the holder to one ordinary share, was as follows:

Year Outstanding Exercised Outstanding Exercise Maturity

granted options as at options options as at price until

31 December 31 December

2002 2003

Directors

R. van Gelder 1998 20,000 ( 20,000 ) – € 15.70 8 April 2003

20,000 ( 20,000 ) –

Staff 1998 10,000 ( 10,000 ) – € 15.70 8 April 2003

10,000 ( 10,000 ) –

Total 1998 30,000 ( 30,000 ) – € 15.70 8 April 2003

30,000 ( 30,000 ) –

The number of shares owned by directors as at 31 December 2003 is as follows:

R. van Gelder 37,500

37,500

4. Share premium reserve

Movements were as follows: 2003 2002


Stock dividend ( 3,015 ) –


The entire share premium reserve is distributable free of tax.

5. Other reserves

Movements were as follows: 2003 2002


Profit appropriation for previous reporting year 73,406 46,758

Issue of formerly purchased own ordinary shares

for purposes of exercised options 495 893

Currency translation differences and other movements ( 19,288 ) ( 15,008 )


A legal reserve for non-distributed profits of group and/or associated

companies was not required at the end of 2003.


78


Annua l Repo r t 20037878787878

6. Commitments and contingent liabilities

Royal Boskalis Westminster nv heads the fiscal entity which includes almost all

Dutch 100% subsidiaries.

The company is therefore liable for the tax obligations of the fiscal entity as a whole.

The company has issued guarantees on behalf of contracts, joint ventures

and group companies. These amounted to € 3 million at the end of 2003

(2002: € 4 million).

Furthermore, the long-term operational lease commitments of a foreign group

company have been guaranteed for approximately € 5 million (2002: € 5 million)

per annum. In addition, certain recourse obligations exist in respect of project

financiers. Where deemed necessary, provisions have been made. In respect of

some matters, legal proceedings and investigations have been instituted against

Royal Boskalis Westminster nv or group companies. Where deemed necessary,

provisions have been made.


Supervisory Board

S.D. de Bree

J. Aalberts

M.W. Dekker

M. van der Vorm

A.A. Westerlaken

Board of Management

R. van Gelder BA

Dr. P.A.M. Berdowski

K.G. van Nes

A.H.A. Hoevenaars



Other information

Provisions in the articles of association relating to profit appropriation

Article 27.

1. From the profits realized in any financial year, first of all, distributions will be made on cumulative protective

preference shares if possible, in the amount of the percentage specified below of the amount that has to

be paid up on these shares as from the beginning of the financial year to which the distribution is related.

The percentage referred to above equals the average Euribor interest rate determined for loans with a

term of one year – weighted in respect of the number of days to which this interest rate applied – during

the financial year to which the distribution is related, increased with four percentage points at most; this

increase will be determined every five years by the Board of Management subject to approval of the

Supervisory Board. If in the financial year in respect of which the above-mentioned distribution takes

place, the amount that has to be paid up on cumulative protective preference shares has been reduced

or, pursuant to a resolution for further payment, has been increased, the distribution shall be reduced or,

if possible, be increased with an amount equal to the above-mentioned percentage of the amount of the

reduction or the increase, as the case may be, calculated from the moment of the reduction or from the

moment further payment became compulsory. If in the course of any financial year cumulative protective

preference shares have been issued, the dividend on those cumulative protective preference shares shall be

reduced for that year in proportion to the day of issue, taking into account a part of a month as a full month.

2. If and in so far as the profit is not enough to realize the distribution referred to in paragraph 1, the deficit

shall be distributed from the reserves, subject to statutory provisions.

3. If in any financial year the profit referred to in paragraph 1 is not enough to realize the distributions

referred to above in this article, and furthermore no distribution or only a partial distribution from the

reserves as referred to in paragraph 2 is realized, so that the deficit is not or not completely distributed,

the provisions of this article and the provisions of the following paragraphs shall only apply in the next

financial years after the deficit has been made up for. After application of paragraphs 1, 2 and 3, no

further distribution shall take place on the cumulative protective preference shares.

4. Out of the remaining profit, an amount shall be reserved annually to the extent as shall be determined

by the combined meeting of the Board of Management and the Supervisory Board.

The remaining part of the profits after reservation, as referred to in the immediately preceding sentence,

is at the free disposal of the General Meeting of Shareholders and in case of distribution, the holders

of ordinary shares will be entitled thereto in proportion to their holding of ordinary shares.

Article 28.

1. Dividends shall be made available for payment within thirty days of their adoption, or any sooner as

the Board of Management may determine.

2. Unclaimed dividends will revert to the company after five years.

3. If the Board of Management, subject to the approval of the Supervisory Board, so decides, an interim

dividend shall be distributed, subject to the preference of the cumulative protective preference shares

and the provisions of article 2:105 of the Dutch Civil Code.

4. The General Meeting of Shareholders, on proposal of the Board of Management, may decide that dividends

will be distributed totally or partially in the form of shares in the company or depositary certificates thereof.

Other i n fo rmat ion


80

Other information

Annua l Repo r t 20038080808080

5. The company may only realize distributions to the shareholder to the extent that its equity capital exceeds

the amount of the subscribed capital, increased with the reserves that have to be maintained by law.

6. A deficit may only be offset against reserves that have to be maintained by law to the extent that this

is permitted by the law.

Proposed profit appropriation

In accordance with Article 27 of the articles of association, € 28.3 million of the net result after tax

will be appropriated for a dividend payment of € 1.04 per share. It is proposed to add the balance

of € 42.6 million to other reserves.

Shareholders may opt to take this dividend as follows:

• entirely in stock; the dividend will be charged to the tax-exempt share premium reserve or, if so

desired, to other reserves, or

• entirely in cash; € 1.04 per share will be distributed, after the deduction of dividend tax.

The option period will commence on 19 May and end on 3 June next. The conversion ratio between the

stock dividend and cash dividend will be announced on 4 June. The conversion ratio will be determined

on the basis of the average of the closing rate of the Boskalis share on 27 May, 28 May, 1 June, 2 June

and 3 June 2004. The new shares will share in the profit for the 2004 financial year and subsequent years.

Auditor’s report

Introduction. We have audited the 2003 financial statements as included in this annual report of Royal

Boskalis Westminster nv, Sliedrecht. These financial statements are the responsibility of the company’s

management. Our responsibility is to express an opinion on these financial statements based on our

audit.

Scope. We have conducted our audit in accordance with auditing standards generally accepted in

The Netherlands. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation.

Opinion. In our opinion, the financial statements give a true and fair view of the financial position of

the company as of 31 December 2003 and of the result for the year then ended in accordance with

accounting principles generally accepted in The Netherlands and comply with the financial reporting

requirements included in Part 9, Book 2, of The Netherlands Civil Code.

Rotterdam, 9 March 2004

KPMG Accountants N.V.



Stichting Continuïteit KBW

Report

The Stichting Continuïteit KBW has, pursuant to the decision of the General Meeting of Shareholders

held on 9 May 2001, acquired the right to take cumulative protective preference shares in Royal Boskalis

Westminster nv for a nominal amount which shall be equal to the nominal amount of ordinary shares

outstanding at the time of the issue.

The option of issuing the cumulative protective preference shares has not yet been exercised.

The Board of the Stichting Continuïteit KBW consists of three members:

W.E. de Vin

J.A. Dekker

J.F. van Duijne

Declaration of Independence

The Board of the Stichting Continuïteit KBW and the Board of Management of Royal Boskalis

Westminster nv hereby declare that, in their joint opinion, the requirements referred to in appendix X

of the Listing and Issuing Rules of Euronext Amsterdam N.V. in respect of the independence of the

Stichting Continuïteit KBW have been fulfilled.

Papendrecht, March 2004

Royal Boskalis Westminster nv

Board of Management

Stichting Continuïteit KBW

The Board

St ich t ing Cont inu ï te i t KBW



Ten years Boskalis

82828282

(amounts x € 1 million, unless stated otherwise)

2003(2)

2002 2001 2000 1999 1998 1997 1996 1995 1994

Turnover (work done) 1,046 1,035 1,083 960 851 801 697 569 493 582

Turnover (completed contracts) – 1,124 1,081 882 784 782 637 520 499 594

Orderbook (work to be done) (3) 1,124 1,273 1,224 1,214 820 785 661 593 400 322

EBIT (4) 77.9 109.3 103.4 89.7 77.6 63.2 44.2 32.0 33.8 41.0

EBITDA (5) 157.2 175.9 165.6 144.9 131.6 108.7 92.0 74.6 79.8 88.8

Net result 70.9 82.1 77.7 67.2 57.5 47.1 37.3 28.2 32.2 40.1

Depreciation 79.3 66.6 62.2 55.2 54.0 45.5 47.8 42.6 46.0 47.8

Cash flow 150.2 148.7 139.9 122.4 111.5 92.6 85.1 70.8 78.2 87.9

Shareholders’ equity (3) 455.2 413.0 376.0 327.4 288.8 253.5 225.3 203.2 184.0 165.0

Average number of outstanding shares

(x 1,000) (9) 26,630 25,949 25,900 25,784 25,902 25,941 25,788 25,650 25,441 25,200

Number of outstanding shares (x 1,000) (10) 27,256 25,970 25,917 25,881 25,902 25,941 25,788 25,650 25,441 25,200

Personnel (number of persons) (3) 3,186 3,285 3,119 3,295 3,186 3,115 3,075 3,179 2,679 2,905

Ratios (percentages)

Operating result as % of the turnover 6.7 8.9 9.0 9.6 9.4 7.3 6.5 5.5 6.2 6.5

Return on capital employed (6) 16.0 20.3 21.4 21.0 20.8 18.3 15.2 12.6 15.7 21.9

Return on equity (7) 16.3 20.8 22.1 21.8 21.2 19.7 17.4 14.5 18.4 26.9

Solvency (3/8) 42.5 41.6 38.4 37.5 39.6 18.7 16.6 16.8 17.2 15.4

Figures per share (x € 1.00)

Profit (9/11) 2.66 3.16 3.00 2.61 2.22 1.82 1.45 1.10 1.27 1.59

Cash flow (9) 5.64 5.73 5.40 4.75 4.30 3.57 3.30 2.76 3.07 3.49

Shareholders’ equity (3/10) 16.70 15.90 14.51 12.65 11.15 9.77 8.74 7.92 7.23 6.55

Dividend 1.04 1.26 1.20 1.05 0.90 0.73 0.57 0.50 0.50 0.57

Share price range (x € 1.00)

(Depositary receipts of) ordinary shares 16.51 17.80 25.15 16.50 10.50 8.85 13.93 10.39 8.08 15.61

23.15 35.55 37.15 30.50 18.40 18.38 20.42 16.38 16.25 23.60

(1) Figures taken from the financial statements.

(2) Results on work in progress from 2003 onwards based on work done and up to and including 2002 based on completed contracts.

(3) As at 31 December.

(4) Consists of earnings before interest and taxation.

(5) Consists of earnings before interest, taxation, depreciation and amortization.

(6) Net result + interest paid on long-term loans as % of the average capital employed (shareholders' equity + long-term loans).

(7) Net result as % of the average shareholders’ equity.

(8) Shareholders’ equity as % of the balance sheet total (fixed assets + current assets).

(9) Weighted average number of outstanding shares less the number of shares owned by the company.

(10) Number of outstanding ordinary shares less the number of shares owned by the company.

(11) The dilution effect was practically nil up to the financial year 2003.

Ten years Boska l i s(1)


Legal structure

Lega l s t ruc tu re


Royal Boskalis Westminster nv

Boskalis Westminster Dredging bv

A selection of operating companies and participating interests.

Aannemersbedrijf M. de Haan bv Boskalis Infra bv

Aannemingsmaatschappij Markus bv Cofra Int bv (51%)

A.H. Breijs & Zonen bv Hydronamic bv

Baggermaatschappij Holland bv J. van Vliet bv

Boskalis bv Zinkcon Dekker bv

Boskalis Dolman bv

Boskalis Zinkcon Ltd Westminster Dredging Company Ltd

PVW Int. Dredging & Harbour Works Ltd Westminster Gravels Ltd

Rock Fall Company Ltd Zanen Dredging & Contracting Co. Ltd

RW Aggregates Ltd (50%)

Archirodon Group nv (40%) Coastal and Inland Marine Services Inc.

Atlantique Dragage SARL Delta GmbH

BKW Dredging and Contracting Ltd Dragamex SA de CV (50%)

Boskalis Australia Pty Ltd Dragapor Dragagens de Portugal S.A.

Boskalis Dredging India Pvt Ltd Dravensa CA

Boskalis International bv Heinrich Hirdes GmbH

Boskalis International Egypt SAE Heinrich Hirdes Kampfmittelräumung GmbH

Boskalis International (M) Sdn Bhd Koon Zinkcon Pte Ltd (50%)

Boskalis International (S) Pte Ltd Nigerian Westminster Dredging & Marine Ltd (60%)

Boskalis International Uruguay S.A. Paragon International Engineers & Consultants bv

Boskalis Dragomar S.r.l. P.T. Boskalis International Indonesia

Boskalis Guyana Inc. Riovia SA

Boskalis Polska Sp. z o.o. Soc. Española de Dragados SA

Boskalis South Africa (Pty) Ltd Stuyvesant Dredging Company

Boskalis Sweden AB Bean Stuyvesant LLC (50%)

Boskalis Taiwan Ltd Terramare Oy

Boskalis Westminster Aannemers N.V. Zinkcon Contractors bv

Boskalis Westminster Cameroun SARL Zinkcon Dekker Wasserbau GmbH

Boskalis Westminster (Oman) LLC (49%) Zinkcon International bv

Boskalis Zinkcon bv Zinkcon Marine Singapore Pte Ltd

Sandpiper A/S Boskalis Offshore A/S

Lamnalco Ltd (50%) Lamnalco (Nigeria) Ltd (50%)

Lamnalco (Malaysia) Sdn Bhd (24.5%) Lamnalco (Sharjah) Ltd (35%)

Lamnalco Namibia (Pty) Ltd (35%) Boskalis Westminster Al-Rushaid Ltd (49%)

Holding and service

companies

Baggermaatschappij

Boskalis bv

Boskalis

Westminster Ltd

Boskalis

Westminster

International bv

Boskalis Offshore bv

Boskalis Westminster

Middle East Ltd

Zanen Verstoep bv

BV Beheermaatschappij

T. den Breejen

van den Bout

Boskalis Finance bv



A structured human resources policy is important

both for individual employees and for the company

as a whole. With the broad-ranging implementation

of competence management, Boskalis is continuing

on the course it set for itself last year. Because

quality people make the difference.

“The right man or woman at the right place”, says

human resources manager Peter Hinssen, “that’s our

motto. Only then can people thrive and achieve great

things. This belief meant that we opted for a struc-

tured human resources policy using competence

management. We evaluate the expertise and skills

required for every position and then determine

whether employees have the right skills for the job.

This provides us with a picture of the level of expertise

and experience of the organization as a whole and

allows us to manage our employees’ further develop-

ment better. This is essential in a market in which

customers are increasingly demanding. In addition,

the job market for professionals is depressed. Add to

that the fact that, today, people don’t just choose a

job – they choose a career. It’s obvious what you have

to do: invest in your people. After all, if you want the

company to stay in the lead, you need the right employ-

ees, and you have to know how to hold on to them.”

“Competence management provides a means of

communicating with and about people that enables

comparison”, says Frank Verhoeven, general manager

of Boskalis bv, where the competence management

tool is already in use. “Things emerge which you actu-

ally already know but which haven’t been addressed

systematically. So nothing has been done about them.

In our case, an analysis of our young supervisors’ ex-

pertise, skills, and wishes has resulted in our deciding

to set up an operational course in dry earth moving,

which will be taught by our own experienced people.

This allows us to combine supply and demand in a

very effective and efficient way.”

Left Frank Verhoeven, general manager Boskalis bv

and right Peter Hinssen, human resources manager.

Investing in people



“The right man or woman

at the right place.”

“If you want to make the difference as a company,

you need the right people at the right place, and

you have to be able to hold on to them.”


86

The world of Boskalis

The wor ld o f Boska l i s


Area Middle

Area West

AreaMiddle East

Area East

Iberian Peninsula

ArchirodonLamnalco

Head office/Home market Home markets Offices of Boskalis

United States

of America

United Kingdom The Netherlands Germany

Sweden

Finland

Mexico Italy Nigeria


Organization

Organ iza t ion


International projects market

Boskalis International bv

Area Middle T.L. Baartmans, H.F.M. Hesseling,

C.N.A.M. Kootstra, L. Slinger

Area Middle-East B.M. de Witt MBA, W.D. Keij

Area East M.C. Dekker, Dr. K.F. Bogaert,

J.J. Scheele, B.J.H. Pröpper

Area West H.P.M. Sanders

Home market

The Netherlands

Boskalis bv F.A. Verhoeven, J.J. de With, C. Wielaart

United Kingdom

Westminster Dredging Company Ltd P.G. Roland, J.J. Dekker,

T.P. Greenall, N. Haworth

Germany

Heinrich Hirdes GmbH H.G. Peistrup, J. de Reus

Nordic (Finland and Sweden)

Terramare Oy and Boskalis Sweden AB J. Yletyinen, H. Lindström

Iberian Peninsula

Dragapor Dragagens de Portugal S.A. P. Venis

Sociedad Española de Dragados, SA P. Venis

Mexico

Dragamex SA de CV P. Klip, C.D. Versteeg Z.

Nigeria

Nigerian Westminster Dredging & Marine Ltd J.F.A. de Blaeij

Italy

Boskalis Dragomar S.r.l. B. Melchiorri

United States of America

Bean-Stuyvesant LLC J. Bean, B. Hoffman, M.C. van de Ven

Specialist niche markets

Offshore services

Boskalis Offshore bv J. Boender, W.B. Vogelaar

Underwater rock fragmentation

Rock Fall Company Ltd G. Steel

Environmental activities

Boskalis Dolman bv J.A. Dolman

Corporate staff departments

Controlling & Tax J.H. Kamps

Corporate Strategy & Business Development J.H. Kamps

Treasury F.A.J. Rousseau

Investor Relations & Corporate Relations R.T. Berends

Legal Affairs K. Duppen

Quality Assurance & Safety S.P. van Woensel

Information & Communications Technology J.A. Stam

Corporate Communications I.A.M. de Bus


88

Organization


Operational staff departments

Personnel & Organization T.F. Buirma

Research & Development J.A. Eygenraam

Dredging Department H. Postma

Central Technical Department E.C. Holman

Works Council

T.A. Scheurwater, chairman

M.G. de Best

L.J. Bouwens

M.A. Buddingh’

M.H. Eekhout

M.C.P. Hanssen-van der Velden

M.J. Kooderings Clemens

B. Kooijman

H. van der Land

G.J. Lodonk, secretary

J.H.W. van der Pol

W.Th. La Rivière, vice-chairman

J.C. de Snoo

M. Treffers

M.F. van Wijk

L. Pasma, secretary


Offices around the world

Off i ces a round the wor ld


Head office

Royal Boskalis

Westminster nv

Rosmolenweg 20

P.O. Box 43

3350 AA Papendrecht

The Netherlands

Telephone +31 (0)78 69 69 000

Fax +31 (0)78 69 69 555

[email protected]

www.boskalis.com

The Netherlands

Baggermaatschappij

Boskalis bv


Rosmolenweg 20

P.O. Box 43

3350 AA Papendrecht

The Netherlands

Telephone +31 (0)78 69 69 011

Fax +31 (0)78 69 69 555

[email protected]


Rosmolenweg 20

P.O. Box 43

3350 AA Papendrecht

The Netherlands

Telephone +31 (0)78 69 69 011

Fax +31 (0)78 69 69 571

[email protected]

Boskalis bv

Zinkcon Dekker bv

’s-Gravenweg 399-405

P.O. Box 4234

3006 AE Rotterdam

The Netherlands

Telephone +31 (0)10 28 88 777

Fax +31 (0)10 28 88 766

[email protected]

www.boskalisbv.nl

Boskalis Dolman bv

’s-Gravenweg 399-405

P.O. Box 4466

3006 AL Rotterdam

The Netherlands

Telephone +31 (0)10 28 82 800

Fax +31 (0)10 28 82 810

[email protected]

www.boskalisdolman.nl

Boskalis Infra bv

Nijverheidstraat 68

2901 AR Capelle a/d IJssel

P.O. Box 4290

3006 AG Rotterdam

The Netherlands

Telephone +31 (0)10 45 82 022

Fax +31 (0)10 45 83 775

Aannemersbedrijf

M. de Haan bv

Alde Wei 2, 9222 NG

Drachtstercompagnie

The Netherlands

Telephone +31 (0)512 341 770

Fax +31 (0)512 340 473

A.H. Breijs & Zonen bv

Nijverheidstraat 68

2901 AR Capelle a/d IJssel

P.O. Box 4290

3006 AG Rotterdam

The Netherlands

Telephone +31 (0)10 45 82 022

Fax +31 (0)10 45 83 775

[email protected]

Cofra BV

Zuider IJdijk 58

1095 KN Amsterdam

P.O. Box 94900

1090 GX Amsterdam

The Netherlands

Telephone +31 (0)20 69 34 596/

+31 (0)20 69 31 465

Fax +31 (0)20 69 41 457

[email protected]

www.cofra.com

Hydronamic bv

Rosmolenweg 20

P.O. Box 209

3350 AE Papendrecht

The Netherlands

Telephone +31 (0)78 69 69 099

Fax +31 (0)78 69 69 869

[email protected]

www.hydronamic.nl

Aannemingsmaatschappij

Markus bv

Haarlemmerstraatweg 149

1165 MK Halfweg

P.O. Box 88

1160 AB Zwanenburg

The Netherlands

Telephone +31 (0)20 49 74 871

Fax +31 (0)20 49 78 032

[email protected]

www.markusbv.nl

J. van Vliet bv

Krommenieerpad 42

P.O. Box 103

1520 AC Wormerveer

The Netherlands

Telephone +31 (0)75 62 84 558

Fax +31 (0)75 62 13 331

[email protected]


90



United Kingdom and Ireland

Westminster Dredging

Company Ltd

‘Westminster House’,

Crompton Way

Segensworth West, Fareham

Hampshire PO15 5SS, U.K.

Telephone

+44(0)1489885933

Fax +44(0)1489578588

[email protected]

www.westminsterdredging.co.uk

Boskalis Westminster Ltd


Crompton Way



Telephone

+44(0)1489885933

Fax +44(0)1489578588

Rock Fall Company Ltd

Unit A1a,

Olympic Business Park

Drybridge Road, Dundonald

Ayrshire KA2 9BE, U.K.

Telephone

+44(0)1563851302

Fax +44(0)1563851063

[email protected]

www.rock-fall.co.uk

Boskalis Zinkcon Ltd


Crompton Way



Telephone

+44(0)1489885922

Fax +44(0)1489578588

Irish Dredging Company Ltd

‘Pembroke House’,

Pembroke Street

Cork, Ireland

Telephone +353 214277399

Fax +353 214277586

Mobile +353 872550486

[email protected]

www.irishdredging.com

Rest of Europe


Aannemers nv

P.O. Box 159

2000 Antwerp, Belgium

Telephone

+32(0)32327340/2316979

Fax +32(0)32320704

Atlantique Dragage Sarl

9 Rue St Eloi

78100 St Germain en Laye,

France

Telephone +33(0)139040490

Fax +33(0)134517459

[email protected]

Boskalis Offshore AS

Tangen 12,

4070 Randberg

P.O. Box 5063 Dusavik,

4084 Stavanger, Norway

Telephone +4751411100

Fax +4751411101

[email protected]

Sociedad Española de

Dragados, S.A.

Plaza Castilla, 3 – 7º A

28046 Madrid, Spain

Telephone +34 91 323 7703

Fax +34 91 323 7128

[email protected]

Dragapor Dragagens de

Portugal S.A.

Av. D. Manuel I

2890 – 014 Alcochete,

Portugal

Telephone +351 21 234 82 40

Fax +351 21 234 82 69

[email protected]

Enka-Boskalis Su Yapilari

Inçaati Ticaret A.S.

Enka Binasi

Bestekar Sevki bey Sokak 32

Balmumcu 80780 Istanbul,

Turkey

Telephone

+902122742574/75

Fax

+902122728869/2122742567

Delta GmbH

Zinkcon Dekker Wasserbau

GmbH

11, zum Panrepel

28307 Bremen, Germany

Telephone +49(0)421438350

Fax +49(0)4214383519

Heinrich Hirdes GmbH

Bauhofstrasse 8b

21079 Hamburg, Germany

Telephone

+49(0)40 76 60 94-0

Fax +49(0)40 76 60 94-55

[email protected]

www.heinrichhirdes.de

Terramare Oy

Laurinmäenkuja 3a

P.O. Box 14

FIN-00441 Helsinki, Finland

Telephone +358(0)9613621

Fax +358(0)961362700

[email protected]

www.terramare.fi




Boskalis Sweden AB

Lundbyhamnen 122

S-41754 Gothenborg, Sweden


Telefax +4631515039

[email protected]

www.boskalis.se

Boskalis Dragomar S.r.l.

c/o T.R. S.r.l. Via Leone XIII, 95

00165 - Rome, Italy

Telephone +39 06 39870456

Fax +39 06 39870263

Terramare Eesti Osauhing

Regati pst 1/3

10143 Tallinn, Estonia

Telephone/Fax

+372 6306 540

[email protected]

Middle East


Middle East Ltd

Flat no. 204, Saif Bin

Ghobash Bldg.

Zayed 2nd Street

P.O. Box 4831, Abu Dhabi,

U.A.E.

Telephone +971 2 6447306

Fax +971 2 6443158

[email protected]


Middle East Ltd

Falcon Tower Building

7th Floor, Suite 706

P.O. Box 23486

Diplomatic Area, Manama

Bahrain

Telephone +973 535757

Fax +973 535775

[email protected]

Boskalis International

(Egypt Branch)

Ground floor of 1, Al

Shaheed Gamal

El Fasakhani Street

5th Avenue Al Sabaa

Emarate

Almaza – Heliopolis 11361,

Cairo, Egypt

Telephone +20(0)24175688

Fax +20(0)24174262

[email protected]


(Oman) LLC

P.O. Box 5063,

RUWI, Muscat

Sultanate of Oman


Fax +968 591478

Al Rushaid Investment Co.

P.O. Box 539

Dhahran Airport 31932,

Saudi Arabia


Fax +966 8647320

Lamnalco Ltd

P.O. Box 5687, Sharjah,

U.A.E.

Telephone +971 6 5692111

Fax +971 6 5691313

[email protected]

www.lamnalco.co.ae

Boskalis Dredging India

Pvt Ltd

23 Sangeeta, Tagore Road

Santacruz (West)

Mumbai 400 054, India

Telephone +91 22 26046699/

26050368/26488517/26488518

Fax +91 22 26040579

[email protected]

America


(Guyana)

1, Water Street, Quarry

Wharf, Kingston

P.O. Box 101768,

Georgetown, Guyana

Telephone +592(0)2259241

Fax +592(0)2258666

[email protected]

Atlantique Dragage Sarl

Dégrad des Cannes, B.P. 139

97323 Cayenne Cedex,

French Guyana

Telephone +594594354459

Fax +594594354254

atlantique.dragage@

mdi-guyana.fr


P.O. Box 10.021

Onverdacht, district Para,

Surinam


Fax +597352177


Overseas

# 824 Kenneth Avenue

Gulf View

La Romain, Trinidad and

Tobago


Fax +18686539155

[email protected]

Coastal and Inland Marine

Services, Inc.

P.H. Centro Comercial

Ciudad Siglo XXI

Avendida Ricardo J. Alfaro y

Cl. Juan Pablo II

Bethania, Panama

Telephone

+5072600051/88/96

Fax +5072361776

[email protected]


92



Dravensa C.A.

Edificio ONIX, Piso 6,

Oficina 61,

Calle Sojo – El Rosal,

Caracas, Venezuela

Telephone

+58(0)2129517967/6712

Fax +58(0)2129512773

[email protected]


Sucursal Argentina

Tucúman 540, piso 6 “H”

1049 – Capital Federal

Argentina

Telephone +54 11 43288566

Fax +54 11 43288566

[email protected]


Uruguay S.A.

Luis Alberto de Herrera 1248

World Trade Center

Torre A – Officina 703

11300 Montevideo, Uruguay

Telephone +598(2)6285085

+598(2)6226402

Fax +598(2)6281563

[email protected]

Stuyvesant Dredging

Company

3525 North Causeway

Boulevard, Suite 612

Metairie, Louisiana 70002,

U.S.A.


Fax +15048370407

Bean Stuyvesant LLC

1055 St. Charles Avenue,

Suite 520,

New Orleans, LA 70130,

P.O. Box 51118

New Orleans, LA 70151-1118

U.S.A.

Telephone +1 504 587 8700

Fax +1 504 587 8717

[email protected]

www.cfbean.com

Dragamex SA de CV

Km 7.5 Carretera

Coatzacoalcos-Minatitlán

C.P. 96496 Coatzacoalcos

Veracruz, Mexico

Telephone +52 921 2118200

Fax +52 921 2118208

[email protected]

www.dragamex.com

Africa


P.O. Box 189

31200 Arzew

Wilaya d’Oran, Algeria

Telephone +213 414 70586

Fax +213 414 79288

Boskalis South Africa

(via KPMG Services

(Proprietary) Limited)

Pretoria office

P.O. Box 11265

Hatfield

0028 Southfield

South Africa

Telephone +27 124311300

Fax +27 124311301

Boscampo G.I.E.

B.P. 4054, Douala,

Cameroon


Fax +2373430907

[email protected]


Gabon Z.I. Owendo

Route du Barracuda

Boite Postale 336, Libreville,

Gabon


Fax +241702185

[email protected]

Nigerian Westminster

Dredging and Marine Ltd

‘Westminster House’

Plot 1601 Adeola Hopewell

Street, Victoria Island

P.O. Box 1518,

Lagos, Nigeria

Telephone

+234(0)12624580/581

Fax +234(0)12624582

[email protected]

Lamnalco (Nigeria) Ltd

56, Ogunu Road,

P.O. Box 799

Warri, Delta State, Nigeria

Telephone +234(0)12646490

ext 44727

(via Shell Lagos)

Australia and Far East


The Forrest Centre, Level 29

221 St Georges Terrace

Perth WA 6000, Australia

Telephone +61(0)892880610

Fax +61(0)892880663

[email protected]

Boskalis Australia Pty Ltd

Suite 16-01, Tower A, Zenith

Centre, 821 Pacific Highway

Chatswood, NSW 2067

P.O. Box 341

Chatswood, NSW 2057

Australia

Telephone +61 2 941 544 55

Fax +61 2 941 510 99

[email protected]




Boskalis International (S)

Pte Ltd

Koon Building

17B Pandan Road

#03-00/#04-00

Singapore 609269

Teban Garden Post Office,

P.O. Box 629

Singapore 916001


Fax +65 67327530

[email protected]

Zinkcon Marine Singapore

Pte Ltd

Koon Building

17B Pandan Road

#03-00/#04-00

Singapore 609269

Jurong Post Office

P.O. Box 446

Singapore 916415


Fax +6567342510


International bv

Korea Branch

Suite 711, Hanaro Building

194-4, Insa-dong, Jongro-

Ku, Seoul, South Korea

Telephone +82(0)27338973

Fax +82(0)27338974


Room 1702, Tower 1

China Hong Kong City

33 Canton Road, Tsim Sha

Tsui, Kowloon

Hong Kong SAR


Fax +85223763489

[email protected]

Boskalis International (M)

Sdn Bhd

Jalan Sultan Ismail

No. 4018, 4th Floor,

President House

50250 Kuala Lumpur

Malaysia

Telephone +60 32 1448092

Fax +60 32 1448093

[email protected]

P.T. Boskalis International

Indonesia

Plaza Centris, Floor 12A

Jl. H.R. Rasuna Said Kav. B-5

Kuningan Jakarta 12910

Indonesia

Telephone +62 21 5269020

Fax +62 21 5269022

[email protected]


Suite 22, 3rd Floor

Legaspi Tower 300

2600 Roxas Blvd. Cor. Vito

Cruz, Manila

Philippines

Telephone +63(0)25241627

Fax +63(0)25217062


Representative Office Beijing

Room 512, Lucky Tower B,

no. 3

Dongsanhuan Beilu,

Chaoyang District

Beijing 100027, P.R. China

Telephone +861064616458

Fax +861064616459

[email protected]

Boskalis started on its first job

in China in August 2003.


Orion is at work there, reclaim-

ing land for a logistical center

in the delta of the Yangtze river

20 kilometers south of Shanghai.

The work is expected to be

completed in late 2004.



Glossary

Glossary

Acquired orders

The contract value of acquired assignments.

Backhoe

A large hydraulic excavating machine positioned on the end of a pontoon. The pontoon is held firmly in

place using spuds. Backhoes can dredge in a range of soil types with extreme precision.

Barge unloading dredger

A ship for discharging and pumping dredged material from barges lying alongside.

Booster station

Pumping station for the transportation of sediment through pipelines over longer distances.

Boskalis Leadership Development program

A management development program that, in collaboration with an external training institute, has been

designed according to Boskalis specifications. It will provide candidates for senior management

positions (national and international) within the organization.

Bucket dredger

The standard, anchored dredger with a revolving chain and buckets that dig into the bed and are

discharged. This type of equipment is now mainly used for environmental dredging and other jobs

requiring extreme precision, such as dredging tunnel trenches.

Competence management program

Program targeting the systematic development of the workforce in accordance with their talents and

competences.

Completed contracts

Contract value of completed work.

Cost leadership

Achieving lowest cost price.

Cutter

See Cutter suction dredger.

Cutter suction dredger

A vessel that dredges while being held into place using spuds and anchors. This technique combines

powerful cutting with suction dredging. Cutter suction dredgers are mainly used where the bed is hard

and compact. The dredged material is loaded into hoppers but is generally pumped to land through a

pressure pipeline.

Dredging in Practice

Practical course established by Boskalis for Dutch and foreign superintendents in which a theoretical

understanding of the dredging profession is combined with learning about practical dredging from

experienced employees with fleet and operational backgrounds.



Glossary

Dredging-plus activities

Activities that fit in with the core activity and core competences of the company. For example, off-

shore services, gravel and sand trading, soil improvement, dry earth moving, environmental activities,

munitions clearance, underwater rock fragmentation, pipeline construction and hydraulic engineering.

Dutch guidelines for annual reporting

Guidelines for annual reporting drawn up and promulgated by the Council for Annual Reporting

(Raad voor de Jaarverslaggeving), that represents providers, users and auditors.

Dynamic positioning system

System for keeping a vessel in place in which the propellers and rudders are controlled by an

automatic system.

EBIT

Earnings before interest and tax.

EBITDA

Earnings before interest, tax, depreciation and amortization.

Environmental disc cutter

The environmental disc cutter is a cutter suction dredger with an enclosed cutter head, an adjustable

vizor and controllable suction flow. A process control system controls the various parameters so that

high-density mixture concentrations can be achieved without turbidity and with high levels of precision.

This type of cutter suction dredger is preeminently suited for environmental projects.

ERP system

Enterprise Resource Planning System. An information system with full integration of primary business

processes.

Fallpipe vessel

Vessel that moves over the area to be covered, while dumping the stone on board through a fallpipe.

The end of the pipe is located just a few meters above the level of the surface to be covered.

The fallpipe is controlled using a precise positioning system. The fallpipe vessel Seahorse can also be

equipped with an A-frame on the aftship and a grab controlled by an ROV (Remotely Operated Vehicle).

This makes it possible to dredge down to depths of 1,000 meters.

Goodwill

The difference found at the time of the acquisition of participating interests between the acquisition

price paid for the shares and the net asset value.

Grab crane

A stationary pontoon with a crane that uses a crane shovel or grab. Dredged material is deposited in

barges that operate independently. Grabs can manage both sludge and hard objects and this makes

them suitable for, among other things, clearing up waters that are difficult to access, for gravel winning

and maintenance dredging on uneven beds.


96

Glossary


Home market

Boskalis distinguishes itself from its competitors by the use of a home market strategy. The home

market organizations have local marketing profiles, as well as their own fleets and infrastructures.

They can rely on the support of the financial and technical resources of the global Boskalis

organization. Home markets provide a stable flow of assignments and opportunities to generate

additional margins through associated activities.

Hopper

See Trailing suction hopper dredger.

IFRS

International Financial Reporting Standards: rules for financial reporting drafted and promulgated by

the IASB (International Accounting Standards Board). They will be compulsory within the European

Union from 2005 onwards for all listed companies.

International Dredging Academy

Collaboration with the Scheepvaart en Transportcollege in Rotterdam in which a modular curriculum

has been developed exclusively for Boskalis. The training is for Dutch employees and employees from

abroad (with nautical training) for work on the Boskalis fleet. This training will enable them to take up

officer positions in the future.

International projects market

Market that focuses primarily on larger capital expenditure projects for new buildings and/or

extensions. In addition, there are projects that regularly involve cooperation with third parties.

This makes it possible to provide clients with optimal services and to share risks.

ISM code

International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention:

an international standard for compliance with safety regulations and the prevention of pollution on

seagoing vessels. ISM requires shipowners to set up and maintain a safety management system.

Since 1 July 2002, all Boskalis seagoing self-propelled vessels have met the requirements of this code.

ISO standards

Standards of the International Organization for Standardization; the global federation of national

normalization organizations that issues standard requirements for, among other things, quality

management systems (ISO-9001) and environmental management systems (ISO-14001).

ISPS Code

International Ship & Port Facility Security Code of the International Maritime Organization regulating

precautions that deal with terrorist threats to shipping. All Boskalis seagoing ships are expected to

meet these requirements from July 2004 onwards.


Glossary


Orderbook

The turnover accounted for by parts of orders as yet uncompleted.

OSHAS-18001

Occupational Health & Safety Management System Specification. Standard for a safety management

system drawn up by, among others, the classification society Bureau Veritas.

Plant Management System

System that provides support for the clear and structured management of ships by means of internal

procedures.

PPI

Public-Private Initiative. An umbrella term for various types of projects in which the government joins

forces with the business community. The objectives are to capitalize on the qualities and potential of

both parties and jointly manage risks.

Stone-dumping vessel

A stone-dumping vessel is a ship with a deck on which stone can be loaded. Using a dynamic

positioning system and slides, the stones are pushed over the edge of the ship into the right position

in the water.

Suction dredger

Stationary, hydraulic vessel that sucks up the sediment/water mixture through a suction pipe.

Suction dredgers are generally used for sand winning.

TEU

Twenty feet Equivalent Unit. Unit used to indicate the capacity of a container or transport flows.

Tracked underwater dredging unit

Small vessel that can be remotely controlled for dredging underwater at large depths.

Trailing suction hopper dredger

A self-propelled unit that loads its well or hopper using centrifugal pumps and pipes that trail over the

bed as the ship sails. Trailing suction hopper dredgers can operate independently of other equipment

and can transport material over long distances. The dredged material is dumped through flaps or

bottom doors, by rainbowing, or pumped on to land using a pipeline.

Turnover work done

Volumes produced in a given period. The work may not yet be completed.


98

Glossary


WACC

Weighted Average Cost of Capital. The weighted average of the cost of capital (required and after

taxation) for capital and reserves, and loan capital (interest-bearing).

Work in progress

Projects that have not been completed on the balance-sheet date but that have been finished in part.

The cutter suction dredgers

Taurus and Ursa on the

Ras Laffan project in Qatar

where they worked on a

2-kilometer-long channel

with a depth of 7.4 meters

in very hard ground. The

channel will supply Qatar

with drinking water and

industrial cooling water.


8 + 1* Trailing suction

hopper dredgers

Hopper capacity >6,000 m3

Equ ipment


8 Suction dredgers

Total installed power

from 656 to 4,050 kW

19 + 4* Backhoes

Bucket capacity

from 1.4 to 22 m3

123 + 108* Launches, tugs,

supply and crew boats

Propulsion power

from 30 to 4,412 kW

22 + 1* Floating grab cranes

(‘grab dredgers’)

Grab capacities

from 1.2 to 9.2 m3

4 Stone dumping vessels

Capacity

from 354 to 1,400 t

1 ‘Tracked’ underwater

dredging unit

Remote-controlled

30 + 4* Work boats

Propulsion power

from 133 to 918 kW

6 + 1* Drill barges

5 Floating hoisting pontoons

Hoisting capacities from

10 to 270 t

5 + 2* Screeder pontoons

For waterbed protection

(clay and stone)

7 Bucket dredgers

Bucket capacity

from 450 to 900 liters

25 + 14* Cutter suction and

bucket-wheel dredgers

Total installed power from

257 to 9,262 kW

18 + 9* Trailing suction

hopper dredgers

Hopper capacity <6,000 m3

3 Self-propelled seagoing

cutter suction dredgers


from 14,733 to 15,830 kW

* Owned by (non-controlled) associated companies. In addition to the equipment shown here, the group also owns a range of auxiliary

equipment such as floating pipelines, winches, pumps, drag lines, hydraulic excavators, wheel loaders, dumpers, bulldozers, mobile cranes,

crawler drill rigs, sand pilers, filling installations for shore protection mattresses, fixed land pipelines, various pontoons and houseboats.

1 Environmental disc cutter

21 + 5* Booster stations


from 390 to 6,150 kW

4 Barge unloading dredgers


from 1,650 to 4,300 kW

1 + 1* Dynamically

positioned fallpipe vessel

Capacity from 17,000 to 18,500 t

6 + 41* Stone transportation

barges

Capacity from 120 to 2,000 t

110 + 15* Hopper and

transportation barges

Hopper capacity from 300 to 2,336 m3

2 + 1* Remote-controlled

underwater dredging units

Maximum dredging depth 600 m

Equipment




Cyrus in Arzew, Algeria, where

Boskalis is working on the main-

tenance and the expansion of

the oil and gas harbor. Together

with the trailing suction hopper

dredger Cornelia, a total of

1,500,000 m3 hard and soft

material will be dredged.


Compiled and

coordinated by Royal

Boskalis Westminster nv

Design and realisation

Photography

Lithography and printing

Corporate Communications Department

Handelskade, Rotterdam

H.H.G. Been, A.D. van Gool, A. van Gutter, Van der Kloet Fotografie, G.W.L. Koejemans,

Klaas Laan, Norman Childs, R.A. Snoep and others

PlantijnCasparie Capelle a/d IJssel

Colophon

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Rosmolenweg 20

3356 LK Papendrecht

The Netherlands

P.O. Box 43

3350 AA Papendrecht

The Netherlands

Telephone +31 (0)78 69 69 000

Telefax +31 (0)78 69 69 555



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