Annual Report 2005 - jaarverslag · Kingdom Germany Nordic Dredging and Earthmoving 83% of turnover • Construction and maintenance of harbors and waterways • Creation of land

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Annual Report 2005

This annual report contains forward-looking statements. These statements are based on current expectations, estimates and projections

of Boskalis’ management and information currently available to the company. These forecasts are not certain and contain elements of risk

that are difficult to predict and therefore Boskalis does not guarantee that its expectations will be realized. Boskalis has no obligation to

update the statements contained in this annual report.

2

Strong demand for dredging serv ices

Annua l Repor t 2005

Boskalis is a leading player on the global dredging market. A market characterized particularly by long-term

macro-economic growth factors that are explained in this Annual Report. Here the trailing suction hopper

dredger Barent Zanen is deepening the approach to the Panama Canal so that larger container vessels

can also pass through. This is one of the projects that results from the ‘world trade’ growth factor.

Table of contents

Table of contents


Key developments in 2005 4

Message to the shareholders 5

Company profile 7

The Boskalis markets 8

Segment Maritime Infrastructure: Archirodon 12

Segment Maritime and Terminal Services: Lamnalco 14

Ten years Boskalis 16

Mission, strategy and financial objectives 20

Investing in growth and market position 22

Corporate social responsibility 26

Basic principles of the corporate strategy 28

Investor Relations 34

Report of the Supervisory Board on 2005 36

Report of the Board of Management on 2005 42

Corporate Governance 51

Application at Boskalis 52

Risk management 53

Financial statements 2005 60

Consolidated profit and loss account 63

Consolidated statement of recognized income and expense 64

Consolidated balance sheet 65

Consolidated statement of changes in equity 66

Consolidated cash flow statement 67

Explanatory notes to the consolidated financial statements 68

Company profit and loss account 103

Company balance sheet before profit appropriation 104

Statement of changes in equity 105

Explanatory notes to the company financial statements 106

Other information 108

Stichting Continuïteit KBW 110

Growth factors of the dredging industry

Growth of global population 10

Growth of global energy consumption 18

Growth of world trade 32

Climate change 58

Sustainability 112

The world of Boskalis 114

Organization 115

Offices around the world 117

Glossary 122

Equipment 127

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 prevailing official Annual Report in the Dutch language.

4

Key developments in 2005

Key deve lopments in 2005


Record number of new orders, historically large orderbook

New orders worth a record amount of € 2,338 million were acquired in 2005. The size of the orderbook

increased to € 2,427 million (year end 2004: € 1,244 million).

Recovery of results

Growth in turnover +13%

Turnover grew by 13% last year to € 1,156 million.

Net profit +85%

Net profit increased by 85% to € 62.7 million; earnings per share increased from

€ 1.22 to € 2.21.

Much demand in energy-driven markets

Approximately 40% of the turnover was directly or indirectly related to growing energy markets.

Increased dividend

It has been Boskalis’ policy for many years to distribute 30% to 40% of the net result in the form of a

dividend. Starting with the 2005 financial year, this policy will be adjusted upwards to a payout ratio

of 40% to 50%. The proposal is to pay out a (cash) dividend of € 1.10 per share from the 2005 result

(2004: € 0.75 per share).

Share price increased by 126%, strongly traded

The Boskalis share price increased by 126% in 2005 to € 56.25. Thanks to good trading volumes

Boskalis has been included in the Amsterdam ‘AMX index’ again since March 2, 2006.

Board of Management

In December 2005 it was announced that the chairman of the Board of Management, Mr R. van Gelder,

will be stepping down because he is reaching the age of retirement in May 2006 and that he will be

succeeded by Mr P.A.M. Berdowski, the current vice-chairman of the Board of Management. In addition,

Mr J.H. Kamps was appointed to the Board of Management as chief financial officer with effect from

January 1, 2006. The appointment of these experienced managers from within the company provides for

sound succession and continuity at the top.

Corporate Governance

The section on corporate governance in the Annual Report 2004 set out the company’s policy as regards

corporate governance. This policy was approved by the General Meeting of Shareholders in 2005.

IFRS

Starting from the 2005 financial year, Boskalis is basing its financial reporting on the principles of the

International Financial Reporting Standards (IFRS). The adoption of IFRS had a limited effect on financial

position and results. The key effects of the transition were explained in June 2005.


R. van Gelder,

chairman Board of

Management.

5

Message to the shareholders

Dear shareholders,

Within a relatively short time in 2005, uncertainty in the global dredging market made way for major

contracts, a doubling of the orderbook and a good expected fleet utilization rate for the coming years.

The turnaround in the market was especially driven by developments in the energy sector. The high

price of oil gives countries in the Persian Gulf in particular – such as Bahrain, Qatar, Oman and the

United Arab Emirates – the financial scope to invest on a large scale in their maritime infrastructure,

varying from land reclamation for tourism and the construction of an airport at sea, to building and

expanding container and LNG harbors. Furthermore, oil companies are investing substantial amounts

in exploration and production from oil and gas resources in other energy-related markets such as

West Africa and Northern and Eastern Russia. This is a development that we foresee continuing in

the coming years.

In addition, the growth of waterborne bulk and container traffic continues to feed the demand for

deepening and expanding harbor capacity in numerous markets, such as Western Europe, China,

India, Southeast Asia and Australia. Climate and environmental factors are also producing a demand

for coastal defense and related dredging services.

In short, having landed a number of large-scale contracts in the Middle East in 2005 and because of

the development on a broad scale in other markets, we expect a period of much work and heavy

utilization of the fleet in the coming years.

As regards the order intake, 2005 was a great year. Orders worth a total of more than € 2.3 billion were

acquired.

It was also a year in which operating results recovered after having fallen in 2004.

Group turnover increased by 13% to € 1,156 million.

Utilization rates of the large dredging equipment improved in the second half of the year in particular. Margins

were still modest on a lot of projects; the streamlining program carried out in 2004 contributed to the recovery of

the operating results in 2005. EBITDA increased to € 163 million (2004: € 137 million).

About 40% of our group turnover is now directly and/or indirectly related to developments in energy markets.

This relates to our positions in the Middle East and West Africa, our Offshore niche activities and the

Lamnalco oil and gas terminal services. These positions have been broadened and strengthened in

recent years. Given the good outlook in the energy sector for the coming years, we expect to continue

to profit from these activities.

We are allowing for the possibility that in the coming period the demand for dredging services – from time to

time – may be greater than the available capacity. As a result we are pursuing a selective market policy, which

is aimed at long-term positioning and improvement of margins and operating results.


6 Annua l Repor t 2005


6

Given the full orderbooks of shipyards and suppliers, and the consequently long delivery times, rapid

expansion of capacity is only possible to a limited extent. Within those possibilities we will invest strongly

in the coming years to expand and improve equipment, both as regards hopper and cutter capacity and

as regards terminal services (Lamnalco). Boskalis expects to invest approximately € 800 million in the

next five years.

The upturn in the dredging market and the way in which Boskalis is responding to that upturn has been

well received by the financial markets. Both the price and turnover of Boskalis shares developed favorably

in 2005. Active and transparent communication via the media, with analysts and with investors contributed

to those developments. Boskalis has been included in the Mid-cap index of the Amsterdam stock exchange

again since March 2, 2006.

We expect the upward trend that began in 2005 to continue in the coming year. An increasing turnover

and higher equipment utilization rates are forecast for 2006. However, it is not possible to make concrete

statements regarding our expectations for the results at present.

Given the good outlook for the coming years and the continued strength of the company’s financial position

and taking into consideration the plans for major investments for 2006 and beyond, we have decided that

there is cause to adjust the dividend policy upwards.

Although 30% to 40% of the profit (from normal operations) was distributed in the form of a dividend for many

years, we now intend to set the payout at 40% to 50% for the coming years. For 2005, we are proposing

to you a dividend payout of € 1.10 per share for 2005 (2004: € 0.75).

Finally, now that I am stepping down in May 2006 due to retirement. I wish to express my personal thanks

to you for the backing and confidence that you have given the company, my colleagues and myself

through the years. It was a source of support and inspiration.

On behalf of the Board of Management

R. van Gelder

Strong investment in

expansion and

improvement equipment

Favorable development

price and turnover

Boskalis shares

Continuation upward

trend in 2006

Upwards adjustment

of dividend policy


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

position.

Royal Boskalis Westminster nv is an international group with a leading position in the world market for

dredging services. Its core activities are the construction and maintenance of ports and waterways, land

reclamation, coastal defense and riverbank protection. The company holds important home market positions

in and outside Europe and targets all market segments in the dredging industry. It also has strategic partner-

ships in maritime infrastructure (Archirodon) and in maritime and terminal services (Lamnalco).

Boskalis has a versatile fleet of over 300 units and operates in over 50 countries across five continents.

Including its share in partnerships, Boskalis has over 7,000 employees.

Boskalis has three business segments: “Dredging and Earthmoving”, “Maritime Infrastructure”

(Archirodon) and “Maritime and Terminal Services” (Lamnalco).

United Statesof America The Netherlands

Mexico Nigeria

Head office/Home market Home markets Offices of Boskalis

ArchirodonLamnalco

UnitedKingdom Germany Nordic

Dredging and Earthmoving

83% of turnover

• Construction and maintenance

of harbors and waterways

• Creation of land in water

• Coastal defense and riverbank

protection

• Installation of oil and gas

pipelines

• Sand and gravel trading

• Environmental activities

• Underwater rock fragmentation

Maritime Infrastructure

14% of turnover

• Maritime construction

including quay walls, jetties, oil

and gas terminals, breakwaters,

riverbank protection

• Construction of infrastructure

including water purification systems,

sewerage systems, dams, bridges

• Industrial construction

including power stations, desalination

plants, pumping stations

Maritime and Terminal Services

3% of turnover

• Mooring of tankers

• Management of oil and gas

terminals

• Pilot services

• Underwater vessel

maintenance

• Offshore logistic services

Company prof i le

Company profile


The Boskalis markets

The Boska l is markets

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

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

last few years the annual volume of sales on the global market has grown rapidly and is approximately

€ 7 billion. Half of these sales (approximately € 3.5 billion) are generated in 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 many different smaller regional and local players. With a share of

approximately 20%, Boskalis is an important player in the open market segment. In the less open markets,

dredging work is generally done by local private companies or state companies and there are limited openings

for private international dredging companies like Boskalis.

The past decade has seen 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 a high degree of efficiency. Major factors affecting access to

the global dredging market are scale, professional staff, innovative ability, a flexible fleet, cost leadership,

and financial strength.

Its broad geographical spread means that a global player like 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 clients

high-quality products and services at competitive prices.

The Boskalis markets are driven by long-term growth factors...

Influence of global trends

on the dredging industry

Macro-growth factors will drive the global dredging market in the coming years


The Boskalis markets

Energy supply is playing an increasing role in this regard...

...and international positioning is very important.

fig. 1: Global oil and gas

production and

consumption (1995-2005)

fig. 2: Global development in

construction of LNG

terminals (2004-2010)

Expected continuing growth in oil and gas production

and consumption, which...

...stimulates construction of LNG terminals worldwide

Source: BP Statistical Review of World Energy, June 2005 Source: World Energy Atlas, 2004 Edition

• 40% Home markets

Permanent basis with own infrastructure

• Also smaller, dredging-related projects

• Stable stream of contracts

• 20% Middle East region

Dredging, maritime infra, terminal services

• 30% International projects market

Mainly larger projects

• Varying amount of work

• Many competitors

• 10% Niche markets

Specialist offshore activities

Broad market spreads provides stability

Around 40% of group turnover is energy-driven

fig. 1 fig. 2

Home markets

Middle East region

International projects market

Niche markets

40% 30%

20%10%

People need room to live, to grow, to work, to

learn. That is where Boskalis comes into play.


Densely populated cities like

Copenhagen have a growing

demand for sports and

recreation facilities. In order

to meet this demand, Boskalis

was involved in the creation of

a 2-km long, 50-meter wide

recreation island, which will

double the existing recreation

facilities in Copenhagen.

In order to safeguard its economic position the city-state Hong Kong commissioned various land reclamation

projects. The Yau Ma Tei and Chek Lap Kok land reclamation sites are striking examples.

The global population will increase by more than 30% in the next 25

years. The world’s most densely populated coastal areas require space

for housing, education, health care and other essential facilities to

grow along. That is where Boskalis comes into play by reclaiming land.

Anywhere in the world.

Roya l Boska l i s Westmins te r nv

One of the results of the

growing world population is a

substantial increase in tourism.

In the United Arab Emirates in

particular, large-scale islands

are being created for tourists,

focusing on local visitors from

the region and on tourism from

other parts of the world.

Segment Mar i t ime In f rast ructure : Arch i rodon

The ties between Archirodon and Boskalis go back many years. Both companies have a unique history in the

Middle East and although they operate independently from each other in the market, there are many examples

of successful cooperation in complex infrastructure projects, where their combined complementary

maritime strengths provided a competitive edge.

Since inception some 50 years ago, Archirodon has developed into a leading international contractor with a special

focus on the Middle East. The company covers a wide range of engineering and construction abilities and has a

strong track record in complex multi-discipline projects. In 2005 the company worked on 45 projects in 11 different

countries.

Besides marine and offshore business, Archirodon is an allround player in the markets for civil infrastructure and

industrial plants. Like Boskalis, Archirodon has renowned in-house engineering capabilities that contribute to

innovative solutions for customer needs.

Fueled by the Middle East boom, Archirodon’s turnover grew from US$ 200

million in 2001 to a record of almost US$ 500 million last year. The company

has a healthy financial status. Due to the nature of its business, being

Engineering, Procurement and Construction, the company currently

employs approximately 8,250 people.

Boskalis holds a 40% stake in Archirodon, the remaining shares are

privately owned.

Segment Maritime Infrastructure: Archirodon


Boskalis and Archirodon: successful

Civil infrastructure: construction

of 3 main pumping stations

with all associated equipment

to irrigate the desert with water

from the Nile River in Egypt.

players in the market

Archirodon offers the following services:

Marine & Offshore

• Ports and harbors

• Jetties, terminals and offshore structures

• Breakwaters and shore protection

• Offshore pipelines, intakes, outfalls

• Dredging and reclamation

Civil infrastructure

• Bridges, roads and railroads

• Water, sewerage, dams and irrigation

• Airports

Industrial plants

• Power and desalination plants

• Oil and gas facilities

• Pumping stations


Industrial plants: turnkey project for design, construction and

commissioning of a 8 x 350 mW steam power plant in Saudi Arabia.

Marine & Offshore: construction of marine facilities of a grass-root

LNG plant including dredging of a 4-km long approach channel,

2.5-km long jetty, 800 m breakwater, topside works and process

insulated piping in Egypt.

Civil infrastructure: construction of the

Sheikh Zayed Bridge in Abu Dhabi.

Marine & Offshore: construction of multi-user liquid product

berths including facilities for loading and exporting commercial

LPG products, Ras Laffan, Qatar.

Segment Mar i t ime and Termina l Serv ices : Lamnalco, a long-t ime member of the Boska l is fami ly

Segment Maritime and Terminal Services: Lamnalco


Maritime terminal management

services and traffic scheduling.

A typical product of entrepreneurial spirit, the Lamnalco Group was established in 1963 as an equal partner-

ship between Boskalis and the Alireza Group, one of the principal Arab contracting companies, initially

to provide marine support to the Jebel Dhanna Oil Terminal in Abu Dhabi. Lamnalco has since become a

leading international provider of oil and gas terminal and offshore production support services.

Boskalis and Lamnalco share their market intelligence and business networks, which offers early leads for

business opportunities in new locations and regions. In addition, both companies occupy complementary

positions along similar maritime supply chains, especially in the energy sector: Boskalis and its ally

Archirodon with dredging and civil engineering capabilities, Lamnalco with long-term contracts servicing

oil and gas terminals.

Lamnalco pursues an active growth strategy focused on further global expansion, particularly driven by

the surge in the energy markets.

Headquartered in Sharjah, United Arab Emirates, the company currently has operations in twelve countries

with a major presence in the Middle East and West Africa. As part of its business approach, Lamnalco

works through several local joint ventures.

Lamnalco is unique for its specialization in services to the oil and gas industry, which demands unparallelled

performance standards and strong operational capabilities. To meet the typical requirements of its customers,

Lamnalco invests continuously in staff training and development, as well as innovative in-house designed

vessels, the latter being committed to long term (5-20 year) service contracts.

The company currently provides over 3,500 tanker berthings per annum at 26 terminals, ports and harbors,

with 55 berths. It owns a fleet of 104 vessels with the lowest average age in the industry.

Lamnalco generates an annual turnover of almost US$ 100 million and a healthy operating margin and

cash flow.

Lamnalco:

Lamnalco offers specialized marine support services to gas and oil

terminals and ports worldwide:

• Berthing/unberthing of LNG/LPG, Crude and Product tankers calling at jetties,

CALM buoys and FPSO’s/FSO’s

• Marine Terminal Management services and traffic scheduling

• Provision of specialist personnel: pilots, mooring masters, dive maintenance

teams and site superintendents

• Surface and subsurface maintenance operations at jetties and CALM buoys

• Provision of logistics and supply bases to support offshore operations in

remote terminal locations


a first class provider in the oil and gas industry

Subsurface maintenance operations.

Berthing of LNG-tankers.

Provision of logistic services.

Provision of specialist personnel.


Ten years Boskalis

(amounts x € 1 million, unless stated otherwise)

2005 2004 2003(2) 2002 2001 2000 1999 1998 1997 1996

Turnover (work done) 1,156 1,020 1,046 1,035 1,083 960 851 801 697 569

Turnover (completed contracts) – – – 1,124 1,081 882 784 782 637 520

Orderbook (work to be done) (3) 2,427 1,244 1,202 1,273 1,224 1,214 820 785 661 593

EBIT (4) 82.6 47.9 77.9 109.3 103.4 89.7 77.6 63.2 44.2 32.0

EBITDA (5) 162.9 136.9 157.2 175.9 165.6 144.9 131.6 108.7 92.0 74.6

Net result 62.7 33.9 70.9 82.1 77.7 67.2 57.5 47.1 37.3 28.2

Depreciation 80.2 89.0 79.3 66.6 62.2 55.2 54.0 45.5 47.8 42.6

Cash flow 143.5 123.1 150.2 148.7 139.9 122.4 111.5 92.6 85.1 70.8

Shareholders’ equity (3) 542.9 467.9 455.2 413.0 376.0 327.4 288.8 253.5 225.3 203.2

Average number of outstanding shares

(x 1,000) (9) 28,418 27,769 26,630 25,949 25,900 25,784 25,902 25,941 25,788 25,650

Number of outstanding shares (x 1,000) (10) 28,600 28,174 27,256 25,970 25,917 25,881 25,902 25,941 25,788 25,650

Personnel (number of persons) (3) 7,029 7,033 3,186 3,285 3,119 3,295 3,186 3,115 3,075 3,179

Ratios (percentages)

Operating result as % of the turnover 7.1 4.7 6.7 8.9 9.0 9.6 9.4 7.3 6.5 5.5

Return on capital employed (6) 12.0 7.0 16.0 20.3 21.4 21.0 20.8 18.3 15.2 12.6

Return on equity (7) 12.4 7.2 16.3 20.8 22.1 21.8 21.2 19.7 17.4 14.5

Solvency (3/8) 40.8 37.7 42.5 41.6 38.4 37.5 39.6 18.7 16.6 16.8

Figures per share (x € 1.00)

Profit (9/11) 2.21 1.22 2.66 3.16 3.00 2.61 2.22 1.82 1.45 1.10

Cash flow (9) 5.05 4.43 5.64 5.73 5.40 4.75 4.30 3.57 3.30 2.76

Shareholders’ equity (3/10) 18.98 16.61 16.70 15.90 14.51 12.65 11.15 9.77 8.74 7.92

Dividend 1.10 0.75 1.04 1.26 1.20 1.05 0.90 0.73 0.57 0.50

Share price range (x € 1.00)

(Depositary receipts of) ordinary shares 25.75 18.05 16.51 17.80 25.15 16.50 10.50 8.85 13.93 10.39

56.25 25.00 23.15 35.55 37.15 30.50 18.40 18.38 20.42 16.38

(1) Figures taken from the financial statements. As from 2004 all amounts are in accordance with IFRS.

(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 December 31, 2003 amended for IFRS (number of personnel: December 31, 2004).

(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 2005.

Ten years Boska l is (1 )


In Altamira, Mexico, Boskalis

worked on deepening and

widening the 5-km long

access channel as well as

on deepening the harbor

basin for the LNG terminal

that is under construction.

The terminal is being built to

handle the next generation of

LNG tankers. The two largest

storage tanks in the world

(150,000 m3 each) are currently

being constructed there.

Growing global energy consumption. Boskalis

makes way for the world’s flows of oil and gas.


Construction of a petrochemical

harbor in Assaluyeh, Iran. This

new harbor is being built for the

export of various gas-related

products that are produced by

the petrochemical industry in

the Province of Pars. The pipe-

lines that take the gas out of

the offshore field come ashore

in Assaluyeh. Boskalis was also

involved in the construction of

the landfalls.

Clean-up work in the petroleum harbor in Amsterdam, the Netherlands. A total of approximately 160,000 m3 has

been dredged, 5,000 m3 of which was heavily polluted earth that was thermally cleaned.

With the world needing some 50% more energy in 2030, Boskalis makes

way for the world’s flows of oil and gas with the construction of LNG

harbors, harbor and offshore services, installation and protection of great

lengths of pipeline, seabed leveling, landfalls and shore approaches.


Expansion of the LNG harbor

in Point Fortin, Trinidad. The

harbor expansion is necessary

to guarantee Trinidad &

Tobago’s sixth place on the list

of the world’s biggest LNG

producing countries.

Mission, strategy and financial objectives


Miss ion , s t rategy and f inanc ia l ob ject ives

Mission

Strategy

In order to realize the above ambition against a background of markets that grow in the long term but

can also fluctuate from time to time, Boskalis applies a growth strategy that has two cornerstones:

Optimization of the existing operational activities

This means focusing on growth that can be achieved by improving the quality of activities and making

full use of the opportunities in existing markets. After all, Boskalis’ world is constantly in motion and the

company is permanently developing. Whether technical and commercial innovations or clients’ changing

needs are concerned, Boskalis is always looking for ways of achieving the best possible solutions.

This means not only continuous development of people, technology and systems, but also well-aimed

responses to special market developments such as public-private partnerships and changing environmental

requirements.

Whilst retaining the sharpness and creativity to make the maximum possible use of growth opportunities.

Actions aimed at growing with the market and expansion of activities

The market is growing in the longer term and Boskalis is growing with it. An organic growth of the business

that the company can achieve by regularly adding new, modern capacity to its fleet and by clever market

positioning so that maximum use is made of growth opportunities in the market.

Boskalis also sees good possibilities for achieving growth in addition to the traditional core activities.

The company has achieved good results in recent years with related maritime activities (e.g. with its

partners Archirodon and Lamnalco) and is expressly open to further developments, including with third

parties. After all, acquisitions and alliances provide extra opportunities for growth. Boskalis is fully open

to opportunities for cooperation with third parties and to broadening business streams, anywhere in the

world. The policy of home market positions with local partners, regional cooperation such as with Lamnalco

and Archirodon and acquisitions of players in adjacent sectors will also continue in the coming years.

Boskalis aims to be a leading player in the global dredging market and related sectors

Roya l Boska l i s Westmins te r nv21

As well as bringing about a growth in turnover, potential acquisitions in this regard must above all make

a positive contribution to the value of the company. After all, long-term growth is important for the creation

of long-term value for the shareholders. And that remains one of Boskalis’ main objectives.

Financial objectives

Boskalis is aiming for structural growth in turnover of 5-10% per year and a return on equity of 12%.

These are average values that the company aims to achieve over a longer period.

Mission, strategy and financial objectives

Boskalis applies a growth strategy: transparent, consistent and result-driven.

Investing in growth and market position

Invest ing in growth and market pos i t ion


Innovative equipment gives power in the market

Boskalis and its partner Lamnalco (“Maritime and Terminal Services” segment) stand out from their

competitors because of their specialist vessels that can handle difficult jobs. Innovative equipment

developed in-house, with a long-term vision of market developments. Each vessel has unique charac-

teristics; together they form a sophisticated, multi-faceted and extensive fleet. A fleet with which the

company can compete strongly in all segments, all over the world.

Market growth and market positioning demand selective investments in the fleet

The international dredging market is currently growing strongly and it is expected that Boskalis vessels

will be heavily occupied in the coming years. For the longer term (three to five years) the company is

aiming for turnover growth of 5-10% per year.

In this growing market Boskalis is aiming for organic growth and where possible to strengthen its market

position. This ambition for growth, combined with the ageing of a number of vessels, requires investments

to be made in the coming years in expansion and replacement of dredging equipment. This will be

done with a close eye on the necessary capacity in various market segments, as well as on costs and

timing, so that the investments make an optimum contribution to the competitiveness of the company.

At the consolidated group level, including participating interests, Boskalis expects to invest approximately

€ 800 million in the next five years. The most important elements of this investment program are

explained below.

Trailing suction hopper dredgers

In the top segment of the hopper fleet - the jumbo hoppers and mega hoppers - further market growth

is forecast. The jumbo hopper Queen of the Netherlands will shortly be lengthened to handle this

growth. As with her sister vessel WD Fairway, which was lengthened in 2003, the Queen of the

Netherlands will have a capacity of 35,500 m3, which is about 50% more than its current size. The

lengthening of the Queen will secure Boskalis’ position as the leading player in the market for large-

scale dredging projects, which is characterized by large volumes, long navigable distances and deep

dredging depths.



In the large hoppers segment Boskalis works with a number of older vessels such as the Barent Zanen

and the Cornelis Zanen. These 8,000 m3 vessels are over 20 years old and are due for replacement in the

medium term. It is envisaged that they will be replaced with one or two hopper dredgers with a capacity

of about 10,000 m3 each.

In the medium-size hoppers segment, where work is

mainly in domestic markets on harbor maintenance

and beach suppletion, Boskalis wants to strengthen

its market position and also replace a number of

obsolete vessels. It is therefore planned to invest

in two hopper dredgers with a capacity of approx-

imately 5,000 m3 each in the coming years.

Cutter dredgers

Boskalis is a leading player in the jumbo cutter dredgers market. These vessels are deployed to dredge

hard earth and rock, particularly when constructing and extending harbors and waterways and trenches

in the seabed for oil and gas pipelines.

Lengthening of the Queen of the Netherlands to 35,500 m3

Replacement of 2 large hoppers (approximately 10,000 m3)

Replacement of 2 medium-size hoppers (approximately 5,000 m3)


This market segment is growing strongly in various parts

of the world. Boskalis wants to expand its capacity in

this segment in the short term by reconstructing the

former jumbo cutter Oranje. This will be the fourth

jumbo cutter in Boskalis’ fleet, added at a relatively

low investment cost. Boskalis is also continuing to

study a new generation of cutters that can handle very

hard rock.

There will also be investment in one or possibly two medium-sized cutter dredgers in the coming years

to replace obsolete capacity. This will further strengthen the long-term market position in this segment.

Offshore fleet

Boskalis’ activities in the energy-driven offshore markets include among others construction and

protection of oil and gas pipelines that are laid on or in the seabed. In order to protect the pipelines

and level the seabed widespread use is made of stones that are dumped

into the sea from special vessels. This is precision

work that is often carried out at great

depths.


Reconstruction of the former jumbo cutter Oranje

Replacement of 1-2 medium-size cutters

Continuation of the study into new-generation jumbo cutters

Replacement of the stone-dumping vessel Cetus



Replacement of the fall-pipe vessel Sandpiper

Boskalis foresees this market also providing a healthy volume of work in the future. There will therefore

be an investment to replace the fall-pipe vessel Sandpiper and the stone-dumping vessel Cetus, which

is used not only for offshore work but also on coastal defense and riverbank protection projects.

Lamnalco fleet

Lamnalco will also invest in the coming years, particularly in expanding its fleet of specialist tugs.

Lamnalco normally invests based on long-term contracts that have already been obtained.

However, given the rapid market growth and Lamnalco’s ambition to grow at an accelerated rate in that

market, Lamnalco will soon be ordering vessels with which it can offer its specialist services to new clients.

Archirodon

For Archirodon (“Maritime Infrastructure” segment), which is less capital-intensive than Boskalis and

Lamnalco, primarily small-scale investments in equipment are planned, most of which will be project-

related.

Expansion of the fleet of specialist tugs


Corporate soc ia l respons ib i l i ty

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 people 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 sustainable

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


To compensate for the expansion

of the harbor in Le Havre,

Boskalis has created an island

sanctuary for birds with a surface

area of approximately 12 hectares

in the estuary of the River Seine.

The island has become a favorite

place for large numbers of sea

birds, including the endangered

tern, which stays here undisturbed

throughout the breeding season.

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.

Corporate social responsibility


Basic principles of the corporate strategy

Basic pr inc ip les of the corporate s t rategy

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

infrastructure are:

• Entrepreneurship and risk management;

• A broad market spread;

• Employee efficiency;

• A large and versatile fleet;

• A sound financial policy;

• Transparency in corporate governance;

• Professional expertise and skills;

• Efficient organizational and communications structures.

Entrepreneurship and risk management

Doing business means working on a daily basis with uncertainties, opportunities, and risks. Chapter

“Corporate Governance” (pages 51-57) of this report discusses the risk management and internal

control monitoring systems used at Boskalis.

A broad market spread

Boskalis is aiming for balanced growth with maximum use of the connections and synergy between the

group activities and the three business segments. The company’s broad spread across the world, both

geographically as well as across the different economic sectors, gives plenty of opportunities for growth.

This spread also significantly reduces the risks from any fluctuations in markets or market segments.

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 develop-

ment of employees takes priority. For example, the company runs the International Dredging Academy –

a vocational program specially developed by Boskalis where people with nautical training from the

Netherlands and from other countries are trained for a job on the Boskalis fleet. Other examples are

Dredging in Practice – a practical training program for Dutch and non-Dutch superintendents – and the

Boskalis Leadership Development Program. This last program enables Boskalis to fill a significant number

of its management positions from among the people with potential in its own ranks.

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 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.



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.

A sound financial policy

Boskalis has the room for investments and acquisitions, thanks to its stable, sound financial policy with sharp

monitoring of exchange rate and payment risks, a robust financing structure and a strong operational

cash flow.

Transparency in corporate governance

Chapter “Corporate Governance” of this annual report takes a separate look at the topic of Corporate

Governance.

Professional expertise and skills

Innovation. Every project is a source of creativity and innovation. Boskalis is one big innovative playground.

The client’s needs and preferences are translated into a technical design, using the optimal working methods

and utilization of equipment. Due consideration is given to local conditions, such as the weather, tidal

movements, environmental factors, and safety and security issues. Special equipment is often developed;

new techniques are regularly created on projects in practice. Clients increasingly look for innovative forms

of tender, where the knowledge and creativity Boskalis offers can play a greater role. Examples include

Design & Construct tenders, public-private partnerships, or even alliance contracts, in which Boskalis and

its client are project partners.

Research and development (not project-specific). It is strategically crucial that constant work is done on

new techniques and more in-depth knowledge. For many years now, Boskalis has also been conducting

research not linked to specific projects, in part on its own and in part in joint projects with other sector

operators, universities, and knowledge institutes. The Research & Development department at Boskalis has

experienced staff, simulation and calculation models, and laboratory facilities. The R&D staff is regularly

present on the projects and on board the ships, both at home and abroad, to take measurements.

A steering group, representing the Board of Management, the business units, and the technical staff

departments, sets the priorities and evaluates the long-term planning of most of the R&D work.


Boskalis is working on a large-

scale land reclamation project

for the new international airport

in Qatar. In order to build the

platform, 60 million m3 of sand

will be reclaimed from the sea.

The new airport is designed to

handle the increasing amount

of passengers and freight from

2009 onwards.

Engineering capacity (usually project-specific). Major infrastructure projects such as Design & Construct

projects are increasingly put out to tender. The engineering capacity Boskalis can offer and its own

engineering consultancy Hydronamic are very important in this context. By taking working methods

and options for available equipment into account in the design phase, efficient solutions for cost price

and implementation timelines can be proposed. The Boskalis engineering capacity can also be deployed

during the implementation phase of the projects.



Efficient organization and communication

Health, safety and 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 sub-contractors 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 projects. 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 continuous development of environmentally friendly dredging techniques is an

important aspect of policy. Internal expertise in this field is maintained and translated into continuous

improvements of working methods. Clients regularly ask Boskalis for practical advice about designing

dredging projects along environmentally friendly lines, which results in environmental monitoring systems

developed by Boskalis being used. Thanks to the efforts of its environmental experts staff, Boskalis is

able to properly advise its clients about biology-related aspects of the aquatic environment in the design

of dredging projects.

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 equipment, 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 concept

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 software,

hardware and communications technology is vital here.


Increasingly huge container ships;

harbor construction and maintenance

create a deep welcome.


Terramare, Boskalis’ Finnish

subsidiary, worked on the

construction of the Vuosaari

harbor in Helsinki in 2005.

Expansion of the existing

harbor in Helsinki was no

longer possible. The master

plan developed by the city

council comprises € 250 million

for a new harbor with greater

capacity and € 500 million for

the surrounding infrastructure.

The trailing suction hopper dredger Prins der Nederlanden at work in Pusan, Korea. The container harbor will be

expanded by the addition of 4 container terminals with a combined capacity of 1.2 million TEU.

More and more container ships with greater drafts, longer hulls and

wider stacked container loads sail on fixed international routes along

major seaports. Boskalis constructs and maintains harbors to help

accommodate ever greater container transit.


The trailing suction hopper

dredger Queen of the

Netherlands dredged the

Felixstowe waterways and

harbor at depth so that they

remain accessible for larger

container vessels.


Boskalis values good communication 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 communication 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 communication

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

internationally.

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 126%

Once again there was considerable interest in Boskalis shares from analysts and investors. This was

particularly true of investors with a longer-term investment view. The Boskalis share price went up in

2005 by 126%, from € 24.90 to € 56.25.

Share price in euros, closing prices (January 1, 2001 to December 31, 2005).

2005 2004 2003 2002 2001 2001-2005

Boskalis share price: +126% +19% +8% -36% +14% +114%

AEX index: +25% +3% +8% -36% -20% -31%

AMX index: +27% +15% +15% -35% -20% -14%

On the basis of the price as at June 2, 2005 (€ 30.00), the dividend yield for Boskalis shares in the past

year was 2.5% (€ 0.75 per share).

Investor Re lat ions

Investor Relations


Large shareholders

As at March 10, 2006, 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%

In addition to the holdings of these long-term shareholders, most Boskalis shares are in foreign hands.

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

and Ireland and the remainder in some ten European countries.

Dividend policy

The main principle underlying the Boskalis dividend policy is to distribute 40% to 50% of the net result

from normal operations in the form of a dividend. With this main principle for the longer term Boskalis is

aiming to achieve a stable development of the payout to its shareholders.

The choice of dividend form (in cash and/or entirely or partly in shares) takes account of the company’s

desired balance-sheet structure and the interests of shareholders. It is expected that payment of dividend

will be proposed in the form of cash in the coming years.

A proposal will be made to the Annual General Meeting of Shareholders on May 8, 2006 for a dividend

of € 1.10 per share, to be paid out in cash. The dividend will be payable from May 15, 2006.

Euronext listing

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

there continuously. The share is listed on the Next 150 Index. Since March 2, 2006 Boskalis shares are

included in the Amsterdam AMX index.

Financial agenda

Agenda in 2006

March 13 Publication annual results for 2005

Beginning-April Publication annual report 2005

May 8 Annual General Meeting of Shareholders

May 10 Shares go ex-dividend

May 15 Dividend payment for 2005

August 11 Publication of 2006 half-year results

Information

Investor Relations

R.T. Berends

Telephone +31 (0) 78 69 69 822

Fax +31 (0) 78 69 69 805

E-mail [email protected]

Internet www.boskalis.com

Investor Relations


Personalia Supervisory Board

M. Minderhoud (1946), chairman

• former member of the Board of Management of ING Groep N.V.

• chairman of the Supervisory Board of Getronics N.V., Quion Groep B.V. and

De Hypothekers Associatie B.V.

• member of the Supervisory Board of Heembouw Holding B.V., N.V. Nuon (until April 24, 2006),

Eureko B.V./Achmea Holding N.V. and Rabobank Nederland

• chairman of Vodafone International Holdings B.V.

H. Benjamins (1943)

• former chairman of the Board of Management of Royal Frans Maas Groep N.V.

• chairman of the Supervisory Board of Koninklijke Ahrend N.V.

• member of the Supervisory Board of Coöperatieve Bloemenveiling FloraHolland U.A.,

Grondexploitatiemaatschappij Californië B.V., Vos Logistics Nederland B.V.

• chairman of the Limburgse Werkgevers Vereniging (VNO-NCW)

R.M.F. van Loon (1942)

• former vice-president of Shell Chemicals Ltd.

• chairman of the Supervisory Board of Synbra Group B.V.

• member of the Supervisory Board of Koninklijke Vopak N.V.

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., Koninklijke Vopak N.V., Univar N.V.

A.A. Westerlaken (1955)

• chairman of the Board of Management of ’s Heeren Loo Zorggroep

• member of the Supervisory Board of Coöperatieve Bloemenveiling FloraHolland U.A.

• member of the Council for Public Health and Health Care (Raad voor de Volksgezondheid en Zorg)

• member of the Advisory Committee on Remuneration and the Legal Status of Senior Civil Servants

and Senior Politicians (Adviescommissie beloning en rechtspositie ambtelijke en politieke topstructuur)

All members of the Supervisory Board are Dutch.

They do not hold shares or associated option rights in Royal Boskalis Westminster nv.

Secretary

M.J. Kielstra (1972)

The above information is valid as at March 10, 2006.

Report of the Supervisory 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 2005 to the Annual General Meeting of Shareholders. The Annual

Report for 2005, including the financial statements for the same year, was compiled by the Board of

Management. The financial statements are accompanied by the audit report of the company’s external

auditors, KPMG Accountants N.V. On the same day as the day on which the call for the Annual General

Meeting of Shareholders was issued, the Board of Management sent the financial statements to Boskalis’

Works Council for its information.

We recommend to the Annual General Meeting of Shareholders:

• the adoption of the financial statements, 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 2005;

• the distribution of a dividend to shareholders of € 1.10 per share.

Composition of the Board of Management

There were no changes to the Board of Management in the year under review. The Board of Management

consisted of two members. On December 4, 2005 the company announced that Mr R. van Gelder,

chairman of the Board of Management, would step down at the end of the Annual General Meeting of

Shareholders because he was due to retire in May 2006. The current vice-chairman of the Board of

Management, Mr P.A.M. Berdowski, will succeed Mr Van Gelder as chairman of the Board of Management.

The same announcement in December 2005 also stated that the Supervisory Board proposed appointing

Mr J.H. Kamps (46) to the Board of Management in the position of chief financial officer with effect

from January 2006. The notification to shareholders of this proposed appointment was discussed at an

Extraordinary Meeting of Shareholders on January 13, 2006. The Extraordinary Meeting of Shareholders

expressed itself in favor of the appointment of Mr Kamps with effect from January 1, 2006. Afterwards

the Supervisory Board decided as proposed.

Composition of the Supervisory Board

As announced at the General Meeting of Shareholders in May 2004, Mr M.W. Dekker stepped down by

rotation in May 2005. Mr Dekker had been connected to Boskalis for a period of sixteen years as a

member of the Supervisory Board, including the last year as chairman. During that period Mr Dekker

gave Boskalis the benefit of his financial and economic know-how, his broad knowledge of the business

community as well as his experience in the dredging industry (Mr Dekker was chairman of the Board of

Zanen Verstoep N.V. from 1978 to 1988). At the same General Meeting of Shareholders (May 10, 2005)

Mr J. Aalberts retired by rotation as a member of the Supervisory Board. On their own behalf and on

behalf of the company, the Supervisory Board thanked Messrs Dekker and Aalberts for their great

dedication and commitment as members of the Supervisory Board. In order to fill the vacancies on the

Board and in accordance with the Profile of the Supervisory Board, Mr M. Minderhoud was nominated

in December 2004, and Messrs H. Benjamins and R.M.F. van Loon were nominated in January 2005.

These gentlemen were appointed by shareholders, convened in Extraordinary Meetings of Shareholders,

and then they became members of the Supervisory Board. Mr Minderhoud, the vice-chairman, succeeded

Mr Dekker as chairman of the Supervisory Board on May 10, 2005.


Report o f the Superv isory Board on 2005



Activities of the Supervisory Board

In the period under review the Supervisory Board (almost always with all members present) met seven

times with and three times without the Board of Management. 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 development of the results, the balance sheet and industry and market

developments. Other subjects discussed included the results of the margin improvement program

implemented in 2004, the 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 environment. One meeting was dedicated entirely to corporate strategy.

Three introductory meetings were held during the year under review for the new members of the Supervisory

Board at which the Supervisory Board discussed general financial and legal matters, the company’s

financial reporting, and the issues that are specific to Boskalis and its business activities. For example,

the dredging business operations and the techniques used were on the agenda of the introductory meeting

on June 21, 2005; the meeting on September 26 addressed financial and taxation matters of Boskalis;

and the meeting on November 9 focused on the market in which Boskalis operates, namely the ‘global

dredging market’.

Due to the amendments to Book 2 of the Dutch Civil Code introduced on October 1, 2004 regarding the

dual-board company structure, the Board approved a proposal from the Board of Management to amend

the Articles of Association, and then presented it to the shareholders. Because there was no quorum at

an Extraordinary Meeting of Shareholders held in December 2004, the decision-making process regarding

the amendment to the Articles of Association was concluded in a second Extraordinary Meeting of

Shareholders held in January 2005 (at which the quorum requirement was not in effect).

The Supervisory Board has three core committees, namely the Audit Committee, the Remuneration

Committee and the Selection and Appointment Committee. The core committees performed their

assigned tasks as described below.

Audit Committee

Following its establishment in 2004, the Audit Committee met three times in 2005 to discuss issues including

the financial reporting for the 2004 financial year and the reporting of the 2005 half-year results, as well as

subjects such as IFRS, risk management, internal control and financial accounting and control systems,

and relevant legislation and regulations. In addition to the chairman of the Board of Management and the

chief financial officer (CFO), the external auditor (KPMG) attended all meetings of the Audit Committee. In

this connection, the meetings also discussed KPMG’s audit approach and activities.



Remuneration Committee

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

pursuant to the recommendations of the Remuneration Committee. The remuneration report as drawn

up by the Remuneration Committee can be summarized as follows.

The policy in relation to the remuneration of the Board of Management, which was raised by the Supervisory

Board at the Extraordinary Meeting of Shareholders on December 23, 2004 and which had been accepted

and adopted by shareholders, is aimed at successfully attracting and retaining qualified managers for a

listed, globally active company with specialist technical activities and capital-intensive equipment. The

remuneration includes a fixed salary, a variable salary and a pension plan. The amount and composition of

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

about a peer group of companies that are comparable to Boskalis in terms of size and/or complexity.

The short-term bonus consists of two criteria of equal weight. One half is related to the annual return

linked to the net profits plus interest on long-term loans, expressed as a percentage of the average

invested capital. The other half is related to the degree to which the member of the Board has achieved

the targets set by the Supervisory Board. The short-term bonus can be a maximum of 60% of the fixed

annual salary for the chairman and 55% for members of the Board.

The long-term bonus scheme also emphasizes two criteria of equal weight. One criterion is aimed at

creating added value (EVA) and the other criterion is aimed at realizing corporate policy in the long

term. The long-term bonus is expressed per year as a conditional number of notional shares and is

fixed after three years and paid out in cash at the equivalent value applicable at that time.

For an overview of individual payments to the members of the Board of Management, the reader is referred

to page 96 of the Annual Report. The variable salary awarded in 2005 relates to the 2004 financial year.

In addition, one of the members of the Board of Management, Mr R. van Gelder, received an additional

payment of € 625,000. This is the result of commitments made by the Supervisory Board to Mr Van Gelder

with respect to his long-term incentive before 2003.

The Remuneration Committee met four times and consulted extensively outside the meetings.

Proposals were submitted to the Supervisory Board regarding the adjustment of the fixed annual salary

of the members of the Board of Management as of January 1, 2005 and the determination of the short-

term bonus for 2004. In this context, the 2005 criteria for both the short-term and the long-term bonus

were also determined.



Selection and Appointment Committee

The Selection and Appointment Committee met twice during the past year and conducted extensive

internal discussions, as well as holding meetings with candidates. The Selection and Appointment Committee

discussed the composition and size of the Board of Management with the Board of Management, including

as regards the upcoming retirement of the chairman of the Board of Management and the proposal to

appoint Mr Kamps as a member of the Board of Management as well as the occupation of senior manage-

ment positions. Both current and future occupation of the positions concerned were considered.

The Dutch Corporate Governance Code

The principles of good governance and best practice provisions set out in the Dutch Corporate Governance

Code (referred to below as the “Code”) were discussed at meetings of the Supervisory Board with the

Board of Management. For the “Apply or Explain” report in response to the Code, the Board refers readers

to the special publication of the Board of Management and the Supervisory Board on this subject, which

was published in 2005 at the same time as the Annual Report for 2004. This publication is available on

the Boskalis website at www.boskalis.com and can also be obtained directly from the company.

In accordance with the provisions of the Code, an Addendum to the “Regulations to prevent the misuse

of inside information in respect of transactions involving company securities” was drawn up and came

into effect on January 1, 2005.

It is the assessment of the Board that the provisions in the Code regarding the independence of the

members of the Supervisory Board have been met. The Board considers Mr M. van der Vorm to be a

non-independent party as referred to in the Code.

The chairman of the Supervisory Board consulted regularly on ongoing developments with the chairman

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

Board meetings.

The Supervisory Board met three times without the Board of Management. A range of subjects were

discussed on those occasions. Items on the agenda included the performance of the Supervisory Board

and of individual members of the Supervisory Board, the performance of the Board of Management

and of individual members of the Board of Management as well as fulfillment of expected vacancies.

The composition and assignment of tasks within the Board of Management were discussed. Possible

succession plans for the Board of Management and the upper echelon were also discussed on these

occasions.

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 in 2005 and for the policy pursued and expresses its special appreciation for the

dedication and commitment shown by all.

Papendrecht / Sliedrecht, March 10, 2006

The Supervisory Board

M. Minderhoud, chairman

H. Benjamins

R.M.F. van Loon

M. van der Vorm

A.A. Westerlaken

Members of the Audit Committee

H. Benjamins, chairman (with effect from May 10, 2005)

M. Minderhoud (chairman until May 10, 2005)

Members of the Remuneration Committee

A.A. Westerlaken, chairman

M. Minderhoud (up to and including December 31, 2005)

R.M.F. van Loon (with effect from January 1, 2006)

Members of the Selection and Appointment Committee

A.A. Westerlaken, chairman

M. Minderhoud

Report of the Board of Management


Personalia Board of Management

R. van Gelder, chairman (1945)

• member of the Board of Management since 1985

• chairman of the Board of Management since 1993

• chairman of the International Association of Dredging Contractors and

of the Euronext Issuing Institutions’ Advisory Body

• member of the Board of the Association of Securities-Issuing Companies

and Nederland Maritiem Land

• member of the Advisory Board of ABN AMRO Bank N.V.

• member of the Supervisory Board of Hagemeyer N.V., SBM Offshore N.V. and HES Beheer N.V.

P.A.M. Berdowski, vice-chairman (1957)


• vice-chairman of the Board of Management since 2001

• chairman of the Supervisory Board of Amega Holding B.V., Scope Publishing B.V.

and N.V. Holding Nutsbedrijf Westland

• chairman of the Stichting Pensioenfonds Boskalis Westminster Nederland

J.H. Kamps, chief financial officer (1959)


• member of the Board of Management of Stichting Fondsenbeheer Waterbouw, Stichting

Bedrijfstakpensioenfonds Waterbouw and Stichting Pensioenfonds Boskalis Westminster Nederland

All members of the Board of Management are Dutch.

The chairman of the Board of Management holds 37,500 shares in Royal Boskalis Westminster nv.

Secretary

M.J. Kielstra (1972)

The above information is valid as at March 10, 2006.

From left to right:

J.H. Kamps, R. van Gelder,

P.A.M. Berdowski


Report o f the Board of Management on 2005


INTRODUCTION

In the past year an upturn occurred in the international dredging market, with much volume and new

market opportunities with an acceptable price/risk profile. This resulted in a full orderbook at year

end, which provides a strong foundation for the coming years. In addition, various large-scale projects

were announced in the market that hold out the prospect of a large volume of work for the medium

term.

As a result of the policy of taking a selective approach to the market in recent years, work continued

in 2005 on often short-term projects with moderate price levels. Nevertheless, a higher operating

result was achieved, mainly thanks to a higher turnover and a better fleet utilization rate.

Innovation was again high on the agenda in 2005, as was the further development of employees

and the organization. The company made good progress in these areas.

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

POSITIVE MARKET DEVELOPMENTS IN 2005

Much demand in energy-driven markets. Boskalis’ broad positioning in a number of energy-driven mar-

kets, together with its partners Archirodon and Lamnalco, produced a growing stream of contracts in

2005. In particular, there was the opportunity to respond to the rapidly growing demand in the Middle

East, as well as to become involved in the laying of offshore gas pipelines and the construction of LNG

terminals on various continents.

Increasing demand in European home markets. Although the volume of work and the price levels in the

European home markets were also under pressure in 2005, a number of larger projects were announced

in the course of the year, which have the potential to provide much work in the coming years. These

projects include harbor expansions in Wilhelmshaven (Germany), London and Felixstowe (United Kingdom),

as well as Maasvlakte in Rotterdam. Extensive harbor projects have also been announced in Russia,

particularly in the vicinity of St. Petersburg.

Successful growth of Archirodon and Lamnalco. Both Boskalis partners grew significantly last year, on

the one hand as a result of their traditionally strong position in the Middle East and on the other hand

– especially in the case of Lamnalco – because of a growth strategy aimed at other regions in the world.

This Annual Report contains profiles of Archirodon (pages 12-13) and Lamnalco (pages 14-15).

FINANCIAL COURSE OF BUSINESS

The key points in 2005 were as follows:

• Net profit +85%, € 62.7 million, cash flow € 143.5 million;

• Record orderbook, € 2.43 billion and record turnover, € 1,156 million;

• Much work in energy-driven markets;

• Higher fleet utilization, margins still modest;

• Payout increased: dividend per share € 1.10; strong financial position;

• Effects of 2004 rationalization visible.



Turnover and orderbook

In the year under review, turnover amounted to € 1,156 million (2004: € 1,020 million). Whereas turnover

fell slightly in the Netherlands and was stable on balance in the rest of Europe, it grew across the board

in the rest of the world, especially in the Middle East, Australia, Asia and Africa. Approximately 40% of

this turnover was related to the production and transport of oil and gas and, particularly in the Middle

East, investment of energy revenues in infrastructure to promote trade, tourism and industry.

Turnover work done by geographical area

(x € 1 million)

2005 2004 2003 2002 2001

The Netherlands 182 195 230 254 283

Rest of Europe 218 220 219 189 208

Australia / Asia 240 179 223 207 265

Middle East 248 223 113 132 61

Africa 129 99 106 115 77

North and South America 139 104 155 138 189

1,156 1,020 1,046 1,035 1,083

Turnover by segment

(x € 1 million)

2005 2004 2003 2002 2001

Home markets in Europe 360 336 411 420 460

Home markets outside Europe 115 76 173 186 167

International projects ‘hit and run’ 392 359 301 324 372

Specialist niche markets 93 88 91 52 56

Total dredging and dry earthmoving 960 859 976 982 1,055

Maritime infrastructure 159 133 70 53 28

Maritime and terminal services 37 28 – – –

1,156 1,020 1,046 1,035 1,083

Turnover

(x € 1 million)



Dredging and earthmoving - Home markets (turnover of € 475 million)

Turnover on the home markets increased to € 475 million (2004: € 412 million). Turnover increased in

Germany, the United Kingdom and Nordic; the volume fell slightly in the Netherlands, and this market

continued to stagnate – partly because of the effects of complex government decision-making and

licensing procedures. Outside of Europe turnover improved in Nigeria and the United States compared

with the previous year.

The home markets’ share in the turnover, as in 2004, was approximately 40%. The Boskalis home

markets are:

The Netherlands Nigeria

Northwestern Europe (Germany, Mexico

United Kingdom, Nordic) United States

Dredging and earthmoving - International projects market (turnover of € 392 million)

On the international projects market the dredging turnover increased to € 392 million (2004: € 359 million)

due to a substantially higher turnover in the Middle East (particularly the Emirates, Qatar and Saudi

Arabia), as well as harbor expansions and energy-related investments in Australia, Asia and Africa.

Dredging and earthmoving - Specialist niche markets (turnover of € 93 million)

The turnover from specialist offshore services for the oil and gas industry increased to € 93 million

(2004: € 88 million). The main activities involved were installing and protecting offshore oil and gas

pipelines, among other places off the coast of Australia, India, Trinidad and in the North Sea.

Maritime infrastructure (turnover of € 159 million)

As a result of the very busy construction markets in the Middle East, turnover from maritime infrastructure

increased to € 159 million (2004: € 133 million). This turnover is achieved with the 40% participating

interest in Archirodon.

Maritime and terminal services (turnover of € 37 million)

The energy-driven growth in turnover from maritime service provider Lamnalco continued last year,

particularly as a result of increased activities in Saudi Arabia and Nigeria. Boskalis’ 50% share in the

turnover amounted to € 37 million (2004: € 28 million).

Orders worth a total of € 2,338 million were acquired in 2005, with a significant number in the Middle East

(dredging, infrastructure and terminal services) and the European home markets (dredging). The size of

the orderbook increased to € 2,427 million (year end 2004: € 1,244 million). This includes an amount

of € 317 million for the land reclamation work in Singapore that is still to be carried out (year end 2004:

€ 328 million). The timing of the resumption of this work is still uncertain.

Orderbook

(x € 1 million)

Acquired orders

(x € 1 million)



Results

As a result of the policy of taking a selective approach to the market in recent years, work continued in

2005 on often short-term projects with moderate price levels. Nevertheless, the group result before

depreciation, interest and taxation (EBITDA) increased to € 162.9 million (2004: € 136.9 million), mainly

due to higher turnover and better fleet utilization in the ‘dredging and earthmoving’ segment. The effects

of the rationalization carried out in 2004 were also visible. The operating result increased to € 82.3 million

(2004: € 47.5 million) and the net profit increased to € 62.7 million (2004: € 33.9 million).

Good contribution from all segments

Although the greater contribution to profit from the ‘dredging and earthmoving’ segment had a significant

effect on the result, the contributions to profit from the other segments also increased:

Segment result (x € 1 million)

2005 2004

Dredging and earthmoving 65.3 50.8

Maritime infrastructure 16.3 10.3

Maritime and terminal services 6.2 5.0

Dredging and earthmoving

The segment result increased to € 65.3 million (2004: € 50.8 million) due to the higher turnover, improved

equipment utilization and cost reductions.

The average utilization of the hopper fleet rose to 37 weeks on an annual basis (2004: 31 weeks), mainly

due to the higher utilization rate of the large trailing suction hopper dredgers. The cutter fleet’s utilization

rate was also favorable, particularly because of the deployment of the larger cutter suction dredgers for

several extensive projects: 36 weeks on an annual basis (2004: 34 weeks).

Maritime infrastructure

The result from the ‘maritime infrastructure’ segment (40% interest in Archirodon) increased to € 16.3 million

(2004: € 10.3 million), as a result of the high volume of work in the Middle East, as well as positive results on

completed projects.

Maritime and terminal services

The Lamnalco segment result increased to € 6.2 million (2004: € 5.0 million) because of the increased

turnover.

Depreciation amounted to € 80.2 million compared to € 89.0 million in 2004. This decrease was the result

on the one hand of the additional depreciation in 2004 as part of the fleet rationalization (€ 4.4 million),

and on the other hand of a lower level of depreciation on equipment in several – now finalized – joint

venture projects.

Net profit

(x € 1 million)

Fleet utilization

(in weeks per year)



The result from non-consolidated participating interests amounted to € 0.3 million (2004: € 0.4 million).

Taxes amounted to € 18.1 million (2004: € 12.0 million), which represents an effective tax rate of 22.4%

(2004: 26.1%). This lower tax percentage is linked to the spread of the results over the many different

countries where the company is active and how the results are taxed in those countries.

For 2005, the return on equity amounted to 12.4% (2004: 7.2%).

Investments and balance sheet

In the year under review, investments reached € 87 million. Investment was modest in the ‘dredging and

earthmoving’ segment (€ 45 million) and mainly concerned replacement of pipelines and smaller equipment.

Lamnalco (‘maritime and terminal services’ segment), which is implementing an ambitious growth strategy,

was responsible for a significant amount of the total investments (€ 24 million). In addition, Archirodon

(‘maritime infrastructure’ segment) invested in project-related equipment in particular (€ 18 million).

Divestments totaled € 8 million, so net investments amounted on balance to € 79 million

(2004: € 118 million).

In line with the increased operating results, the cash flow rose in 2005 to € 143.5 million

(2004: € 123.1 million).

Particularly as a result of the low level of investment in relation to the cash flow, the cash position increased

to € 201 million (year end 2004: € 141 million). Part of this cash, € 56 million, was held by projects being

executed in cooperation with third parties (year end 2004: € 56 million).

Equity to total assets as of December 31, 2005 was 40.8% (2004: 37.7%).

Proposed profit appropriation

A proposal will be submitted to the Annual General Meeting of Shareholders to appropriate € 31.4 million

for a cash dividend payment of € 1.10 per share. The remainder in the amount of € 31.3 million will be

added to the retained earnings.

POLICY AND OPERATIONAL MATTERS

Personnel & Organization

Against the background of growing market demand and the increasing complexity and scale of projects,

2005 was also marked by personnel developments and strengthening of the tools that are used in that

regard. To that end, work started on preparing a Boskalis training program for senior project managers

and project directors. The aim of the program is to accelerate people’s development in the area of

complex and large-scale project management.

The second implementation stage of Prinses, the new management and information system for human

resources, was completed at the end of December. Consequently Boskalis now has a modern and complete

Human Resources Management instrument at its disposal.

Investments

(x € 1 million)

Cash flow

(x € 1 million)



Competence management was also successfully introduced in 2005 for part of the fleet. Implementation

of this system will continue in 2006. The so-called ‘Crew Policy Plan’ - a plan for long-term targeted

and systematic development of fleet crew - was also implemented.

A number of changes were made to the pension system for Dutch members of staff in December in

order to comply with changes in Dutch law regarding (early) retirement and, more broadly, life-course

planning. The new laws and fiscal regulations in this area offer employees an optimum range of choices

at costs that remain at the same level for the company in the longer term.

Workforce size. In 2005, the average size of the Boskalis workforce was 7,031; the figure at year-end

2005 was 7,029 employees (compared to 7,033 at year-end 2004).

A new Works Council was installed last year and communications with the new Works Council, as with

the previous one, were intensive. The Works Council’s active approach and the way in which it fulfills its

duties are very much appreciated.

Health, safety and environment

Working in a safe, healthy and environmentally aware manner was again high on the agenda last year.

There were intensive communications on these subjects in order to further raise safety awareness within

the organization and to keep the people sharp on the shop floor. On-site safety inspections were also

carried out by senior managers and safety awareness training was given to managers.

Individual safety performance forms an integral part of the remuneration policy at Boskalis. In this vein,

the Board of Management awards the Boskalis Safety Award to an employee annually for the best idea

submitted for safety improvement. This prize was awarded again at the beginning of 2006.

Awards for good safety performances were received from outside the company in Qatar, at the airport

project in Doha. In Singapore the government gave a Silver Award for the Changi Outfall project.

After the local organization in Singapore was certified in 2004 in accordance with the environmental

standard ISO-14001 and the safety and environmental standard OSHAS-18001, the Business Unit Offshore

was certified last year and work started with a view to certification of the Business Unit Europe.

The MANsafe training started in the spring of 2005. This training program has two variants: Safety

Leadership, which is focused on recognizing and preventing dangerous situations, and Safety

Management, which is about setting up and operating a safety management system.

In 2005, the number of accidents fell compared to 2004. The accident rate (LTIF, the number of accidents

per million hours worked) remained at the same level of approximately 8, which is substantially below

the average for the sector. The policy objective is a continued reduction in LTIF.



Equipment

Last year the Central Technical Department set out the investment plan that will be implemented in the

coming years. For example, preparations were made for the reconstruction of the cutter dredger Oranje

and the lengthening of the Queen of the Netherlands and work began on designing two offshore stone-

dumping vessels and two medium-size hopper dredgers with a capacity of about 5,000 m3 each.

The level of investment in dredging equipment was modest in 2005.

As part of tightening up the organization, further measures were taken to ensure that various vessel

components will be purchased at more competitive prices in the future.

Partner company Lamnalco invested heavily in specialist vessels to use on new harbor and terminal

service contracts.

Research and development

The Boskalis research department again worked on many different innovative designs last year. This work

focused on both the development of specialist equipment and the further improvement of dredging

processes.

Good progress was made in 2005 on developing a special draghead for dredging in stone using a trailing

suction hopper dredger. Tests have taken place with trailing suction hopper dredgers, including in the

Middle East and Australia.

Tests were carried out in the hydraulic laboratory in Delft and on board the hopper dredger Waterway

using a technique for optimizing the production level of trailing suction hopper dredgers in fine sand.

Work also continued on improving the process information presented on board the vessels with a view

to optimizing production levels.

The improved process instrumentation and control system for cutter suction dredgers developed in

cooperation with IHC Systems was put into service in 2005 on the jumbo self-propelled cutter dredgers

Ursa and Taurus.

Information and Communication Technology (ICT)

The international modernization and standardization of ICT systems was given further shape in the past

year. Work began on implementing the new Project Management System ERP-Lite in 2005.

Implementation of a document management system also began in 2005 with a view to making it easier

to share knowledge within the organization.

50



The new information plan for 2006-2010 was completed at the beginning of 2006. The emphasis is on

further improvement of existing systems, knowledge management and collaboration environments.

A number of new systems will also be developed.

Work started last year on building a new Management Information System. This system will handle data

collection at the source (projects and other reporting entities), financial and management reporting by

business units and consolidation and reporting at group level. The first phase – data collection at the

source – is now complete. The second phase – consolidation and reporting – will be completed in 2006.

Prospects for the coming year

An increasing turnover and higher equipment utilization rates are forecast for 2006. As regards margin

development, recently acquired orders show a recovery, but the orderbook still contains projects acquired

with moderate margins that will be carried out in 2006. However, it is not possible to make concrete

statements regarding our expectations for the results at present.

Boskalis is allowing for the possibility that market demand will exceed the available capacity.

For Boskalis this means that the policy of selective contracting will continue.

The investment activities will increase in 2006. They will focus primarily on the accelerated expansion of

hopper and cutter capacity and on additions to the fleet for use in the oil and gas industry. The plans form

part of the long-term program set out in the chapter on the “Investment plan for growth and strengthening

of market position”, on pages 22-25.

The size of the work force is expected to increase slightly in the coming year because of the increasing

market demand.

In conclusion

2005 was a transitional year in which the outlines of new growth became clearer, especially in the second

half of the year. Thanks to the consistent performance and acuteness of our employees, also in the period

of uncertainty that is now behind us, we are ready for the challenges that the market will hold for us in

the coming years. The Board of Management thanks the employees for their dedication and enthusiasm

in the past year.


Board of Management

R. van Gelder, chairman

P.A.M. Berdowski

J.H. Kamps


Corporate Gover nance


Boskalis is a listed two-tier company. The new “large corporation” rules applicable to two-tier companies

came into force on October 1, 2004. The new legislation is mandatorily applicable to Boskalis because:

(a) the shareholders’ equity exceeds € 16 million, (b) the company (or a dependent company) has set

up a works council, and (c) at least 100 employees are working in the Netherlands at the company and

all dependent companies together.

Boskalis shares are listed and continuously traded on Euronext Amsterdam N.V.

BOSKALIS AND CORPORATE GOVERNANCE

The Dutch Corporate Governance Code (the “Code”) that came into force on January 1, 2004 applies

to Dutch companies listed on the stock exchange and comprises a code of conduct for good and

responsible governance, as well as for proper supervision thereof, including accountability for such

supervision.

The guiding principle is that the company is a long-term partnership consisting of various parties

involved in the company. The stakeholders are those groups and individuals that influence or are influenced

directly or indirectly by the achievement of the company’s objectives, such as employees, shareholders

and other financiers, suppliers, customers, but also the government and groups in society.

The Board of Management and the Supervisory Board of the company bear integral responsibility for

weighing these interests, always maintaining a focus on the continuity of the company and the creation

of long-term shareholders value.

The Board of Management of Boskalis is charged with managing the company, which includes being

responsible for the achievement of the company’s objectives, as well as for the strategy and the policy

pursued and the consequent development of results. The Board of Management is accountable in this

regard to the Supervisory Board and the General Meeting of Shareholders. In performing its tasks, the

Board of Management is guided by the interests of the company and the business associated with the

company and for this purpose weighs the relevant interests of parties involved with the company.

The Supervisory Board has the task of supervising the policy of the Board of Management and the

general course of events in the company and the associated business. The Supervisory Board also

gives advice to the Board of Management.

The Supervisory Board has set up three so-called core committees, namely the Audit Committee, the

Remuneration Committee and the Selection and Appointment Committee. See page 41 for the composition

of these committees.


At least one General Meeting of Shareholders takes place every year in any event. The tasks performed

by the General Meeting of Shareholders include adopting the financial statements, and the General

Meeting also has powers regarding the appointment and dismissal of (members of) the Supervisory

Board.

There is also a Works Council that provides employee representation in the context of the Works

Councils Act.

APPLICATION AT BOSKALIS

Boskalis subscribes to the notion that a sound and transparent system of checks and balances is important

for having sufficient confidence in companies operating on the capital market. Boskalis considers clarity and

openness in accountability and supervision as cornerstones of proper management and entrepreneurship.

For this purpose, the company has a sound system of corporate governance.

At Boskalis, the guarantees for proper corporate governance are mainly to be found in an open company

culture, where entrepreneurship, technical professionalism and accepted civil decency are characteristic.

The main outlines of the Boskalis corporate governance structure are set out each year in the Annual

Report, and any material changes in Boskalis’ corporate governance structure will be submitted to the

General Meeting of Shareholders.

The so-called “apply or explain” report referred to in the Code was included in the section on corporate governance

in the Annual Report for 2004. This section is available on the Boskalis website at www.boskalis.com and

can also be obtained directly from the company. In short, Boskalis already applies or will apply all the principles

and 91 of the 92 applicable best practice provisions from the Code.

In one case, Boskalis considers that the specific nature and character of the company mean that it is in

its best interests to apply a best practice that differs from the relevant provision in the Code. This concerns

provision III.2.1. The reason for the Boskalis practice is included in the section referred to above. The General

Meeting of Shareholders in 2005 approved the corporate governance policy chosen by the company.

Boskalis does not currently foresee any material changes in the corporate governance structure of the

company in the near future.



RISK MANAGEMENT

Market and competition risks

The Boskalis markets are heterogeneous and often develop in different ways. In most cases, the clients

are national, regional, and local governments or associated institutions and oil and gas companies.

These markets are generally driven by long-term economic factors, such as increases in the global

population, the growth of the global economy, and the growth of international trade volumes. The long-

term prospects for these factors are favorable.

In the short term, factors such as limited government budgets and falling oil and gas prices may have a

negative impact on the markets, despite the long-term growth trends. In general Boskalis is well placed

to respond to both positive and negative developments in individual market segments because of its

global spread of activities, its extensive, versatile, and internationally based fleet, and its strong positions

in the home markets. Moreover, the dredging industry is largely focused on the maintenance and develop-

ment of infrastructure. This means that long-term developments will generally be more important than

short-term economic fluctuations.

On its markets, Boskalis is facing both large, internationally operating competitors and more regional or

local competitors that are limited to one or several submarkets.

In most cases, projects are brought to the market using private or public tender procedures.

Competition is mostly on the basis of price. The dredging industry is a capital-intensive industry with

high entry and exit barriers, particularly for companies operating in the international arena. Prices are

influenced greatly by the relation between the demand for dredging services and the available capacity

and utilization of the equipment. The broad international spread of market positions and equipment and

cost leadership are therefore key success factors that receive a great deal of emphasis from Boskalis,

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

The solid financial position also provides a strong basis to manage risks.

Operational risks

On the markets where Boskalis operates, ‘fixed price/lump sum’ is still the most common type of contract.

In this type of contract, the contractor must include nearly all the operating and price risks in the price. It is

generally impossible to claim payment from the client for any unexpected costs that occur during the course

of a project. Accordingly, such operating and price risks must be taken into account when calculating the

cost price.



Operating risks mainly involve soil conditions, variable weather conditions, technical suitability of the equipment,

wear and tear when it comes into contact with processed materials, and damage to equipment and third-

party property. Boskalis seeks to manage these risks by means of thorough project preparation and appropriate

measures, such as conducting soil studies, maintaining easily accessible databases with information on

past experiences, and using detailed risk analysis techniques. In addition, there is a strong focus on staff

training, schooling, and refresher courses, a certified quality and safety program, and optimal maintenance

policies to keep equipment in good condition. Some risks are also insured if possible. The key to Boskalis’

professionalism and skills lies in its ability to manage these operating risks effectively and responsibly.

Risks related to price developments on the purchasing side, such as increased wages, costs of materials,

sub-contracting costs, fuel, etc., which are usually for Boskalis’ account, are also taken into account

when preparing cost price calculations. Wherever possible, especially on projects that extend over a

long period of time, price index clauses are included in contracts. With regard to fuel, contracts some-

times stipulate delivery by the client; from time to time, forward contracts or futures are arranged.

Financial risks

With regard to projects, Boskalis encounters not only operating risks but also financial risks. Financial

risks primarily concern the possibility that projects will be disrupted by political developments, violence,

etc. as well as the risk of non-payment by clients. Boskalis has a strict risk acceptance and hedging

policy for political and payment risks. Except in case of first-class, creditworthy clients, payment risks

are in principle covered by insurance, bank guarantees, advance payments, etc.

Many of the projects are contracted in foreign currency. Once positions in foreign currency have been

committed, they are in principle fully hedged, generally by forward currency contracts.

The development of the US dollar exchange rate in relation to the euro is particularly relevant. A large

proportion of the projects are contracted in US dollars or in currencies that are more or less directly

linked to the US dollar.

With regard to the competitiveness of Boskalis’ cost structure, a significant part of the cost structure

of most of Boskalis’ major international competitors is also linked to the euro. The impact of currency

developments is greater in markets where the competition comes primarily from parties whose cost

structures are not linked to the euro. However, on balance, the fluctuations of the US dollar in relation

to the euro have only a limited impact on the competitive position of the company.



The most important non-fully owned affiliated companies of Boskalis (Archirodon, Lamnalco, and Bean

Stuyvesant) are fully or largely US dollar-based. However, the cost structures of these companies are

also completely or largely US dollar-based. These investments are viewed from a long-term perspective.

Translation risks with regard to investments in these affiliated companies are not hedged, under the

assumption that currency fluctuations and interest and inflation developments will balance out in the

long run. The profit and loss accounts of these affiliates are converted at average currency exchange

rates. Currency translation differences are directly charged or credited to the shareholders’ equity.

Financial derivatives (forward contracts, options, interest swaps, futures, etc.) are only used if they are

based on underlying real transactions.

As is common practice in the contracting business, Boskalis also has large amounts outstanding in the

form of bank guarantees or surety bonds (guarantees issued by insurance companies, primarily the

case in the United States), usually in favor of clients. Boskalis’ financing policy is conservative since

adequate credit, and particularly bank guarantee facilities, are essential to an uninterrupted conduct of

business. The company has ample credit and bank guarantee facilities at its disposal.

Internal risk management and control systems

The internal risk management and control systems are based on the principles of effective management

control and tailored to the day-to-day working environment in which Boskalis operates worldwide.

Three aspects are important for the assessment and evaluation of the internal risk management and

control practices and systems within Boskalis, due to the hands-on nature of and short lines of com-

munication within the company:

1. With regard to daily operations, an extensive framework of quality assurance rules, procedures and

systems that include clear guidelines for responsibilities, authorizations and risk control, forms the

backbone of operational risk management and control. In addition, besides audits by external agencies,

Boskalis also performs regular internal audits under the auspices of a QA officer.

2. The daily management of the Boskalis organization takes place with clear responsibilities and short,

clear lines of command that are defined unambiguously. Both competition and project implementation

require speed, knowledge, and decisiveness. Daily management is hands-on.

3. Progress and development of the operating results and the company’s financial position, as well as

operational and financial risks, are monitored by means of structured periodic reporting, analysis of

the financial results, and performance reviews at senior management level.



Risks with regard to financial reporting

Structure of financial reporting

Boskalis’ financial reporting takes place within a tight framework of budgeting, reporting and forecasting.

Reports are externally or internally oriented.

External reporting consists of an Annual Report, including financial statements audited by the external auditor,

as well as a half-yearly report containing abridged consolidated and segmented financial information.

The external reports are drawn up in accordance with IFRS and based on the internal financial reporting.

The internal financial reporting – the so-called ‘management reporting’ – consists of extensive consolidated

quarterly reports, which report on current developments compared to (cumulative) quarterly budgets. There

is also a quarterly forecast of the annual results, cash flows and balance sheet positions at the end of the

financial year. The quarterly budgets are part of the annual group budget, which is set in December every

year by the Supervisory Board and the Board of Management.

The internal financial reporting has a layered structure – in accordance with the internal arrangement of

management responsibilities – whereby consolidation takes place step by step starting with the projects,

via business units up to and including group consolidated reports.

Project managers are responsible for budgets, profit and loss and balance sheets for their projects, which are

drawn up in accordance with applicable guidelines and instructions. In turn, business unit management is

responsible for the financial reports of their business unit.

The Board of Management discusses the quarterly reports in formal quarterly meetings with the responsible

business unit managers. These meetings are minuted. The consolidated group reports are discussed with

the Supervisory Board every quarter.

The structure and quality of the financial accounting and control systems of Boskalis and its group companies

are assured by unambiguous and periodic internal and external audits. Relevant aspects of the financial

accounting and control systems are set out in manuals, guidelines, and procedures. Internal audits to monitor

and improve quality and discipline are conducted on the basis of at-random and ad hoc investigations

(financial audits) that also contain elements of instruction and training. Moreover, the quality of the financial

control systems is evaluated regularly in the context of the activities of the external auditors.

The Board of Management considers that the financial reporting arranged in this way, with a clear formal

structure and regular assessment and discharge, guarantees the high quality of the figures in the periodic

reports.



Statement about risks with regard to the financial reporting

In spite of the risk management and control systems that Boskalis has implemented, there exists no absolute

certainty that mistakes, losses, fraud or illegalities do not occur. However, based on the structure and

operation of the financial reporting and review systems used within Boskalis, the Board of Management

states that:

• the risk management and control systems provide reasonable assurance that the financial reports are

free of material misstatements;

• there are no indications that the risk management and control systems did not work properly during

the year under review;

• there are no indications that the risk management and control systems will not work properly during

the year in progress.

The topic of internal risk management and control has been discussed with the Supervisory Board.

No major changes were introduced in the risk management and internal control systems during the

course of the year under review.


The world is bracing itself for weather extremes

and Boskalis helps building up the defense.


Coastal protection work in Singapore.

The global climate is changing. Storms and rising seas put the pressure

on beaches, coasts and riverbanks. Boskalis deploys its best people

and the industry’s most powerful dredgers for the world to withstand

the forces of nature.


The coastal defense contract

in Pevensey Bay, United

Kingdom protects the coast

against a storm that can occur

once every 300 years and

manages the defense for

25 years.


Financ ia l s tatements 2005

61

Financial statements 2005


Consolidated profit and loss account 63

Consolidated statement of recognized income and expense 64

Consolidated balance sheet 65

Consolidated statement of changes in equity 66

Consolidated cash flow statement 67

Explanatory notes to the consolidated financial statements 68

General 68

Compliance statement 68

Principles of financial reporting 68

Information by segment 74

Other operating income 75

Operational costs 75

Personnel expenses 76

Taxation 76

Income tax receivable and payable 77

Deferred income tax assets and liabilities 78

Tangible fixed assets 79

Associated companies 80

Other financial fixed assets 81

Inventories 81

Work in progress 82

Debtors and other receivables 82

Cash and cash equivalents 82

Issued capital 83

Share premium 83

Legal reserve 83

Hedging reserve 83

Currency translation reserve 83

Retained earnings 84

Profit for the year 84

Earnings per share 84

Interest-bearing loans and borrowings 84

Employee benefits 85

Provisions 87

Trade and other payables 88

Financial instruments 88

Commitments and contingent liabilities 90

Subsequent events 91

Related parties 91

Transition to IFRS 96

Table of contents

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

62



Company profit and loss account 103

Company balance sheet before profit appropriation 104

Statement of changes in equity 105

Explanatory notes to the company financial statements 106

General 106

Principles of financial reporting 106

Change in accounting principles 106

Investment in group company 106

Issued capital 106

Share premium 107

Other reserves 107

Profit for the year 107

Remuneration of members of the Board of Management and Supervisory Board 107

Commitments and contingent liabilities 107

Other information 108

Provisions in the Articles of Association relating to profit appropriation 108

Proposed profit appropriation 108

Auditor’s report 109

Stichting Continuïteit KBW 110

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

63



Revenue

Turnover [4] 1,155,721 1,019,903

Other operating income [5] 7,517 4,455

1,163,238 1,024,358

Operating expenses

Operational costs [6] - 803,424 - 699,782

Personnel expenses [7] - 197,283 - 188,111

Depreciation and amortization expense [11] - 80,216 - 88,966

-1,080,923 - 976,859

Operating result 82,315 47,499

Net financing costs

Interest income 1,952 1,538

Interest expense - 3,229 - 3,383

- 1,277 - 1,845

Result associated companies [12] 326 440

Profit before taxation 81,364 46,094

Taxation [8] - 18,094 - 12,001

Net group profit 63,270 34,093

Net profit attributable to:

Shareholders 62,747 33,903

Minority interests 523 190

63,270 34,093

Earnings per share [25] € 2.21 € 1.22

Diluted earnings per share [25] € 2.21 € 1.22

Consol idated prof i t and loss account

( in € 1,000 ) Note 2005 2004

64



Results recognized directly in group equity (after taxation)

Currency translation differences on foreign operations [22] 13,425 - 10,912

Actuarial gains and losses and asset limitation

on defined benefit pension schemes [27] - 1,405 - 16,087

Movement in fair value effective cash flow hedges [30] - 25,078 —

- 13,058 - 26,999


Total recognized income and expense for the year 50,212 7,094

Total recognized income and expense for the year attributable to:

Shareholders 49,413 7,280

Minority interests 799 - 186

50,212 7,094

( in € 1,000 ) Note 2005 2004

Consol idated s tatement o f recognized income and expense

65



Consolidated balance sheet

( in € 1,000 ) Note 2005 2004

AssetsNon-current assets

Tangible fixed assets [11] 653,264 645,748

Investments in associated companies [12] 15,071 14,313

Other financial fixed assets [13] 11,605 11,550

Deferred income tax assets [10] 4,445 —

684,385 671,611

Current assets

Inventories [14] 43,380 41,143

Due from customers for work in progress [15] 58,680 48,371

Debtors and other receivables [16] 340,728 340,607

Income tax receivable [9] 2,208 —

Cash and cash equivalents [17] 200,559 140,499

645,555 570,620

Total assets 1,329,940 1,242,231

Group equity and liabilitiesShareholders’ equity

Issued capital [18] 68,639 67,617

Share premium [19] 13,473 13,874

Legal reserve [20] 63,469 43,344

Hedging reserve [21] 8,302 —

Currency translation reserve [22] 2,613 - 10,536

Retained earnings [23] 323,608 319,701

Profit for the year [24] 62,747 33,903

542,851 467,903

Minority interests 6,265 5,466

Group equity 549,116 473,369

Non-current liabilities

Interest-bearing loans and borrowings [26] 27,706 19,192

Employee benefits [27] 8,626 8,018

Deferred income tax liabilities [10] 41,744 16,528

Provisions [28] 3,510 3,422

Other liabilities 1,494 2,038

83,080 49,198

Current liabilities

Trade and other payables [29] 452,601 476,261

Due to customers for work in progress [15] 179,577 171,313

Interest-bearing loans and borrowings [26] 26,819 17,059

Income tax payable [9] 37,718 52,890

Provisions [28] 1,029 2,141

697,744 719,664

Total group equity and liabilities 1,329,940 1,242,231

66



Consol idated s tatement o f changes in equ i ty

Balance as at December 31, 2004 67,617 13,874 43,344 — - 10,536 319,701 33,903 467,903 5,466 473,369

Effect of first-time adoption of IAS 32

and IAS 39 “Financial instruments” [34] — — — 33,380 — 506 — 33,886 — 33,886

Balance as at January 1, 2005 67,617 13,874 43,344 33,380 - 10,536 320,207 33,903 501,789 5,466 507,255

Profit appropriation 2004

Cash dividend — — — — — — - 8,351 - 8,351 — - 8,351

Stock dividend 1,022 - 401 — — — — - 621 — — —

Addition to retained earnings — — — — — 24,931 - 24,931 — — —

1,022 - 401 — — — 24,931 - 33,903 - 8,351 — - 8,351

Movement legal reserve [20] — — 20,125 — — - 20,125 — — — —

Total recognized income and expense

Net group profit — — — — — — 62,747 62,747 523 63,270

Currency translation differences — — — — 13,149 — — 13,149 276 13,425


on defined benefit pension schemes [27] — — — — — - 1,405 — - 1,405 — - 1,405

Movement in fair value of effective

cash flow hedges [30] — — — - 25,078 — — — - 25,078 — - 25,078

— — — - 25,078 13,149 - 1,405 62,747 49,413 799 50,212

Balance as at December 31, 2005 68,639 13,473 63,469 8,302 2,613 323,608 62,747 542,851 6,265 549,116

Balance as at December 31, 2003 65,415 14,635 — — — 304,337 70,854 455,241 — 455,241

Effect of adopting IFRS 1 [34] — — — — — 15,278 — 15,278 5,890 21,168

Balance as at January 1, 2004 65,415 14,635 — — — 319,615 70,854 470,519 5,890 476,409


Cash dividend — — — — — — - 9,896 - 9,896 - 238 - 10,134

Stock dividend 2,202 - 761 — — — — - 1,441 — — —

Addition to retained earnings — — — — — 59,517 - 59,517 — — —

2,202 - 761 — — — 59,517 - 70,854 - 9,896 - 238 - 10,134

Forming legal reserve [20] — — 43,344 — — - 43,344 — — — —

Total recognized income and expense

Net group profit — — — — — — 33,903 33,903 190 34,093

Currency translation differences [34] — — — — - 10,536 — — - 10,536 - 376 - 10,912


on defined benefit pension schemes [27] — — — — — - 16,087 — - 16,087 — - 16,087

Movement in fair value of effective

cash flow hedges [30] — — — — — — — — — —

— — — — - 10,536 - 16,087 33,903 7,280 - 186 7,094

Balance as at December 31, 2004 67,617 13,874 43,344 — - 10,536 319,701 33,903 467,903 5,466 473,369

Currency Profit Total Total

Issued Share Legal Hedging translation Retained for the capital and Minority group

(in € 1,000) Note capital premium reserve reserve reserve earnings year reserves interest equity

Currency Profit Total Total

Issued Share Legal Hedging translation Retained for the capital and Minority group

(in € 1,000) Note capital premium reserve reserve reserve earnings year reserves interest equity

67



Cash flows from operating activities


Depreciation 80,216 88,966

Cash flow 143,486 123,059

Adjustments for:

Net financing costs 1,277 1,845

Taxation 18,094 12,001

Book results on sale of fixed assets - 7,296 - 3,649

Movement other financial fixed assets 1,291 - 5,533

Movement non-current liabilities and provisions

(including direct equity movements) - 1,744 - 31,150

Movement in inventories - 2,237 - 10,513

Movement in working capital (excluding income tax and interest) - 14,213 28,660

Result associated companies - 326 - 440

Cash generated from operations 138,332 114,280

Interest received 1,952 1,538

Interest paid - 3,229 - 3,383

Income taxes paid - 16,651 - 15,652

Net cash from operating activities 120,404 96,783

Cash flows from investing activities

Net payment and withdrawal associated companies 496 - 117

Purchase of tangible fixed assets - 87,173 - 122,545

Proceeds from sale of tangible fixed assets 15,280 8,026

Dividends received 256 682

Net cash from investing activities - 71,141 - 113,954

Cash flows from financing activities

Movement in non-current portion of loans 7,722 - 6,202

Movement in current portion of loans 2,255 6,210

Dividends paid - 8,351 - 10,134

Net cash from financing activities 1,626 - 10,126

Net increase / decrease (-) in cash and cash equivalents 50,889 - 27,297

Cash and cash equivalents as at January 1 [17] 140,499 172,459

Bank overdrafts as at January 1 [17] - 2,208 - 4,717

Net cash and cash equivalents as at January 1 138,291 167,742

Net increase / decrease (-) in cash and cash equivalents 50,889 - 27,297

Currency translation differences 2,769 - 2,154

Movement in net cash and cash equivalents 53,658 - 29,451

Cash and cash equivalents as at December 31 [17] 200,559 140,499

Bank overdrafts as at December 31 [17] - 8,610 - 2,208

Net cash and cash equivalents as at December 31 191,949 138,291

Consolidated cash f low statement

( in € 1,000 ) Note 2005 2004

68



Explanatory notes to the consolidated f inancial statements

General

Royal Boskalis Westminster nv is a group, operating in an international environment, with a leading position in the world

market of dredging and related maritime services. The group’s head office is located in Papendrecht, The Netherlands.

Royal Boskalis Westminster nv is a public limited corporation that is listed on the Euronext Amsterdam stock exchange.

During the reporting period the group (the company and its consolidated group companies) did not change significantly

as a result of acquisitions or disposals.

The financial statements have been prepared by the Board of Management and were discussed and released for publication

in the combined meeting of the Supervisory Board and the Board of Management on March 10, 2006. The financial state-

ments 2005 will be submitted for approval to the Annual General Meeting of Shareholders of May 8, 2006.

Compliance statement

The consolidated balance sheet, the consolidated profit and loss account and the accompanying explanatory notes

are in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and

the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). These consolidated

financial statements are the group’s first financial statements prepared in accordance with IFRS. The group used IFRS 1

“First-time adoption of International Financial Reporting Standards”. Explanatory note 34 to the consolidated financial

statements, “transition to IFRS”, is prepared in line with IFRS 1. Also, the group used three exemptions in accordance

with IFRS 1. Firstly, the compliance to IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial

Instruments: Recognition and Measurement” is postponed until January 1, 2005. Accordingly, the 2004 comparative

figures have not been restated for these items. Secondly, accumulated currency translation differences on foreign

operations, denominated in functional currencies other than the euro, are accumulated starting January 1, 2004.

Therefore, no retrospective adjustment has been made with regard to accumulated currency translation differences

originating from before this date. Thirdly, the group used the exemption that for three vessels the cost price (“deemed

cost”) has been determined using the fair value as at January 1, 2004 instead of the book value as in line with Dutch

generally accepted accounting principles.

Further disclosure on the transition to IFRS and the effects on the reported financial position, the financial performance

and the cash flow of the group are reported in explanatory note 34.

Principles of financial reporting

Format and valuation

The consolidated financial statements are drawn up in euro, which is the group’s functional currency. The consolidated

financial statements are based upon historical cost to the extent that IFRS does not prescribe another accounting

method for specific items. Preparing financial statements in accordance with IFRS means that estimates and

assumptions made by the management partly determine the recognized amounts under assets, liabilities, revenues

and costs. The estimates and assumptions are mainly related to the measurement of tangible fixed assets (economic

lifetime and impairment), results on completion of work in progress, pension liabilities and taxation.The estimates

made and the related assumptions are based on management’s experience and understanding and the development

of external factors that can be considered reasonable under the given circumstances. Estimates and assumptions are

subject to alterations as a result of changes to facts and understanding and may have different outcomes per reporting

period. Any differences are recognized in the balance sheet or profit and loss account, depending on the nature of

the item. The actual results may deviate from results reported previously on the basis of estimates and assumptions.

Unless stated otherwise, all amounts in the tables in these financial statements are stated in thousands of euros.

1.

2.

3.

3.1

69



Consolidation

Based on existing control, group companies are included in the consolidation for 100%, taking into account any minority

interests. Joint ventures – both strategic alliances and contractual project-driven construction consortiums – are included in

the consolidation on a proportional basis according to the share in the joint control. Amounts receivable from and payable to

project-driven construction consortiums are eliminated in the consolidation. Elimination differences as a result of imbalance

between partners in current account relation with project-driven construction consortiums, for example timing differences in

supply, are recognized in the consolidated balance sheet under other receivables or other payables. Shareholdings that are

not eligible for consolidation based on control, but where significant influence exists on the financial and operating policy, are

recognized under associated companies. Intragroup receivables and payables, related party transactions and unrealized

results within the group and with associated companies, are eliminated in the consolidation.

Foreign currencies

The assets and liabilities of foreign group companies and joint ventures that are denominated in functional currencies

other than the euro have been translated at the exchange rates as at the end of the reporting period. The profit and

loss account items of the foreign group companies and joint ventures concerned have been translated at the average

exchange rates for the reporting period. Resulting currency translation differences are directly added or charged to

the translation reserve in group equity. Exchange rate differences as a result of operational transactions are taken into

the profit and loss account of the reporting period.

Hedging and financial instruments

It is the policy of Royal Boskalis Westminster nv to use cash flow hedges to cover all operational currency risks which

mainly concern future cash flows from projects that are highly probable and that are denominated in currencies other

than the euro. Fuel price risks and interest rate risks in future cash flows are hedged on a regular basis using specific

derivatives. Hedge accounting is used for the majority of cash flow hedges. This means that movements in the market

value of cash flow hedges not yet settled – including results realized on the “rolling forward” of existing hedges as a

result of differences between the duration of the hedges concerned and the underlying cash flows – will be directly

added or charged to the hedging reserve in group equity, taking taxation into account. If a cash flow hedge, that is

added or charged to the group equity, either expires, is closed or is settled, or the hedge relation with the underlying

cash flows can no longer be considered effective, the accumulated result will continue to be recognized in group equity

as long as the underlying cash flow is still expected to take place. When the underlying cash flow actually takes place,

then the accumulated result is directly taken into the profit and loss account. Movements in the market value of cash

flow hedges to which no hedge accounting is applied (ineffective cash flow hedges and the ineffective portion of

effective cash flow hedges) are taken into the profit and loss account of the reporting period. Results from settled

effective cash flow hedges and the movements in the market value of ineffective cash flow hedges are recognized in

the related items within the operating result. The purchase or sale of financial instruments are generally recorded at

transaction rate. Derivatives are valued at cost at initial recognition; subsequently they are valued at fair value. Based

on the close relation between the economic features and risks of the embedded derivatives and underlying contracts,

embedded derivatives in (construction) contracts are not treated separately from the underlying contracts concerned.

3.2

3.3

3.4

70



Impairment

An assessment is made each reporting period, to determine whether any indication exists of impairment of the assets

of Royal Boskalis Westminster nv. This does not apply to assets resulting from inventory, work in progress, deferred assets

arising from employee benefits and assets that are classified as held for sale. If there is any indication of impairment, an

estimate is made of the fair value of the asset concerned. This assessment is made annually for goodwill.

The difference between the results of this assessment and the relevant book value is charged as an impairment to the profit

and loss account and deducted from the book value. Indications of impairment of floating and other construction equipment

are based on long-term expectations for the utilization of (groups of interchangeable) equipment. If there are indications of

impairment, the fair value is determined based on the realizable value or the present value of the estimated future cash

flows for the remaining economic life of the equipment, from the utilization of the equipment concerned or of the group of

interchangeable equipment. The present value is calculated at a pre-tax discount rate that reflects current expectation of

the market rate of interest, while also taking into account specific asset related risks that are not included in the estimated

future cash flows. There is no active market for large dredging equipment from which a reliable net realizable value of the

assets can be derived. With the exception of goodwill, impairment previously charged to the profit and loss account can

be reversed if the estimate of the fair value gives cause to do so.

Tangible fixed assets

Tangible fixed assets are recognized at cost price minus accumulated depreciation and accumulated impairment. The cost

price is calculated from the purchase price and/or the internal directly attributable costs according to directly allocated

costs. Depreciation is done on a straight-line basis, taking into account any residual value. Given the highly varied wear

and tear on dredging equipment, as a result of project-specific combinations of soil conditions, material to be processed,

maritime circumstances, and the intensity of the deployment of the equipment (factors that are difficult to predict), the

maintenance and repair expenses are predominantly charged to the profit and loss account. Based on this approach,

the depreciation of components in the initial cost price of the individual units of equipment is generally determined on

a grouped basis. A limited part of the maintenance and repair expenses is, under certain circumstances, eligible for

capitalization and straight-line depreciation if long-term economic lifetime can be clearly demonstrated. Modifications

and capacity-increasing investments are capitalized at cost price and depreciated on a straight-line basis over the

remaining useful and/or economic lifetime of the asset. Buildings are depreciated over periods varying from ten to

fifty years. The depreciation periods for floating and other construction equipment vary from fifteen to eighteen years.

Furnitures and fittings and other fixed operating assets have depreciation periods between three and ten years.

Intangible assets

Goodwill arises upon acquiring group companies, joint ventures and associated companies and is calculated as

the difference between the acquisition price and the fair value of the assets and liabilities acquired, according to the

accounting principles of Royal Boskalis Westminster nv. Goodwill and other intangible assets are capitalized net of

accumulated amortization and accumulated impairment. Goodwill and intangible assets with an infinite lifetime are not

systematically amortized. Negative goodwill that may arise upon acquisition is added directly to the profit and loss

account. Straight-line amortization is applied to other intangible assets with a limited economic lifetime.

Financial fixed assets

Associated companies in which the group has significant influence on the financial and operating policy are accounted

for at net asset value, adjusted for material differences with the accounting principles of the group, less any accumulated

impairment. The other financial fixed assets are mainly held on a long-term basis and/or until maturity and are carried

at amortized cost. Accumulated impairment is deducted from the book value.

3.5

3.6

3.7

3.8

71



Inventories

Inventories, which mainly consist of fuel, auxiliary materials and spare parts, are valued at average cost or at net realizable

value, if lower. If the net realizable value is lower than the book value, the difference is charged to the profit and loss

account and deducted from the book value.

Work in progress

Work in progress is valued at the cost price of the work done, plus a part of the expected results upon completion of

the project in proportion to the progress made and less progress billings, advances and provisions. Provisions are

recognized for expected losses on work in progress, as soon as they are foreseen, and deducted from the cost price; if

necessary, any profits already recognized are reversed. The cost price includes direct project costs, consisting of direct

payroll costs, materials, costs of subcontracted work, other direct costs and rental charges and maintenance costs

for the 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. Profits are not recognized unless a reliable estimate can be made

of the result on completion of the project. The balance of the value of work in progress, progress billings and advance

payments is determined per project. For projects where the progress billings and advance payments exceed the value

of work in progress, the balance is recognized under current liabilities instead of under current assets. The respective

balance sheet items are “due from customers for work in progress” and “due to customers for work in progress”.

Debtors and other receivables

Debtors and other receivables are stated at (amortized) cost less accumulated impairment losses, such as doubtful

debts. If the discount effect is not material, debtors and other receivables are stated at cost.

Cash and cash equivalents

The cash and cash equivalents, which consist of cash and bank balances and deposits with terms of no more than three

months, are stated at nominal value. The explanatory notes disclose the extent to which cash and cash equivalents are

not freely available as a result of transfer restrictions, joint control or other legal restrictions.

Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are liabilities to financial institutions. At initial recognition, interest-bearing loans are

measured at cost taking into account any transaction costs involved in acquiring the loans. Subsequently, interest-bearing

loans and borrowings are stated at amortized cost.

Employee benefits

For each separate defined benefit scheme, the net asset or liability is determined as the balance of the discounted

value of the future payments to (former) employees, less the fair value of plan assets. The calculations are done by

qualified actuaries using the projected unit credit method. The discount rate equals the yield on solid corporate or

government bonds as per the balance sheet date, that approximates the duration of the liability. If this calculation

results in a receivable for the group, this amount will only be recognized if a reasonable expectation exists that it is

realizable under the applicable agreements. Actuarial gains and losses are added or charged directly to retained earnings

in group equity, including any limitations on the measurement of net assets. Past service costs are charged to the profit

and loss account on a straight-line basis, insofar as the benefits are not unconditionally granted. Defined contribution

liabilities are charged to the profit and loss account when the contributions are due. The other employee benefits consist

mainly of jubilee benefits. The calculation of the liability is based upon the actuarial assumptions of the predominant

defined benefit scheme.

3.9

3.10

3.11

3.12

3.13

3.14

72



Provisions

Provisions are determined based upon estimates of future cash outflows for legal or constructive obligations of an

uncertain size or with an uncertain settlement date, that relate to operational activities and arise from past events.

Provisions for reorganization costs are recognized when a detailed and formal plan is announced to all those concerned

or when the execution of the plan has commenced. Provisions for warranties are recognized for warranty claims with

respect to completed projects with warranty periods, for some of (proportionally) consolidated entities. The carrying

value of this provision is based on common practice in the industry and the company’s history of warranty claims

over the past ten years for relevant projects. Provisions, if applicable, relate to reorganization, warranties, legal

proceedings and submitted claims. Provisions are discounted insofar as the difference between the discounted

value and nominal value is material.

Deferred tax assets and liabilities

Deferred income tax assets and liabilities mainly consist of temporary differences between carrying value and tax

base of assets and liabilities, at the relevant applicable tax rates. Deferred tax assets and deferred tax liabilities are

netted insofar as they relate to the same fiscal entity.

Trade and other payables

Trade and other payables are recognized at (amortized) cost. Insofar as the difference between the discounted and

nominal value is not material, trade and other payables are stated at cost.

Turnover

Turnover mainly consists of the cost price of the work done during the reporting period, plus a part of the expected

results upon completion of the project in proportion to the progress made during the reporting period, and including

and/or deducting the provisions recognized and/or used and released during the reporting period for expected losses.

The applied “percentage-of-completion” method is, by its nature, based on an estimation process. Turnover also includes

the revenue for services rendered to third parties during the reporting period. Turnover does not include any direct

taxes. Revenues for which uncertainties exist whether the economic benefits of the work done or services rendered

will flow to the group, are not recognized as turnover.

Other operating income

Other operating income mainly consists of book profits from the sale of tangible fixed assets and currency translation

differences on transactions in foreign currency.

Operational costs

Operational costs consist of the cost price of the work done during the reporting period, excluding personnel expenses

and depreciation. Operational costs also include equipment utilization costs, general overhead costs, late results from

projects and other (late) results.

Personnel expenses

Personnel expenses consist of wages and salaries for own personnel and the related social security charges and pen-

sion costs, including paid and accrued contributions for defined contribution plans and the movement in the assets and

liabilities from defined benefit plans, excluding actuarial gains and losses added or charged directly to group equity.

Depreciation and amortization expense

This item comprizes the depreciation on tangible fixed assets and the amortization of other capitalized costs.

3.15

3.16

3.17

3.18

3.19

3.20

3.21

3.22

73



Interest income and expenses

Interest income and expenses comprize interest received and receivable from third parties, interest paid and payable

to third parties, which are allocated to reporting periods based on the effective interest method, and gains and losses

on financial instruments used to hedge interest risks that are included in the profit and loss account.

Result from associated companies

This item comprizes the share in the results after taxation of the participating interests not included in the consolidation.

Taxation

Taxation is calculated based upon the result before taxation for the reporting period, taking into account the applicable

tax provisions and valid tax rates, and also includes adjustments on taxation from previous reporting periods and move-

ments in deferred taxes recognized in the reporting period. Taxation is included in the profit and loss account unless

it relates to items directly recognized in equity, in which case taxation is included in equity. Temporary differences are

accounted for in deferred tax assets and/or deferred tax liabilities. Deferred tax assets are only recognized to the extent

that it is probable that taxable profit will be available for realization in the future. In general, the carrying forward of tax

losses is not taken into account given the incidental and project-based approach to activities in most countries.

Dividends

Dividends are recognized as a liability in the period in which they are declared.

Cash flow statement

The consolidated cash flow statement is drawn up using the indirect method. Cash is defined as cash and cash equivalents

including bank overdrafts (excluding the current portion of loans) as presented in the balance sheet. Cash flows are

separately presented in the cash flow statement as cash flows from operating activities, investing activities and financing

activities. Interest on long-term financing is recognized in the cash flow from operating activities. Dividends paid to

shareholders and holders of minority interests are recognized in the cash flow from financing activities.

Principles for information by segment

In addition to dredging and earthmoving activities, which are managed as a single activity, the group also carries out

activities through strategic alliances. Based on joint control with the alliance partners, these activities are managed

directly by the Board of Management and are therefore classified as separate segments of the company. This approach

is also based on the specific management structure and reporting within these segments of the company. On this

basis, the following classification into business segments is used as the primary segmentation format:

• Dredging and earthmoving;

• Maritime infrastructure (particularly Archirodon);

• Maritime and terminal services (particularly Lamnalco).

The geographic structure is used as a secondary segmentation format. This is also how the internal management

structure and reporting of each of the aforementioned business segments is organized. The project-based nature of

the activities results in the assets of the business segments being deployed worldwide during the reporting period

and segmentation by region of assets and investments in fixed assets would be arbitrary and would not provide any

relevant information.

3.23

3.24

3.25

3.26

3.27

3.28

74



Information by segment

Business segments

Maritime and

Dredging and Maritime terminal

2005 earthmoving infrastructure services Group

Turnover 959,559 158,910 37,252 1,155,721

Segment result 65,249 16,301 6,231 87,781

Non-allocated group costs - 5,466

Operating result 82,315

Result associated companies - 2,054 — 2,380 326

Non-allocated interest - 1,277

Non-allocated taxes - 18,094

Net group profit 63,270

Segment assets 1,061,772 123,131 88,634 1,273,537

Subsidiaries 6,877 — 8,194 15,071

Non-allocated assets 41,332

Total assets 1,329,940

Segment liabilities 619,931 59,624 35,051 714,606

Non-allocated liabilities 66,218

Total liabilities 780,824

Investments in tangible fixed assets 45,308 17,918 23,947 87,173

Depreciation 69,699 6,765 3,752 80,216

Maritime and

Dredging and Maritime terminal

2004 earthmoving infrastructure services Group

Turnover 859,176 132,737 27,990 1,019,903

Segment result 50,833 10,348 4,950 66,131

Non-allocated group costs - 18,632

Operating result 47,499

Result associated companies - 1,824 — 2,264 440

Non-allocated interest - 1,845

Non-allocated taxes - 12,001

Net group profit 34,093

Segment assets 1,048,936 114,979 47,566 1,211,481

Subsidiaries 9,361 — 4,952 14,313

Non-allocated assets 16,437

Total assets 1,242,231

Segment liabilities 616,149 53,425 10,147 679,721

Non-allocated liabilities 89,141

Total liabilities 768,862

Investments in tangible fixed assets 101,760 8,107 12,678 122,545

Depreciation 78,140 8,059 2,767 88,966

4.

4.1

75



The non-allocated group costs for the 2004 financial year include reorganization costs for an amount of € 12.8 million.

The turnover of the segments “dredging and earthmoving” and “maritime infrastructure” comprize mainly revenues from

work in progress. Movements in the value of work in progress, consisting of cost price, realized results and the provision

for future losses, together with the work done and work completed during the reporting period, determine the turnover for

these segments. If certain projects are executed together in a joint venture, the segments only report their own share in the

turnover and results recognized, resulting in no material related party transactions that need to be eliminated.

Geographic segments

Turnover Total assets Capital expenditure

2005 2004 2005 2004 2005 2004

Netherlands 182,307 195,002 — — — —

Rest of Europe 218,280 219,806 — — — —

Australia / Asia 239,625 178,680 — — — —

Middle East 247,574 223,344 — — — —

Africa 128,967 98,695 — — — —

North and South America 138,968 104,376 — — — —

Total allocated 1,155,721 1,019,903 — — — —

Tangible fixed assets — — 653,264 645,748 87,173 122,545

Associated companies — — 15,071 14,313 480 1,518

Other non-allocated — — 661,605 582,170 — —

Group 1,155,721 1,019,903 1,329,940 1,242,231 87,653 124,063

The tangible fixed assets of Royal Boskalis Westminster nv consist mainly of equipment that is deployed worldwide

on a project basis, and cannot be allocated entirely to various geographic segments.

Other operating income

The other operating income includes book results and currency translation results. The book results over 2005 mainly

comprize the insurance payment for a trailing suction hopper dredger that sunk and the book profits on the sale of

two trailing suction hopper dredgers.

Operational costs

The internal management and reporting structure within the group is mainly focused on projects, based upon (sub)activities.

A breakdown throughout the group of operational costs in different cost categories is made occasionally only for relevant

cost categories. A complete registration, aggregation and reporting for all cost categories throughout the group, including

proportionally consolidated joint ventures, does not provide any additional insight in the performance and operations of

the business. The operational costs over 2004 include € 0.8 million reorganization expenses. Operational costs include

operational lease expenses amounting to € 7.3 million (2004: € 7.4 million).

4.2

5.

6.

76



Personnel expenses

2005 2004

Wages and salaries 169,863 160,999

Social security costs 15,628 15,099

Pension costs for defined benefit schemes 5,663 4,985

Pension costs for defined contribution schemes 6,129 7,028

197,283 188,111

Personnel expenses over 2004 include € 7.9 million reorganization expenses.

Taxation

2005 2004

Current tax expense

Current year - 17,689 - 13,409

Tax adjustments prior years 656 —

Over / under(-) provided in prior years 17,940 284

907 - 13,125

Deferred tax expense

Origination and reversal of temporary differences - 2,815 - 8,692

Benefit or charge from recognized tax losses carried forward - 640 3,156

Benefit or charge from foreign branch profits and losses recognized for tax purposes - 15,546 6,660

- 19,001 1,124

Taxation in the consolidated profit and loss account - 18,094 - 12,001

Based upon the current insight in the tax position in the Netherlands a reclassification amounting to € 18 million has

been made from income tax payable in current liabilities to deferred income tax liabilities in non-current liabilities. In

the current tax expense, this reclassification is included in the item “over / under (-) provided in prior years”.

7.

8.

77



The following movements in deferred tax assets and liabilities, together with the items they relate to, are recognized

directly in group equity:

2005 2004

Deferred tax for:

Actuarial gains and losses on defined benefit pension schemes 492 3,861

Change in fair value of effective cash flow hedges 8,919 —

9,411 3,861

The operational activities of Royal Boskalis Westminster nv are subject to various tax regimes with tax rates varying from

10% to 40% (2004: 10% to 44%). These different tax rates, together 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 22.4% (2004: 26.1%).

The changing geographic spread of activities affects the weighted effective tax rate as a consequence of the application

of different local nominal tax rates.

The average effective tax rate is calculated as the taxation charge divided by the profit before taxation, as shown in the

consolidated profit and loss account. The reconciliation between the Dutch nominal tax rate and the effective tax rate is

as follows:

2005 2004

Domestic tax rate in The Netherlands 31.5% 34.5%

Application of local nominal tax rates - 5.3% - 10.5%

Non-deductible expenses 1.1% 1.0%

Unrecognized tax losses 10.9% 23.8%

Effect of tax losses utilized - 3.9% - 5.5%

Special tax rulings - 11.9% - 17.2%

Effective tax rate 22.4% 26.1%

Income tax receivable and payable

The current income tax receivable and income tax payable relate to the fiscal positions of the group companies

concerned and consist of fiscal years still to be settled less withholding taxes or tax refunds.

9.

78



Deferred income tax assets and liabilities

As at January 1, 2005 Movement in temporary differences during the year As at December 31, 2005

Charged (-)/ First-time Currency

added to Charged to adoption IAS translation

Asset Liability net profit equity 32 and 39 differences Asset Liability

Tangible fixed assets 13,981 - 16,934 - 5,144 — — - 5 15,103 - 23,205

Work in progress — - 9,708 1,717 — — — 138 - 8,129

Debtors and other receivables 705 - 284 - 289 — — 1 399 - 266

Hedging reserve — — — 8,919 - 11,127 — — - 2,208

Actuarial gains and losses 3,861 — — 492 — — 3,812 541

Pension schemes — - 3,478 - 334 — — — — - 3,812

Provisions 4,918 - 7,408 2,555 — — — 65 —

Trade and other payables 7,308 — - 1,921 — — — 5,387 —

Foreign branch profits

not yet recognized for tax purposes — - 5,040 1,488 — — — — - 3,552

Foreign branch losses 8,914 - 15,811 - 17,034 — — — 7,628 - 31,559

Tax losses carried forward 3,156 — - 640 — — — 2,516 —

Other assets and liabilities — - 708 601 — — - 50 409 - 566

42,843 - 59,371 - 19,001 9,411 - 11,127 - 54 35,457 - 72,756

Offsetting deferred tax

assets and liabilities - 42,843 42,843 - 31,012 31,012

Net in the consolidated

balance sheet — - 16,528 4,445 - 41,744

As at January 1, 2004 Movement in temporary differences during the year As at December 31, 2004

Charged (-)/ First-time Currency

added to Charged to adoption IAS translation

Asset Liability net profit equity 32 and 39 differences Asset Liability

Tangible fixed assets 19,968 - 22,113 - 1,034 — — 226 13,981 - 16,934

Work in progress — - 7,608 - 2,133 — — 33 — - 9,708

Debtors and other receivables 1,064 - 311 - 329 — — - 3 705 - 284

Hedging reserve — — — — — — — —

Actuarial gains and losses — — — 3,861 — — 3,861 —

Pension schemes — 374 - 3,852 — — — — - 3,478

Provisions 5,411 - 7,715 - 181 — — - 5 4,918 - 7,408

Trade and other payables 7,763 — - 455 — — — 7,308 —

Foreign branch profits

not yet recognized for tax purposes — - 3,312 - 1,728 — — — — - 5,040

Foreign branch losses 5,706 - 20,991 8,388 — — — 8,914 - 15,811

Tax losses carried forward — — 3,156 — — — 3,156 —

Other assets and liabilities — — - 708 — — — — - 708

39,912 - 61,676 1,124 3,861 — 251 42,843 - 59,371

Offsetting deferred tax

assets and liabilities - 39,912 39,912 - 42,843 42,843

Net in the consolidated

balance sheet — - 21,764 — - 16,528

10.

79



Deferred tax assets are not recognized as long as it is not probable that economic benefits can be expected in future

periods. Deferred tax assets and liabilities within fiscal entities are offset in the balance sheet.

Unrecognized deferred income tax assets

Unrecognized deferred tax assets regarding tax losses carried forward of group companies amount to € 30.9 million

(2004: € 41.8 million), of which € 1.2 million expires within one year, € 1.1 million between one and five years and

€ 28.6 million after more than five years. These deferred tax assets are not recognized in the balance sheet as long as

recovery through taxable profit or deductible temporary differences before expiration is not probable. Tax losses carried

forward in temporary active project-driven foreign entities are not taken into account, given the occasional and project-

based activities in these entities.

Tangible fixed assets

Floating Tangible

and other fixed assets

Land and construction Other fixed under

buildings equipment assets construction Total

Balance as at January 1, 2005

Cost 64,672 1,334,886 34,179 16,607 1,450,344

Accumulated depreciation - 32,833 - 745,405 - 26,358 — - 804,596

Carrying amount 31,839 589,481 7,821 16,607 645,748

Movements

Additions 1,988 36,615 2,987 45,583 87,173

Disposals - 201 - 6,960 - 823 — - 7,984

Put into operation 47 48,925 198 - 49,170 —

Depreciation - 2,397 - 75,093 - 2,726 — - 80,216

Other movements - 528 446 - 1,225 - 1,027 - 2,334

Currency translation differences 379 7,387 272 2,839 10,877

- 712 11,320 - 1,317 - 1,775 7,516

Balance as at December 31, 2005

Cost 64,584 1,394,282 30,988 14,832 1,504,686


Carrying amount 31,127 600,801 6,504 14,832 653,264

11.

80



Floating Tangible

and other fixed assets

Land and construction Other fixed under

buildings equipment assets construction Total

Balance as at January 1, 2004

Cost 62,859 1,162,238 24,597 119,809 1,369,503

Deemed cost adjustment — - 20,510 — — - 20,510


Carrying amount 34,274 457,513 8,092 119,809 619,688

Movements

Additions 975 26,199 3,806 91,565 122,545

Disposals - 6 - 3,538 - 344 - 489 - 4,377

Put into operation 233 194,981 - 1,031 - 194,183 —

Depreciation - 3,937 - 81,428 - 3,601 — - 88,966

Other movements 53 465 12 46 576

Currency translation differences 247 - 4,711 887 - 141 - 3,718

- 2,435 131,968 - 271 - 103,202 26,060

Balance as at December 31, 2004

Cost 64,672 1,334,886 34,179 16,607 1,450,344


Carrying amount 31,839 589,481 7,821 16,607 645,748

The depreciation for 2004 includes an additional charge of 4.4 million for a number of older units as a result of fleet

rationalization. There are no indications that the fair value of tangible fixed assets differs materially from the book value,

which is measured at historical cost less accumulated depreciation. There is no active market for large dredging equip-

ment from which a reliable net realizable value of the assets can be derived. Based on the current market expectations

and the level of internal rental rates, there are no indications for impairment at year-end 2005. For three vessels, the

cost price at the IFRS transition date has been stated at fair value (deemed cost). The historical cost price amounted

to 65.5 million. The securities provided for financing granted, by means of mortgage rights on tangible fixed assets,

are disclosed in note 26.

Associated companies

The key associated companies of Royal Boskalis Westminster nv are:

Ownership interest

Company Country of incorporation 2005 2004

Bean Meridian Holding LLC United States of America 25% 25%

Bean Excavation LLC United States of America 25% 25%

Bean Meridian LLC United States of America 25% 25%

Bean Environmental LLC United States of America 25% 25%

Abu Dhabi Petroleum Ports

Operating Company - IRSHAD Abu Dhabi, UAE 20% 20%

RW Aggregates Ltd United Kingdom 50% 50%

12.

81



Bean Meridian Holding LLC owns 75% of the shares of Bean Excavation LLC, Bean Meridian LLC and Bean Environmental

LLC, as a result the direct and indirect share of the group in these three companies totally amounts to 43.75%.

The voting rights in associated companies are equal to the ownership interests. The share of the group in assets,

liabilities, turnover and result of the aforementioned associated companies is stated below:

2005 2004

Assets 31,381 28,835

Liabilities 16,310 14,522

Equity 15,071 14,313

Revenues 15,665 15,301

Result 326 440

Other financial fixed assets

2005 2004

Balance as at January 1 11,550 6,309

Movements - 1,119 4,901

Movement in measurement at amortized cost - 172 632

Currency translation differences 1,346 - 292

Balance as at December 31 11,605 11,550

The other financial fixed assets comprize long-term advance payments to suppliers and long-term retentions from

customers, which are due in agreed time periods.

Inventories

2005 2004

Fuel and materials 16,310 16,017

Spare parts 25,868 23,295

Sand, armor stones, geo-textiles and drains 1,202 1,831

43,380 41,143

During 2005, 31.5 million of inventories were recognized as an expense and 0.9 million was written down through

the profit and loss account.

13.

14.

82



Work in progress

2005 2004

Contract costs incurred plus recognized project results

less provision for future losses 1,340,565 1,292,398

Progress billings received 1,401,324 1,371,182

Retentions 16,971 13,502

Progress billings 1,418,295 1,384,684

Advances received 43,167 30,656

Progress billings and advances received 1,461,462 1,415,340

Work in progress - 120,897 - 122,942

Due from customers for work in progress 58,680 48,371

Due to customers for work in progress - 179,577 - 171,313

Work in progress - 120,897 - 122,942


2005 2004

Trade debtors 198,603 214,269

Amounts due from associated companies 11,845 12,127

Other receivables and prepayments 130,188 114,211

Derivatives 92 —

340,728 340,607

Cash and cash equivalents

2005 2004

Bank balances and cash 87,816 79,389

Short-term bank deposits 112,743 61,110

Cash and cash equivalents 200,559 140,499

Bank overdrafts - 8,610 - 2,208

Cash and cash equivalents in the cash flow statement 191,949 138,291

Cash and cash equivalents include € 56.4 million (2004: € 56.4 million) held by project-driven construction consortiums

and € 24.1 million (2004: € 18.1 million) held by strategic alliances, which are subject to joint control. In addition, € 3.5 million

was restricted cash at year-end 2005 (2004: € 3.3 million). The remaining funds were freely disposable at year-end 2005.

15.

16.

17.

83



Issued 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.

The movement in the issued capital can be specified as follows:

(in number of shares) 2005 2004

On issue and fully paid at January 1 28,173,865 27,256,249

Stock dividend 2004 respectively 2003 425,922 917,616

On issue and fully paid at December 31 28,599,787 28,173,865

The issued capital as at December 31, 2005 consists of 28,599,787 ordinary shares of € 2.40 par value each and

consequently amounts to € 68.6 million. Furthermore a stock dividend over 2004 was distributed and charged to

share premium in 2005. For that purpose, 425,922 new shares were issued. Of the issued capital as at December 31,

2005, no ordinary shares were owned by Royal Boskalis Westminster nv.

Share premium

Share premium comprizes additional paid in capital exceeding the par value of outstanding shares. Share premium is

distributable free of tax.

Legal reserve

For the difference between the cost price and net asset value of entities, consolidated either proportionally or on the basis

of net asset value, a legally required reserve is recognized because of lack of control to distribute profits, only to the

extent that these differences are not included in the accumulated currency translation differences on foreign operations.

Hedging reserve

The hedging reserve comprizes the fair value of effective cash flow hedges, not yet realized at balance sheet date, net of

taxation, including results realized on the “rolling forward” of existing hedges as a result of differences between the

duration of the hedges concerned and the underlying cash flows.

Currency translation reserve

The translation reserve comprizes all accumulated currency translation differences arising from translation of investments

in foreign operations, which are denominated in reporting currencies other than the group, including the related intragroup

financing. These currency translation differences are accumulated as from the IFRS transition date (January 1, 2004) and

are taken into the profit and loss account at disposal or termination of these foreign operations.

18.

19.

20.

21.

22.

84



Retained earnings

Retained earnings consist of additions and distributions in prior years based on profit appropriations and effects

of changes in accounting principles, and is at free disposal of the General Meeting of Shareholders.

Profit for the year

Profit for the year represents the not yet appropriated current year profit. A proposal for profit appropriation is included in note

32 relating to subsequent events.

Earnings per share

The earnings per share over 2005 amount to € 2.21 (2004: € 1.22). Because there are no dilution effects, the diluted

earnings per share also amounts to € 2.21 (2004: € 1.22). The calculation of the earnings per share is based on the

profit attributable to shareholders of € 62.7 million (2004: € 33.9 million). The calculation of the weighted average number

of ordinary shares is based on the weighted effects of the transactions below.

Weighted average number of ordinary shares:

(in number of shares) 2005 2004

Issued ordinary shares as at January 1 28,173,865 27,256,249

Weighted effect of shares issued due to optional dividend 243,884 512,859

Weighted average number of ordinary shares as at December 31 28,417,749 27,769,108

Interest-bearing loans and borrowings

2005 2004

Non-current liabilities

Mortgage loans 18,633 13,687

Other bank loans 9,073 5,505

27,706 19,192

Current liabilities

Mortgage loans (current portion) 5,845 4,067

Other bank loans (current portion) 12,364 10,784

Bank overdrafts 8,610 2,208

26,819 17,059

Total interest-bearing loans and borrowings 54,525 36,251

23.

24.

25.

26.

85



Effective interest rates, remaining terms and currencies of the interest-bearing loans and borrowings have been

disclosed under financial instruments in the interest rate risk paragraph. As at December 31, 2005, the average

interest rate for the non-current portion of mortgage loans and other bank loans was respectively 3.85% (2004: 2.85%)

and 5.50% (2004: 3.30%).

The non-current portion of mortgage loans and other bank loans due over more than five years amounts to respectively

€ 5.2 million (2004: € 5.9 million) and € 0.1 million (2004: € 0.1 million).

Regarding the mortgage loans, mortgage rights are vested on tangible fixed assets, mainly vessels, with a carrying

amount of € 49.7 million (2004: € 31.5 million). For certain loans, additional securities have been provided by means

of assignment of revenues from rental contracts to third parties and insurance policies regarding these tangible fixed

assets. If applicable financial ratio and negative pledge clause requirements are met.

Employee benefits

Total result

Defined Unfunded defined

benefit Fair value Surplus / pension benefit

obligation plan assets deficit (-) liabilities Total schemes

Opening balance as at January 1, 2005 291,204 299,973 8,769 - 4,701 4,068 —

Current service cost 8,241 — - 8,241 - 27 - 8,268 8,268

Interest cost on obligation 12,989 — - 12,989 - 227 - 13,216 13,216

Contributions received — 6,827 6,827 — 6,827 —

Expected return on plan assets — 15,821 15,821 — 15,821 - 15,821

Net actuarial gains / losses 286 24,720 24,434 - 440 23,994 - 23,994

Benefits paid - 9,852 - 9,852 — 334 334 —

Foreign currency exchange rate changes 1,643 1,681 38 — 38 —

Total movement 13,307 39,197 25,890 - 360 25,530 - 18,331

Closing balance as at December 31, 2005 304,511 339,170 34,659 - 5,061 29,598 - 18,331

Limitation on net plan assets as at January 1 - 8,769 - 8,769

Movement in limit on net plan assets - 25,890 - 25,890 25,890

Limitation on net plan assets as at December 31 - 34,659 - 34,659

Closing balance as at December 31, 2005

after limitation on net plan assets — - 5,061 - 5,061 7,559

27.

86



Total result

Defined Unfunded defined

benefit Fair value Surplus / pension benefit

obligation plan assets deficit (-) liabilities Total schemes

Opening balance as at January 1, 2004 258,516 263,946 5,430 - 4,690 740 —

Current service cost 6,736 — - 6,736 - 65 - 6,801 6,801

Interest cost on obligation 13,311 — - 13,311 - 237 - 13,548 13,548

Contributions received — 24,614 24,614 — 24,614 —

Expected return on plan assets — 15,364 15,364 — 15,364 - 15,364

Net actuarial gains / losses 25,186 8,600 - 16,586 - 23 - 16,609 16,609

Benefits paid - 12,026 - 12,026 — 314 314 —

Foreign currency exchange rate changes - 519 - 525 - 6 — - 6 —

Total movement 32,688 36,027 3,339 - 11 3,328 21,594

Closing balance as at December 31, 2004 291,204 299,973 8,769 - 4,701 4,068 21,594

Limitation on net plan assets as at January 1 - 5,430 - 5,430

Movement in limit on net plan assets - 3,339 - 3,339 3,339

Limitation on net plan assets as at December 31 - 8,769 - 8,769

Closing balance as at December 31, 2004

after limitation on net plan assets — - 4,701 - 4,701 24,933

A part of the Dutch staff participates in “Bedrijfstakpensioenfonds voor de Waterbouw” (a multi-employer pension

fund for the maritime engineering industry). This pension fund qualifies under IFRS as a defined benefit plan, however

the fund has indicated that it is not able to provide sufficient information for a calculation in accordance with IFRS

because there is no reliable and consistent basis to attribute the pension obligations, plan assets, income and

expenses to the individual member companies of the pension fund. Based on the information that is available, including

the 2004 financial statements and the 2005 preliminary financial information of the fund, it is not probable that any

pension liabilities or asset to be recognized would arise under IFRS. There is also no reason to expect that the financial

position of the fund as at December 31, 2005 will affect the amount of contributions to be charged in the future.

The funded defined benefit plans concern the company pension funds in the Netherlands and the United Kingdom.

The unfunded defined benefit plans comprize small pension schemes for two German group companies. The remaining

pension schemes in the group do not qualify as defined benefit plans.

The recognition of pension costs from defined benefit schemes in the annual accounts is presented in the statement

below:

2005 2004

Total result defined benefit schemes 7,559 24,933

Pension costs for defined benefit schemes charged to the profit and loss account - 5,663 - 4,985

Actuarial gains and losses recognized directly in equity 1,896 19,948

Taxation - 491 - 3,861

Actuarial gains and losses recognized directly in equity net of tax 1,405 16,087

87



The plan assets consist for around two thirds of fixed interest securities and for one third of shares. The expected

return on plan assets is the weighted average of, actuarial proven, expected returns on fixed interest securities and

shares based on external sources. The principal actuarial assumptions used for the calculations above are:

2005 2004

Discount rate 4.25%-5.00% 4.35%-5.30%

Expected return on plan assets 5.00%-6.15% 5.00%-6.55%

Expected future salary increases (excluding individual merit) 1.00%-1.50% 1.00%-1.50%

Expected future inflation 1.50%-2.80% 1.50%-2.80%

Expected future pension increases active participants 1.50%-5.00% 1.50%-5.00%

Expected future pension increases inactive participants 1.00%-2.80% 1.00%-2.80%

The employee benefits liabilities consist of defined benefit schemes and jubilee benefits and a number of unfunded defined

contribution schemes in foreign countries for a total amount of:

2005 2004

Defined benefit schemes 5,061 4,701

Other employee benefit liabilities 3,565 3,317

Employee benefits 8,626 8,018

Provisions

Reorganization Other Total

Balance as at January 1, 2005 2,457 3,106 5,563

Provisions made during the year 116 1,009 1,125

Provisions used during the year - 2,027 - 514 - 2,541

Provisions reversed during the year - 2 - 15 - 17

Exchange rate differences — 302 302

Discount to present value — 107 107

Balance as at December 31, 2005 544 3,995 4,539

Non-current 544 2,966 3,510

Current — 1,029 1,029

Balance as at December 31, 2005 544 3,995 4,539

The provision for reorganization costs was made in 2004 as a result of a reorganization and fleet rationalization plan.

Late costs relating to this plan were charged to this provision in 2005. The other provisions mainly relate to warranty

liabilities.

28.

88



Trade and other payables

2005 2004

Trade creditors 120,957 128,714

Taxes and social security payables 24,793 28,959

Amounts due to associated companies 100 1,440

Other creditors and accruals 295,086 317,148

Derivatives 11,665 —

452,601 476,261

Trade and other payables are generally not interest-bearing.

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. The policy with respect to financial

instruments is disclosed in more detail in the Annual Report in chapter “Corporate Governance”.

Translation risk and currency risk

A large proportion of projects is contracted in foreign currencies. In principle, positions in foreign currencies are fully

hedged, usually by means of forward currency contracts. Financial derivatives (forward contracts, options, etc.) are

not used unless there are underlying transactions, mainly future cash flows from work in progress and contracted

projects. Hedge accounting is applied for the majority of cash flow hedges.

Interest rate risk

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.

The effective interest rates and the maturity term profiles of bank loans, deposits and cash and cash equivalents are

stated below:

Effective One year Over 5

interest rate or less 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years years Total

As at December 31, 2005

Cash and cash equivalents — 87,816 — — — — — 87,816

Short-term deposits 2.47% 112,743 — — — — — 112,743

Mortgage loans (euro) 2.80% - 1,134 - 1,165 - 1,165 - 1,165 - 1,165 - 4,693 - 10,487

Mortgage loans (US$) 4.90% - 4,711 - 2,828 - 2,548 - 2,017 - 1,393 - 494 - 13,991

Other bank loans (euro) 3.70% - 124 - 19 — — — — - 143

Other bank loans (US$) 5.50% - 12,117 - 3,828 - 3,004 - 1,869 - 324 - 29 - 21,171

Other bank loans (other) 5.30% - 123 — — — — — - 123

Bank overdrafts (euro) 3.50% - 4,619 — — — — — - 4,619

Bank overdrafts (US$) 5.60% - 2,195 — — — — — - 2,195

Bank overdrafts (other) 5.30% - 1,796 — — — — — - 1,796

173,740 - 7,840 - 6,717 - 5,051 - 2,882 - 5,216 146,034

29.

30.

89



Effective One year Over 5

interest rate or less 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years years Total

As at December 31, 2004

Cash and cash equivalents — 79,389 — — — — — 79,389

Short-term deposits 1.88% 61,110 — — — — — 61,110

Mortgage loans (euro) 2.90% - 1,282 - 1,169 - 1,171 - 1,171 - 1,171 - 5,859 - 11,823

Mortgage loans (US$) 2.70% - 2,785 - 2,131 - 677 - 338 — — - 5,931

Other bank loans (euro) 3.30% - 1,469 - 197 — — — — - 1,666

Other bank loans (US$) 3.30% - 7,872 - 3,879 - 957 - 376 - 4 - 32 - 13,120

Other bank loans (other) 3.50% - 1,443 - 60 — — — — - 1,503

Bank overdrafts (euro) 3.30% - 2,208 — — — — — - 2,208

123,440 - 7,436 - 2,805 - 1,885 - 1,175 - 5,891 104,248

The US$-loans are mainly used for financing of tangible fixed assets within proportionally consolidated strategic alliances.

The other bank loans expressed in US$ have fixed interest rates to an amount of € 3.8 million (2004: € 3.3 million). The

effective interest rate of these loans does not differ materially from the actual market rates. The interest rate renewal

dates of the loans are mainly due within three months after year-end 2005.

Political and payment risks

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 creditworthy, first-

class debtors. These procedures and the geographical diversification of the operations of the group companies

reduce the risk carried by Royal Boskalis Westminster nv with regard to credit concentration and market risks.

On-balance financial instruments and fair value

Pursuant to IFRS 1 “First-time adoption of IFRS”, the standards IAS 32 “Financial Instruments: Disclosure and Presentation”

and IAS 39 “Financial Instruments: Recognition and Measurement” have been applied as from January 1, 2005. Up to

and including 2004, financial instruments were treated off-balance sheet. As at December 31, 2004, the unrealized positive

result amounted to € 17 million. These unrealized results have been taken into account in the determination of the book

value of the underlying balance sheet items and the estimate of the results for ongoing projects and acquired orders,

respectively. The nominal value was € 249 million as at December 31, 2004.

Financial instruments accounted for under assets and liabilities are financial fixed assets, cash and cash equivalents,

receivables, as well as current and non-current liabilities. The estimated fair value of these financial instruments resembles

the nominal value. Derivatives are mainly future cash flows hedged by forward contracts to which hedge accounting

is applied. Movements in the fair value of non-effective cash flow hedges are recognized directly or, under specific

conditions, deferred in the consolidated profit and loss account. Movements in the fair value of effective cash flow

hedges are recognized directly in the hedging reserve in group equity, taking taxation into account. The fair value of

derivatives is derived from the forward rates at settlement date per year-end. The fair value of other financial instruments

is based on current interest rates, taking duration and conditions into account. The fair value of non-interest-bearing

financial instruments due within one year is equal to the nominal value.

90



2005 2004

Carrying amount Fair value Carrying amount Fair value

Other financial fixed assets 11,605 11,605 11,550 10,918


(excluding derivatives) 340,636 340,636 340,607 340,607

Derivatives (receivable) 92 92 — 17,015

Cash and cash equivalents 200,559 200,559 140,499 140,499

Interest-bearing loans and borrowings (non-current) - 27,706 - 27,706 - 19,192 - 19,192

Repayments and other bank debts - 26,819 - 26,819 - 17,059 - 17,059

Other liabilities (non-current) - 1,494 - 1,494 - 2,038 - 2,017

Trade and other payables (excluding derivatives) - 440,936 - 440,936 - 476,261 - 476,261

Derivatives (payable) - 11,665 - 11,665 — - 213

44,272 44,272 - 21,894 - 5,703

Unrecognized results — 16,191

The composition of outstanding financial instruments at year-end is presented below. The remaining duration of these

derivatives has a direct relation to the remaining duration of the relating underlying contracts in the orderbook.

2005 2004

US$ forward sellings (in US$) 190,777 173,289

Forward sellings of other currencies (average contract rates in euro) 108,121 94,816

Forward buying of other currencies (average contract rates in euro) 1,241 2,455

Fuel hedges (in US$) — 2,936

The results on effective cash flow hedges are recognized in group equity as stated below:

2005 2004

Movement in fair value of effective cash flow hedges recognized in group equity 24,989 —

Transferred to the profit and loss account 9,007 —

Total directly charged to group equity 33,996 —

Taxation - 8,918 —

Directly charged to the hedging reserve (net of taxes) 25,078 —

Commitments and contingent liabilities

Operational lease obligations

Non-redeemable operating lease contracts are due as follows:

2005 2004

Within one year 6,747 6,732

After one year but within five years 5,402 10,300

After more than five years 678 44

12,827 17,076

31.

91



Guarantees

The guarantee commitments as at December 31, 2005 amount to € 588 million (2004: € 414 million) and can be

specified as follows:

2005 2004

Guarantees provided by third parties on behalf of:

• associated companies 19,000 23,000

• contracts and joint ventures 547,000 369,000

• lease obligations and other financial obligations 22,000 22,000

588,000 414,000

For the above guarantees outstanding as at December 31, 2005, counter-guarantees have been provided to financial

institutions for approximately € 587 million (2004: approximately € 413 million). Three key group companies are jointly

and severally liable in respect of credit facilities and guarantees provided to several group companies. In respect of

these credit facilities, it has been agreed that providing further securities on existing tangible fixed assets is limited.

Group companies are jointly and severally liable for the non-consolidated part of the liabilities of their joint ventures,

in total € 172 million (2004: € 167 million). Group companies are also jointly and severally liable for performance

obligations for contracts with third parties in project-driven construction consortiums. In addition, certain recourse

obligations exist in respect of project financiers. Where deemed necessary, provisions have been made. In some

countries, local group companies have concluded long-term lease agreements on which the annual installment

payments total approximately € 4 million. Some legal proceedings and investigations have been instituted against

Royal Boskalis Westminster nv or group companies. Where deemed necessary, provisions have been made.

Capital commitments

At year-end 2005, capital commitments amount to € 16 million (2004: € 10 million).

Subsequent events

Proposed profit appropriation 2005

A proposal will be submitted to the Annual General Meeting of Shareholders for the appropriation of an amount of

€ 31.4 million for a cash dividend payment of € 1.10 per share. It is proposed to add the balance of € 31.3 million

to the retained earnings.

Related parties

Identity of related parties

The identified related parties to the group are its group companies, its joint ventures, its associated companies (see

note 12) and the members of the Supervisory Board and Board of Management.

32.

33.

33.1

92



Group companies

The following are the most relevant, active group companies, which can also be considered as related parties.

Ownership interest

Company City and country of incorporation 2005 2004

Aannemersbedrijf M. de Haan bv Drachtstercompagnie, The Netherlands 100% 100%

Aannemingsmaatschappij Markus bv Halfweg, The Netherlands 100% 100%

Baggermaatschappij Boskalis bv Papendrecht, The Netherlands 100% 100%

Baggermaatschappij Holland bv Papendrecht, The Netherlands 100% 100%

Boskalis Cortlever Holding bv Amsterdam, The Netherlands 51% 51%

Boskalis Dolman bv Dordrecht, The Netherlands 100% 100%

Boskalis International bv Sliedrecht, The Netherlands 100% 100%

Boskalis Markus bv Papendrecht, The Netherlands 100% 100%

Boskalis Offshore bv Papendrecht, The Netherlands 100% 100%

Boskalis bv Rotterdam, The Netherlands 100% 100%

Boskalis Westminster Dredging bv Papendrecht, The Netherlands 100% 100%

Boskalis Westminster International bv Papendrecht, The Netherlands 100% 100%

Boskalis Westminster Shipping bv Papendrecht, The Netherlands 100% 100%

Boskalis Finance bv Papendrecht, The Netherlands 100% 100%

BW Soco bv Sliedrecht, The Netherlands 100% 100%

Boskalis Infra bv Rotterdam, The Netherlands 100% 100%

A.H. Breijs & Zonen bv Rotterdam, The Netherlands 100% 100%

J. van Vliet bv Wormerveer, The Netherlands 100% 100%

Hydronamic bv Sliedrecht, The Netherlands 100% 100%

Westminster Dredging Company Ltd Papendrecht, The Netherlands 100% 100%

Boskalis Westminster Ltd Fareham, United Kingdom 100% 100%

Rock Fall Company Ltd Ayrshire, United Kingdom 100% 100%

Irish Dredging Company Ltd Cork, Ireland 100% 100%

Boskalis Sweden AB Gothenburg, Sweden 100% 100%

Atlantique Dragage SARL Nanterre, France 100% 100%

Boskalis Offshore A/S Randaberg, Norway 100% 100%

Terramare Oy Helsinki, Finland 100% 100%

Sociedad Española de Dragados SA Madrid, Spain 100% 100%

Dragapor Dragagens de Portugal SA Alcochete, Portugal 100% 100%

Bagger- und Bauunternehmung Delta GmbH Bremen, Germany 100% 100%

Heinrich Hirdes GmbH Hamburg, Germany 100% 100%

Heinrich Hirdes Kampmittelräumung GmbH Duisburg, Germany 100% 100%

Boskalis Westminster Middle East Ltd Nicosia, Cyprus 100% 100%

Beaver Dredging Company Ltd Toronto, Canada 100% 100%

Boskalis Westminster Inc. Wilmington, United States of America 100% 100%

Coastal and Inland Marine Services Inc. Ancon, Panama 100% 100%

Boscampo Douala, Cameroon 100% 100%

Boskalis Taiwan Ltd Taipei, Taiwan 100% 100%

Boskalis International (S.) Pte Ltd Singapore 100% 100%

Riovia SA Montevideo, Uruguay 100% 100%

Zinkcon Marine Singapore Pte Ltd Singapore 100% 100%

Koon Zinkcon Pte Ltd Singapore 50% 50%

93



Joint ventures

The following are the most relevant, active joint ventures, which can also be considered as related parties.

Strategic alliances:

Ownership interest


Archirodon Group NV The Netherlands 40% 40%

Lamnalco Ltd Sharjah, UAE 50% 50%

Deeprock CV The Netherlands 50% 50%

Dragamex SA de CV Mexico 50% 50%

Bean Stuyvesant LLC United States of America 50% 50%

Project-driven construction consortiums:

Joint venture interest

Entity Country of incorporation 2005 2004

Combinatie BNSG/Boskalis The Netherlands 50% 50%

Combinatie Afbouw Infrastructuur Caland The Netherlands 20% 20%

Combinatie Almere Hout The Netherlands 50% 50%

Combinatie BBZ The Netherlands 50% 50%

Combinatie Haag / Rw4-N14 The Netherlands 33% 33%

Combinatie Wrakkenberging Westerschelde The Netherlands 10% 10%

Boskalis bv / M.N.O. Vervat bv The Netherlands 70% 70%

Vispassage The Netherlands 50% 50%

Combinatie A2 The Netherlands 33% 33%

“Duizend Zestien” vof The Netherlands 75% 75%

Combinatie Zeezand IJmuiden The Netherlands 50% 50%

Combinatie Boskalis KWS N470 The Netherlands 50% 50%

Combinatie Zeeuwse Stromen The Netherlands 33% 33%

Combinatie Zeelanddijk The Netherlands 25% 25%

Combinatie Dintelhaven The Netherlands 50% 50%

Combinatie Haarrijnse Plas The Netherlands 25% 25%

Combinatie Waterweg The Netherlands 50% 50%

Combinatie Tubecon I vof The Netherlands 10% 10%

Combinatie Nederwaert The Netherlands 18% 18%

NOBM Hedel The Netherlands 50% 50%

Combinatie Bowegro vof The Netherlands 50% 50%

Combinatie Heijbos The Netherlands 50% 50%

Boskalis/Rijnland vof The Netherlands 50% 50%

Combinatie Betuweroute Drie vof The Netherlands 23% 23%

Combinatie Betuweroute Drie Civiel The Netherlands 38% 38%

Consortium N11 The Netherlands 17% 17%

Bouwcombinatie Hollandse Meren The Netherlands 6% 6%

Bouwcombinatie Brabant Noord The Netherlands 6% 6%

Combinatie Vaargeul Rotterdam The Netherlands 43% 43%

Combinatie Achtkamp / Zevenhuizerplas The Netherlands 50% 50%

Zandexploitatie Zevenhuizerplas vof The Netherlands 50% 50%

Combinatie Nesselande The Netherlands 33% 33%

Combinatie HSL 1 Grond & Wegen The Netherlands 20% 20%

Combinatie HSL 5 Noord Grond & Wegen The Netherlands 15% 15%

Combinatie Smink BKD vof The Netherlands 50% 50%

94



Combinatie Sanering Petroleumhaven The Netherlands 50% 50%

Combinatie BVNN Boskalis Dolman vof The Netherlands 50% 50%

Combinatie Markus Transverko The Netherlands 50% 50%

Nassbaggerung Stralsund Germany 50% n.a.

Tirpitzmole Kiel Germany 60% 60%

Boskalis-Hyundai-DI vof, Korea Branch South Korea 59% n.a.

Jurong and Tuas Rock Contractors JV Singapore 75% 75%

Penta-Ocean Koon Ham DI

Boskalis JV (Jurong 3B) Singapore 22% 22%

Penta-Ocean Koon DI

Boskalis Ham JV (Jurong 4) Singapore 17% 17%

Boskalis / Archirodon JV

(Changi Outfall Construction) Singapore 50% 50%

New Doha International Airport JV Qatar 29% n.a.

Amwaj Access Road & Seef Interchanges Bahrain 54% 54%

Entrance Channel Douala (Boscampo) Cameroon 50% 50%

Port of Tanger Morocco 50% 50%

Trans Thailand Malaysia Gas Pipeline Thailand 50% 50%

Map Ta Phut / Tideway Boskalis JV Thailand 50% n.a.

Forvie United Kingdom 50% n.a.

Bayu Undan Australia 50% 50%


The following are the most relevant, active associated companies, which can also be considered as related parties.

Ownership interest


Bean Meridian Holding LLC United States of America 25% 25%

Bean Excavation LLC United States of America 25% 25%

Bean Meridian LLC United States of America 25% 25%

Bean Environmental LLC United States of America 25% 25%

Abu Dhabi Petroleum Ports

Operating Company - IRSHAD Abu Dhabi, UAE 20% 20%

RW Aggregates Ltd United Kingdom 50% 50%

Members of the Board of Management and members of the Supervisory Board

Key management qualifying as related parties are only the members of the Board of Management and the members

of the Supervisory Board.

95



Related party transactions

Group companies

Transactions between group companies are eliminated in the consolidation process.

Joint ventures

During the financial years 2005 and 2004 no material transactions took place with strategic alliances other than in

joint control and mainly in proportion to the percentage of participation in the activities in project-driven construction

consortiums. Transactions with project-driven construction consortiums take place on a large scale because of the

nature of the business activities. In respective joint venture agreements, equivalence between individual partners is

achieved by means of, amongst others, agreed rates for personnel and equipment.

The joint group companies have, at year-end 2005, amounts receivable from and payable to project-driven construction

consortiums amounting to € 101 million and € 114 million respectively (2004: € 69 million and € 93 million respectively).

The proportional share of the group in the assets, liabilities, turnover and expenses of joint ventures is stated below.

2005 2004

Non-current assets 139,676 109,610

Current assets 337,220 291,759

Total assets 476,896 401,369

Non-current liabilities 51,029 25,988

Current liabilities 318,424 286,537

Total liabilities 369,453 312,525

Net assets 107,443 88,844

Contract revenue 528,659 450,222

Expenses - 478,677 - 423,973

Net profit 49,982 26,249


Transactions with associated companies are not material, except the rental of equipment in the United States of

America from the associated equipment companies to the strategic alliance Bean Stuyvesant LLC. The proportional

share of the rent of this equipment in the expenses of Bean Stuyvesant LLC amounts to US$ 7.3 million (2004: US$

4.1 million).

33.2

96



Transactions with members of the Board of Management and members of the Supervisory Board

The emoluments for members of the Board of Management and Supervisory Board of the company over 2005 and

2004 were as follows:

Short and

Annual salaries Pension long term

and remuneration costs paid bonuses paid Total 2004

Members of the Board of Management

R. van Gelder 425 113 800 1,338 663

P.A.M. Berdowski 365 64 137 566 534

K.G. van Nes (up to 9.1.2004) — — — — 437

A.H.A. Hoevenaars (up to 10.1.2004) — — — — 335

790 177 937 1,904 1,969

Members of the Supervisory Board

M. Minderhoud 36 — — 36 —

H. Benjamins 25 — — 25 —

R.M.F. van Loon 22 — — 22 —

M. van der Vorm 24 — — 24 21

A.A. Westerlaken 25 — — 25 21

M.W. Dekker (up to 5.10.2005) 15 — — 15 28

J. Aalberts (up to 5.10.2005) 10 — — 10 21

S.D. de Bree (up to 6.1.2004) — — — — 10

157 — — 157 101

Total 2005 947 177 937 2,061

Total 2004 1,349 257 464 2,070

The variable remuneration given in 2005 is related to the achievement of certain targets during the 2004 financial year.

These targets have been achieved. In addition, one of the members of the Board of Management, Mr R. van Gelder,

received an additional payment of € 625,000. This is linked to agreements made between the Supervisory Board and

Mr Van Gelder with respect to his long-term incentive before 2003. No loans or guarantees have been provided to, or

on behalf of, members of the Board of Management or members of the Supervisory Board. The members of the Supervisory

Board receive, besides their remuneration, a yearly allowance for out of pocket expenses of € 2,318 each.

Transition to IFRS

The effects of the transition, from Dutch reporting standards to IFRS as adopted by the European Union, on the group

equity as at January 1, 2004, the result of 2004 and the group equity as at December 31, 2004 and as at January 1,

2005 are shown in the statement below insofar it concerns the most important items. As at January 1, 2004, the provi-

sion for maintenance of equipment was added to group equity. In addition, for some equipment the book value was

adjusted to fair value (deemed cost). The reporting requirements with respect to financial instruments (IAS 32 and 39)

have been applied as from January 1, 2005.

The following notes to the transitional effects differ from earlier publications with respect to the accounting principles

applied for defined benefit schemes. Due to changes in IAS 19 “Employee benefits” that were recently adopted by

the European Union, actuarial gains and losses are directly added or credited to group equity.

34.

97



Equity statement

Shareholders’ Minority Group

( in € 1,000 ) Note equity interests equity

Group equity under Dutch reporting standards

as at December 31, 2003 455,241 — 455,241

Changes in the companies included in the consolidation [34.1] — 5,778 5,778

Release provision for maintenance of equipment [34.2] 29,793 112 29,905

Adjustment to the book value of equipment in connection

with maintenance components capitalized in the past [34.3] - 9,852 — - 9,852

Adjustment to fair value (deemed cost) [34.4] - 20,510 — - 20,510

Adjustment to employee benefits [34.5] 17,042 — 17,042

Cumulative effect of adjustment to the revenue recognition

and valuation of work in progress [34.6] 2,898 — 2,898

Provision taken for warranties [34.7] - 1,760 — - 1,760

Deferred tax on transitional effects of the first-time adoption of IFRS [34.8] - 2,333 — - 2,333

Total transitional effects of the first-time adoption of IFRS 15,278 5,890 21,168

Group equity under IFRS as at January 1, 2004 470,519 5,890 476,409

Cash dividend for 2003 - 9,896 - 238 - 10,134

Profit for 2004 under Dutch reporting standards 30,170 — 30,170

Changes in the companies included in the consolidation [34.9] — 167 167

Balance of coverage of normative costs of wear and tear

in the cost price of work in progress and actual

maintenance costs [34.10] - 1,264 23 - 1,241

Lower depreciation resulting from adjustments

to book value and to cost price [34.11] 3,635 — 3,635

Pension costs for defined benefit schemes [34.12] 1,923 — 1,923

Changes in the revenue recognition and valuation of work in progress [34.13] 919 — 919

Addition to the provision for warranties [34.14] - 410 — - 410

Deferred tax on the transitional effects of the first-time adoption of IFRS [34.15] - 1,070 — - 1,070

Total transitional effects of the first-time adoption of IFRS

on the 2004 result 3,733 190 3,923

Profit for 2004 under IFRS 33,903 190 34,093

Currency translation differences - 10,536 - 376 - 10,912

Actuarial gains and losses [34.12] - 16,087 — - 16,087

Group equity under IFRS as at December 31, 2004 467,903 5,466 473,369

First-time adoption of IAS 32 and IAS 39 “Financial instruments”

Market value of outstanding financial instruments as at January 1, 2005 [34.16] 45,381 — 45,381

Deferred tax on the market value of outstanding

financial instruments [34.17] - 11,495 — - 11,495

33,886 — 33,886

Group equity under IFRS as at January 1, 2005 501,789 5,466 507,255

98



Key figures

Transitional

(in € 1,000, unless stated otherwise) IFRS effects NL GAAP

Turnover 1,019,903 18,699 1,001,204

Group result 34,093 3,923 30,170

Depreciation and amortization 88,966 - 192 89,158

Cash flow 123,059 3,731 119,328

EBITDA 136,905 6,233 130,672

EBIT 47,939 6,425 41,514

Profit available to the shareholders of Royal Boskalis Westminster nv 33,903 3,733 30,170

Profit available to the holders of minority interests 190 190 —

Group result 34,093 3,923 30,170

Figures per share (in € 1.00)

Profit 1.22 0.13 1.09

Diluted profit 1.22 0.13 1.09

Balance sheet total 1,242,231 171,797 1,070,434

Shareholders’ equity 467,903 2,924 464,979

Solvency 37.7% - 5.7% 43.4%

EBIT(DA): Earnings before interest, taxes (depreciation and amortization).

Changes in the companies included in the consolidation at transition date

The application of IAS 27 “Consolidated and Separate Financial Statements” and IAS 31 ”Interests in Joint Ventures”

results in changes in the participating interests included in the consolidation. Owing to the different application of the

concept of “control”, with the emphasis on the actual control or joint control rather than on existing voting rights, and

owing to the consistency that is also required regardless of the activities of the participating interests concerned, the

participating interests in Lamnalco (maritime and terminal services) and Deeprock (ownership and management of the

fall-pipe rock dumping vessel Seahorse) are both included proportionally in the consolidation for 50%. In addition, the

consolidation of group company Koon Zinkcon (shore protection in Singapore) has increased from 50% to 100%.

Conversely, group company Dragamex (dredging activities in Mexico) has been deconsolidated for 50%.

As a result of these changes in the consolidation, the balance sheet now includes minority interests in group equity

with regard to Koon Zinkcon and the Lamnalco participating interests, as well as a number of minority interests that

previously were not presented separately under Dutch reporting standards based on materiality.

34.1

99



Release of the provision for maintenance of equipment at transition date

The provision for maintenance of equipment is no longer permitted under IFRS. The provision does not qualify as a

constructive or legal obligation under IAS 37, “Provisions, Contingent Liabilities and Contingent Assets”. Consequently,

the provision for maintenance of equipment has been released and added to group equity. The part of the provision that

concerns liabilities for current repairs has been reclassified under other current liabilities.

Adjustment to the book value of equipment at transition date

The deployment of dredging equipment in projects that vary in terms of soil conditions, material to be processed,

maritime circumstances and the intensity of the deployment of the equipment results in great differences in the degree

of wear and tear on the equipment. The cost allocation standards that are used both by group and in the industry are

based on the principle that the costs of wear and tear and maintenance, based primarily on the actual soil conditions

and the material to be processed, are allocated to the project causing the wear and tear. The component approach

prescribed under IFRS in IAS 16 “Property, Plant and Equipment” for depreciation and amortization of tangible fixed

assets is based on the assumption that the maintenance of equipment will allow that equipment to be used in the future

and that the costs, after capitalization, will be charged by way of amortization gradually and on a time-proportionate

basis against the future revenues. Since the degree of wear and tear is caused primarily by project-specific combinations

of soil conditions, material to be processed, maritime circumstances and the intensity of the deployment of equipment

(i.e. factors that are difficult to predict) it is very difficult to estimate the useful life and/or the economic life of these

components (which is generally limited) and to systematically depreciate and/or amortize them. Consequently, within

the framework allowed by IAS 16 for “costs subsequent to initial recognition”, the leading principle is to charge costs

of repairs primarily against the profit and loss account. This decision is based primarily on the fact that the useful life

is relatively short and a substantial part of the maintenance is carried out in a continual stream while projects are in

progress. Based on this approach, the depreciation of components in the (initial) cost price of the individual pieces of

equipment is generally determined on a grouped basis. Based on strict internal rules, a limited part of the costs of

maintenance qualifies for capitalization in separate components. The most important criterion in this respect is that it

must be possible to clearly prove a relevant long-term useful and/or economic life of the components concerned.

Particularly for a number of older pieces of equipment, the book values have been adjusted on an asset-by-asset

basis for maintenance components capitalized in the past that would have been charged against the profit and loss

account under the IFRS accounting principles. The cumulative effect of these adjustments has been deducted from

group equity.

Adjustment to fair value (deemed cost) at transition date

For a small number of vessels, the fair value as at January 1, 2004, based on the (internal) value in use, is used as

the deemed cost, in accordance with the exemption offered under IFRS 1 “First-time adoption of IFRS”. During the

assessment of the book value of the dredging equipment and the maintenance components included in the book

value, it became apparent that the book value of the initial purchase price together with the book value of the major

repairs/overhauls conducted after acquisition was relatively high in the case of three dredging ships that were bought in

used condition, while an accurate insight into the separate parts was difficult to obtain. For the purposes of determining

the internal values in use, the market circumstances and technical/economic performances of these specific ships at

year-end 2003 have also been taken into consideration. The differences between the fair value and the book value

under Dutch reporting standards of these ships have been deducted from group equity.

34.2

34.3

34.4

100



Adjustment to pension costs for defined benefit schemes at transition date

The principal pension schemes of the group qualify as “defined benefit plans” under IAS 19 “Employee Benefits”.

As such, the balance of the assets and liabilities of the pension schemes concerned must be accounted for in the

consolidated balance sheet, in accordance with IFRS. In the case of both the company pension fund in the Netherlands

and that in the United Kingdom, the value of the plan assets exceeds the value of the pension liabilities. As a result of

certain conditions in the agreements and schemes applicable to these funds and the group companies concerned,

these assets cannot simply be recovered by the group. Consequently, under IFRS it is not permitted to include these

assets in the balance sheet. The under Dutch accounting principles in the 2003 recognized and expensed additional pension

liabilities to the company pension fund in the Netherlands amounting to € 18 million (non-current portion € 12 million

and current portion € 6 million) are added to group equity. Additionally, unfunded pension liabilities of two German

group companies amounting to € 1 million are charged to group equity.

A part of the Dutch staff have their pension with “Bedrijfstakpensioenfonds voor de Waterbouw” (the pension fund for

the maritime engineering industry). This pension fund qualifies under IFRS as a defined benefit plan but the fund has

declared that it could not provide sufficient information for a calculation in accordance with IFRS because there is no

reliable and consistent basis to attribute the pension obligations, plan assets, income and expenses to the individual

member companies of the pension fund. However, based on the information that is available, it is not probable that

any pension liabilities or surplus to be capitalized would arise under IFRS.

With regard to a small pension scheme for the German group companies, the pension liabilities have been valued in

accordance with IFRS, and the difference compared with the existing book value of these pension commitments has been

deducted from group equity. The remaining pension schemes within the group do not qualify as defined benefit plans.

Adjustment to the valuation of work in progress at transition date

One of the companies included in the consolidation does not value its work in progress entirely in accordance with the

provisions that apply under IFRS, as laid down in IAS 11 “Construction Contracts”. The progress of the work in progress

is now determined in a different way. In addition, some of the provisions taken in connection with this work in progress

that are not allowed under IFRS have been reversed. On the other hand, a warranty provision has been recognized, in

accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, for relevant work in progress and

completed projects (see note 34.7). The cumulative effect of these adjustments to IFRS is recognized in group equity.

Adjustment to the provision for warranties at transition date

The provision for warranties of the company referred to in note 34.6 is based on common practice in the industry and

the company’s history of warranty claims over the past ten years for relevant projects. The non-current portion of the

provision has been discounted, as required by IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

34.5

34.6

34.7

101



Deferred tax on transitional effects of IFRS at transition date

The tax charge resulting from the transitional effects is deferred. The great majority of the differences will materialize

within the same periods as the existing deferred tax liabilities. Consequently, a number of deferred tax assets have

been offset against the deferred tax liabilities. Based on the relevant tax systems, the tax charge resulting from a part

of the transitional effects is virtually nil.

Changes in the presentation of the consolidated profit and loss account for 2004

As a result of the separate presentation of the third-party share in group equity, the share of holders of minority interests

in the group result is presented separately in the profit and loss account.

Change in the recognition of costs of wear and tear in the result for 2004

Under IFRS, the balance of the normative costs of wear and tear charged against the cost price of the projects and

the actual costs of maintenance has been charged against the result, based on the basic principle of charging the

majority of the repair expenses to the profit and loss account.

Effect of adjustment of depreciation resulting from adjustments to book value and to cost price

on the result for 2004

Depreciation for 2004 has been adjusted as a result of the change in principles of recognizing repair costs and the

related adjustments to the book value.

Effect of actuarial gains and losses on the result for 2004

The additional pension charges in the effects of the transition to IFRS concern the additional costs from defined benefit

plans, based on the principles set out in IAS 19 “Employee Benefits”. The actuarial gains and losses for 2004, including

the limitation of net assets, amounting to € 19.9 million (net of taxation € 16.1 million), have been charged directly to

group equity. This treatment is in accordance with changes in IAS 19 as recently adopted by the European Union.

Effect of changes in the revenue recognition and valuation of work in progress on the result for 2004

The change to the system of revenue recognition of work in progress used by one of the companies included in the

consolidation has also resulted in transitional effects in the result for the financial year 2004, as a consequence of

differences in the method used for measuring the progress of the work in progress and of provisions that are not

allowed under IFRS.

34.8

34.9

34.10

34.11

34.12

34.13

102



Addition to the provision for warranties charged against the result for 2004

The movement in the provision for warranties, including the discounting effects on the non-current portion of those

liabilities, has been charged against the 2004 result.

Deferred tax on the transitional effects of the first-time adoption of IFRS charged to the result for 2004

The tax charge resulting from the transitional effects has been recognized in the deferred tax assets and liabilities.

Market value of outstanding financial instruments at transition date

The equity as at January 1, 2005 is not equal to the equity as at December 31, 2004, as a result of the deferred application,

allowed under IFRS 1 “First-time adoption of IFRS”, of IAS 32 “Financial Instruments: Disclosure and Presentation”

and IAS 39 “Financial Instruments: Recognition and Measurement”. The group policy is to use cash flow hedges to

cover all operational currency risks (which mainly concern future cash flows from projects denominated in currencies

other than the euro). In accordance with this policy, the group has been using hedge accounting for many years already.

Although the requirements under IFRS for applying hedge accounting are relatively strict, the group will continue to

apply this method in the future for the majority of the financial instruments it uses, particularly forward exchange

transactions. For the first-time adoption of the aforementioned IFRS standards in the 2005 financial year, the market

value as at January 1, 2005 of the outstanding financial instruments – including results realized on the “rolling-forward”

of existing hedges as a result of differences between the duration of the hedges concerned and the underlying cash

flows – has been added to equity.

Deferred tax on the market value of outstanding financial instruments at transition date

The tax charge on the market value of the outstanding financial instruments has been recognized in the deferred tax

liabilities.

34.14

34.15

34.16

34.17

103



Company profit and loss account

Company result - 127 - 329

Result of group company [4] 62,874 34,232

Net profit 62,747 33,903

( in € 1,000 ) Note 2005 2004

104



Company balance sheet before profit appropriation

AssetsNon-current assets

Investment in group company [4] 541,915 465,489

541,915 465,489

Current assets

Amounts due from group companies 936 2,414

936 2,414

Total assets 542,851 467,903

Equity and liabilitiesShareholders’ equity

Issued capital [5] 68,639 67,617

Share premium [6] 13,473 13,874

Legal reserve [7] 63,469 43,344

Hedging reserve [7] 8,302 —

Currency translation reserve [7] 2,613 - 10,536

Retained earnings [7] 323,608 319,701

Profit for the year [8] 62,747 33,903

542,851 467,903

Total equity and liabilities 542,851 467,903

( in € 1,000 ) Note 2005 2004

105



Statement of changes in equity

Balance as at December 31, 2004 67,617 13,874 43,344 — - 10,536 319,701 33,903 467,903

Effect of first-time adoption of IAS 32

and IAS 39 “Financial instruments” [34] — — — 33,380 — 506 — 33,886

Balance as at January 1, 2005 67,617 13,874 43,344 33,380 - 10,536 320,207 33,903 501,789


Cash dividend — — — — — — - 8,351 - 8,351

Stock dividend 1,022 - 401 — — — — - 621 —

Addition to retained earnings — — — — — 24,931 - 24,931 —

1,022 - 401 — — — 24,931 - 33,903 - 8,351

Movement legal reserve [20] — — 20,125 — — - 20,125 — —

Total result

Net profit — — — — — — 62,747 62,747

Currency translation differences — — — — 13,149 — — 13,149


on defined benefit pension schemes [27] — — — — — - 1,405 — - 1,405

Movement in fair value of effective cash flow hedges [30] — — — - 25,078 — — — - 25,078

— — — - 25,078 13,149 - 1,405 62,747 49,413

Balance as at December 31, 2005 68,639 13,473 63,469 8,302 2,613 323,608 62,747 542,851

Balance as at December 31, 2003 65,415 14,635 — — — 304,337 70,854 455,241

Effect of adopting IFRS 1 [34] — — — — — 15,278 — 15,278

Balance as at January 1, 2004 65,415 14,635 — — — 319,615 70,854 470,519


Cash dividend — — — — — — - 9,896 - 9,896

Stock dividend 2,202 - 761 — — — — - 1,441 —

Addition to retained earnings — — — — — 59,517 - 59,517 —

2,202 - 761 — — — 59,517 - 70,854 - 9,896

Forming legal reserve [20] — — 43,344 — — - 43,344 — —

Total result

Net profit — — — — — — 33,903 33,903

Currency translation differences [34] — — — — - 10,536 — — - 10,536


on defined benefit pension schemes [27] — — — — — - 16,087 — - 16,087

Movement in fair value of effective cash flow hedges [30] — — — — — — — —

— — — — - 10,536 - 16,087 33,903 7,280

Balance as at December 31, 2004 67,617 13,874 43,344 — - 10,536 319,701 33,903 467,903

Currency Profit Total

Issued Share Legal Hedging translation Retained for the capital and

(in € 1,000) Note capital premium reserve reserve reserve earnings year reserves

Currency Profit Total

Issued Share Legal Hedging translation Retained for the capital and

(in € 1,000) Note capital premium reserve reserve reserve earnings year reserves

106



General

Unless stated otherwise, all amounts in these explanatory notes are stated in thousands of euros. The company balance

sheet is drawn up before profit appropriation. The company profit and loss account is limited in accordance with Section 402,

Part 9 of Book 2 of the Netherlands Civil Code.

Principles of financial reporting

The company financial statements have been drawn up using the reporting standards applied for drawing up the con-

solidated financial statements, in accordance with Section 362 sub 8, Part 9 of Book 2 of the Netherlands Civil Code.

Based on Section 362 sub 1, Part 9 of Book 2 of the Netherlands Civil Code, the consolidated financial statements

have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the

European Union and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

These accounting principles are disclosed in note 3 of the consolidated financial statements.

Change in accounting principles

As a consequence of applying the accounting principles for the consolidated financial statements based on IFRS, a

multiple change in accounting principles in the company financial statements has been implemented. The nature and

composition of this change is disclosed in note 34 of the consolidated financial statements “transition to IFRS”. The

cumulative effect added to equity as at January 1, 2004 amounted to € 15.3 million. The effect on the result over 2004

was a gain of € 3.7 million. The first-time adoption of IAS 32 and 39 on financial instruments has a positive non-recurring

cumulative effect on equity as at January 1, 2005 of € 33.9 million.

Investment in group company

Investment in group company only comprizes the 100% investment in Boskalis Westminster Dredging bv, Papendrecht.

The subsidiary is stated at net asset value, based on IFRS, as described in the accounting principles relating to associated

companies in the consolidated financial statements. The movements are shown below:

2005 2004

Balance as at January 1 465,489 458,602

Effect of adopting IFRS 1 — 15,278

Effect of first-time adoption of IAS 32 and 39 33,886 —

Restated balance as at January 1 499,375 473,880

Dividends received - 7,000 - 16,000

Profit for the year 62,874 34,232

Currency translation differences 13,149 - 10,536

Actuarial gains and losses and asset limitation defined benefit schemes - 1,405 - 16,087

Change in fair value effective cash flow hedges - 25,078 —

Balance as at December 31 541,915 465,489

Issued 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.

The issued capital as at December 31, 2005 consists of 28,599,787 ordinary shares of € 2.40 par value each and consequently

amounts to € 68.6 million. Furthermore a stock dividend was distributed for 2004 and charged to share premium for

2005. For that purpose, 425,922 new shares were issued. Of the issued capital as at December 31, 2005, no ordinary

shares were owned by Royal Boskalis Westminster nv.

Explanatory notes to the company f inancial statements

1.

2.

3.

4.

5.

107



To the Stichting Continuïteit KBW has been assigned the, not yet exercised, option right to take cumulative protective

preference shares in Royal Boskalis Westminster nv (see page 110).

Share premium

Share premium comprizes additional paid-in capital exceeding the par value of outstanding shares. Share premium is

distributable free of tax.

Other reserves

The legal reserve for non-distributed profits of group and/or associated companies amounted to € 63.5 million at the

end of 2005 (2004: € 43.3 million). A disclosure of the other reserves recognized in the company balance sheet is

given in the notes to the consolidated financial statements (note 20-24).

Profit for the year

A proposal will be submitted to the Annual General Meeting of Shareholders to appropriate € 31.4 million for a cash

dividend payment of € 1.10 per share. The remainder of € 31.3 million will be added to the retained earnings.

Remuneration of members of the Board of Management and Supervisory Board

The remuneration of members of the Board of Management and Supervisory Board are disclosed in the consolidated

financial statements under related party transactions (note 33).

Commitments and contingent liabilities

Royal Boskalis Westminster nv heads the fiscal entity which includes almost all Dutch 100% group companies. The

company is therefore liable for the tax obligations of the fiscal entity as a whole. The company has issued guarantees

on behalf of project-driven contruction consortiums, and own contracts of group companies. These amounted to

€ 6 million as at December 31, 2005 (2004: € 3 million). In addition, certain recourse obligations exist in respect of

project financiers. Where deemed necessary, provisions have been made. Some legal proceedings and investigations

have been instituted against Royal Boskalis Westminster nv or group companies. Where deemed necessary, provisions

have been made.


Supervisory Board

M. Minderhoud, chairman

M. van der Vorm

A.A. Westerlaken

H. Benjamins

R.M.F. van Loon

Board of Management

R. van Gelder, chairman

P.A.M. Berdowski

J.H. Kamps

6.

7.

8.

9.

10.


Provisions in the Articles of Association relating to profit appropriation

Article 27.

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 by four percentage points at most; this increase will be determined every five years by the Board of Manage-

ment subject to the 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 by 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.

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.

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 following 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.

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.

Dividends shall be made available for payment within thirty days of their adoption, or any sooner as the Board of

Management may determine.

Unclaimed dividends will revert to the company after five years.

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.

The General Meeting of Shareholders, on the 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.

The company may only realize distributions to the shareholder to the extent that its equity capital exceeds the

amount of the subscribed capital, increased by the reserves that have to be maintained by law or by the articles of

association.

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, € 31.4 million of the net result after tax will be appropriated for

a cash dividend payment of € 1.10 per share. It is proposed to add the balance of € 31.3 million to the retained earnings.

Other information

Other information

1.

2.

3.

4.

1.

2.

3.

4.

5.

6.


Auditors’ report

Introduction. We have audited the financial statements 2005 as included in this Annual Report of Royal Boskalis

Westminster nv, Sliedrecht. These financial statements consist of the consolidated financial statements and the

company financial statements. 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 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 state-

ments 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 presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Opinion with respect to the consolidated financial statements. In our opinion, the consolidated financial statements give

a true and fair view of the financial position of the company as at December 31, 2005 and of the result and the cash flows

for the year then ended in accordance with International Financial Reporting Standards as adopted by the European

Union and also comply with the financial reporting requirements included in Part 9 of Book 2 of the Netherlands Civil

Code as far as applicable.

Furthermore we have established to the extent of our competence that the Annual Report is consistent with the consolidated

financial statements.

Opinion with respect to the company financial statements. In our opinion, the company financial statements give a true

and fair view of the financial position of the company as at December 31, 2005 and of the result for the year then ended

in accordance with accounting principles generally accepted in the Netherlands and also comply with the financial

reporting requirements included in Part 9 of Book 2 of the Netherlands Civil Code.

Furthermore we have established to the extent of our competence that the Annual Report is consistent with the company

financial statements.

Rotterdam, March 10, 2006

KPMG Accountants N.V.

R.P. Hasper RA

Other information


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 2006

Royal Boskalis Westminster nv

Board of Management

Stichting Continuïteit KBW

The Board




The Boskalis Dolman mobile soil

washing plant was successfully

deployed to process the sediment

in a responsible manner during

the deepening of the Miami

River in the USA in 2005.

Completion of this contract

awarded to the Weston

Solutions/Bean Environmental

joint venture results in a 15ft deep

river, which enables a substantial

increase in shipping traffic.

Maximizing sustainable growth requires minimizing

detrimental effects for the environment.


With a European subsidy

Boskalis transformed 150

hectares of agricultural land on

the edge of the ‘de Biesbosch’

National Park in the Netherlands

into a unique wildlife and

recreation area.

Six million m3 of polluted earth was removed from lake Ketelmeer in the Netherlands and stored in a dredge spoil depot

in the middle of the lake. The lake is now clean again and has become a magnificent wildlife and recreation area.

Global growth should also be seen in the context of long-term

quality of life. Boskalis uses its expertise and technology to

develop environmentally-conscious solutions. So that the world

can experience sustainable growth.


The innovative BeauDredge

technique developed by

Boskalis makes it possible to

place waterbeds at depth by

extracting a usable layer of soil

from underneath an upper

unusable layer of soil with

minimal disturbance. Thus,

water beds can be lowered

without expensive or space-

consuming disposal.

114

The world of Boskalis

The wor ld o f Boska l is


United States of

America

The Netherlands

Mexico Nigeria

Head office/Home market Home markets Offices of Boskalis

United Kingdom Germany

Nordic

Archirodon

Lamnalco

Organization

Organizat ion


Group management

R. van Gelder BA, chairman Board of Management

P.A.M. Berdowski, vice-chairman Board of Management

J.H. Kamps, member Board of Management, chief financial officer

T.L. Baartmans, group director International

F.A. Verhoeven, group director Europe


Area Europe F.A. Verhoeven, C. van den Heuvel,

J. de Reus, P.G.R. Devinck

Area Middle T.L. Baartmans, J.J. Scheele,

H.F.M. Hesseling, C.N.A.M. Kootstra

Area Middle East B.M. de Witt, J. Kok,

K.A. Vakanas, N. Haworth, J.H. Wiersma

Area East T.L. Baartmans, J.J. Scheele,

L. Slinger, K.F. Bogaert

Area West H.P.M. Sanders

Home markets

The Netherlands

Boskalis bv M.C. Dekker, P. van der Knaap

P. van der Linde

United Kingdom

Westminster Dredging Company Ltd P.G. Roland, J.J. Dekker

Germany

Heinrich Hirdes GmbH H.G. Peistrup

Nordic (Finland and Sweden)

Terramare Oy and Boskalis Sweden AB J. Yletyinen, H. Lindström

Mexico

Dragamex SA de CV P. Klip, C.D. Versteeg Z.

Nigeria

Nigerian Westminster Dredging & Marine Ltd J.F.A. de Blaeij

United States of America

Bean-Stuyvesant LLC J. Bean, B. Hoffman, W.D. Keij

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

116

Organization


Corporate staff departments

Investor Relations & Corporate Relations R.T. Berends

Group Controlling C. Wielaart, A.D. Blom

Fiscal Affairs R.J. Selij

Treasury & Insurances F.A.J. Rousseau

Legal Affairs K. Duppen

Information & Communication Technology J.A. Stam

Quality Assurance & Safety S.P. van Woensel

Operational staff

Personnel & Organization P.A.M. Berdowski (a.i.)

Research & Development J.A. Eygenraam

Dredging Department H. Postma

Central Technical Department E.C. Holman

Works Council

T.A. Scheurwater, chairman

C.A. Appelo

J.J. Bos

F.J. Buitenhuis

S. van der Land

A.C. Oosterbaan jr.

G. Prins

W.J. de Rover

C.G.A. Tonnaer, vice-chairman

M. Treffers

D.A. van Uitert

M. Vijlbrief

H. Vroegh

M. van der Wagt

M.F. van Wijk

L. Pasma, secretary

Offices around the world

Off ices around 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

Boskalis International 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]

Boskalis Offshore bv

Rosmolenweg 20

P.O. Box 43

3350 AA Papendrecht

The Netherlands

Telephone +31 (0)78 69 69 011

Fax +31 (0)78 69 69 571

[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)512 340 603

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

Mollerusweg 102

2031 BZ Haarlem

P.O. Box 88

1160 AB Zwanenburg

The Netherlands

Telephone +31 (0)23 51 76 868

Fax +31 (0)20 51 76 869

[email protected]

www.markusbv.nl

J. van Vliet bv

Krommenieerpad 42

1521 HB Wormerveer

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]

United Kingdom and Ireland

Westminster Dredging

Company Ltd

‘Westminster House’,

Crompton Way

Segensworth West, Fareham

Hampshire PO15 5SS

United Kingdom

Telephone +44(0)1489885933

Fax +44(0)1489578588

[email protected]

www.westminsterdredging.co.uk

118



Boskalis Westminster Ltd


Crompton Way


Hampshire PO15 5SS

United Kingdom

Telephone +44(0)1489885933

Fax +44(0)1489578588

Rock Fall Company Ltd

Unit A1a,

Olympic Business Park

Drybridge Road, Dundonald

Ayrshire KA2 9BE

United Kingdom

Telephone +44(0)1563851302

Fax +44(0)1563851063

[email protected]

www.rock-fall.co.uk

Boskalis Zinkcon Ltd


Crompton Way


Hampshire PO15 5SS

United Kingdom

Telephone +44(0)1489885922

Fax +44(0)1489578588

Irish Dredging Company Ltd

‘Pembroke House’,

Pembroke street

Cork, Ireland

Telephone +353 214277399

Fax +353 214277586

[email protected]

www.irishdredging.com

Rest of Europe

Dredging & Contracting

Belgium NV

11, Avenue Franklin Roosevelt

B-1050 Brussels, Belgium

Telephone +3226278770

Fax +3226474494

Atlantique Dragage Sarl

9 Rue St Eloi

78100 St Germain en Laye,

France

Telephone +33(0)139040490

Fax +33(0)134517459

[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

Insaati 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

Vassgatan 3D

SE-41502 Gothenburg,

Sweden


Telefax +4631515039

[email protected]

www.boskalis.se

Boskalis Dragomar SrL

c/o T.R. srl 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]

OOO Mortehnika

Bolshoy pr. 18A, V.O.

199034 St. Petersburg

Russia




Middle East

Boskalis Westminster

Middle East Ltd

Flat no. 1103, 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, Flat 716

P.O. Box 10630

Manama, Bahrain

Telephone +973 17713255

Fax +973 17714276

[email protected]


Middle East Ltd

Achilleos Building (first floor)

224, Arch. Makarios III Ave.

Lemosos, Cyprus

Telephone 357 257 60550

Fax 357 257 60552

[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 2063,

postal code 112

RUWI, Muscat

Oman

Telephone +968 24491244

Fax +968 24491478


Al Rushaid Co Ltd.

P.O. Box 31685

Dhahran Airport 31932,

Saudi Arabia


Fax + 96638647320

Lamnalco Ltd

Al Buhaira Insurance Tower

Buhaira Corniche Sharjah

P.O. Box 5687 Sharjah, U.A.E.


Fax +97165749090

[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]


8A Rue Thomas Edison

97310 Kourou

French Guyana

Telephone +594594326846

Fax +594594321886


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

Telephone +597370617/8

Fax +597370616

Boskalis International bv/


Overseas

# 824 Kenneth Avenue

Gulf View

La Romain, Trinidad and

Tobago


Fax +18686539155

[email protected]


Commissaris Simons Polder #5

District Para, Surinam

Telephone + 597370617/8

Fax +597370616


Overseas

Building D, First Floor, Grand

Bazaar Complex,

Churchill Roosevelt & Uriah

Butter Highways

Valsayn

Trinidad & Tobago


Fax +18686624771

120




Sucursal Argentina

Edif. Porteña Plaza I, Olga

Cossettini 77

Piso 3, oficina 13

Pto. Madero, Buenos Aires

Argentina

Telephone +541143125963

Fax +541143125976

[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]

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

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

Telephone +237 3430307

Fax +237 3430907

[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)

Fax +234 53233159

Australia and Asia

Boskalis Australia Pty Ltd

Suite 16-01, Level 16

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 Dredging India

Pvt Ltd

23 Sangeeta, Tagore Road

Santacruz (West)

Mumbai 400 054, India

Telephone +91 22 26046699

Fax +91 22 26040579

[email protected]


Zhangabyl 1

66503 Bautino

Mangistau Oblast

Kazakhstan

Telephone 0073 29 28 24 812

Fax 0073 292 42 65 10

[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

Telephone +65 67335622

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 910

Shougang International

Building

Xizhimen North Street

Haidan District, Beijing 100088

People’s Republic China

Telephone +86 10 8229

2361, 62, 63

Fax +86 10 8229 2360


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.

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.

CALM – Cantenary Anchor Leg Mooring

A floating structure that performs the dual function of keeping a tanker moored on a single point and

transferring fluids (generally oil, gas or by-products) while allowing the ship to weathervane.

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.


Glossary

Dynamic positioning sytem

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 pre-eminently 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.

FPSO/FSO

Floating Production Storage and Offloading system/Floating Storage and Offloading system.

Floating production, storage and transshipment systems that often operate a long way offshore.

The systems separate the incoming liquids into oil, gas and water and temporarily store the crude oil.

Tankers are used to transport the oil.

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.

124

Glossary


Home market

Boskalis distinguishes itself from its competitors by the use of a home market strategy. The home mar-

ket 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.

Glossary



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.

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.

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.

Work in progress

Projects that have not been completed on the balance-sheet date but that have been finished in part.

Glossary


Report of the Board of Management on 2005


Equipment


2 + 3* Screeder pontoons

For waterbed protection

(clay and stone)

* 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 excevators, wheel loaders, dumpers, bulldozers, mobile cranes,

crawler drill rigs, sand pillers, filling installations for shore protection mattresses, fixed land pipelines, various pontoons and houseboats.

Equipment

6 + 38* Stone transportation

barges

Capacity from 120 to 2,000 t

8 + 1* Trailing suction

hopper dredgers

Hopper capacity >6,000 m3

6 + 27* Floating hoisting pontoons

Hoisting capacities from

10 to 270 t

4 Bucket dredgers

Bucket capacity from

450 to 900 liters

24 + 13* Cutter suction and

bucket-wheel dredgers

Total installed power

from 257 to 9,262 kW

11 + 10* Trailing suction

hopper dredgers

Hopper capacity <6,000 m3

28 + 9* Work boats

Propulsion power

from 133 to 918 kW

3 Self-propelled seagoing

cutter suction dredgers


from 12,904 to 15,830 kW

21 + 6* Booster stations



4 Barge unloading dredgers


from 1,650 to 4,300 kW

91 + 30* Hopper and

transportation barges

Hopper capacity from 300 to 2,336 m3

17 + 5* Floating grab cranes

(‘grab dredgers’)

Grab capacities

from 1.2 to 9.2 m3

79 + 186* Launches, tugs,

supply and crew boats

Propulsion power

from 30 to 4,412 kW

19 + 5* Backhoes

bucket capacity

from 1.4 to 22 m3

7 Suction dredgers



1 Environmental disc cutter

1 + 1* Dynamically

positioned fallpipe vessel

Capacity from 17,000 to 18,500 t

5 + 3* Drill Barges

4 Stone dumping vessels

Capacity

from 354 to 1,200 t


Compiled and

coordinated by Royal

Boskalis Westminster nv

Design and realisation

Photography and illustration

Lithography and print

Corporate Communications Department

Via > Handelskade, Rotterdam

Arnold Niessen, Roel Snoep, Martin Kers and others

PlantijnCasparie Capelle a/d IJssel

Colophon

We move the ear th to a bet te r p lace

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

An

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Documents

Annual Report 2005 - jaarverslag · Kingdom Germany Nordic Dredging and Earthmoving 83% of turnover • Construction and maintenance of harbors and waterways • Creation of land