fugro n.v. annual report 2003

A n n u a l R e p o r t 2 0 0 3F U G R O N . V.

MARINER

Brought to you by Global Reports

Fugro N.V.

Veurse Achterweg 10

P.O. Box 41

2260 AA Leidschendam

The Netherlands

Telephone: +31 (0)70 3111422

Fax: +31 (0)70 3202703

E-mail: [email protected]

www.fugro.com

Chamber of Commerce

’s-Gravenhage

number 120091

F o r c e f u l

U n b e a t a b l e

G r o w t h

R e s u l t s

O p e r a t i o n s

S o u r c e : ‘ a s e c r e t a d m i r e r ’


A n n u a l R e p o r t 2 0 0 3

M a j o r d e v e l o p m e n t s i n 2 0 0 3

P r e f a c e f r o m t h e P r e s i d e n t a n d

C h i e f E x e c u t i v e O f f i c e r

P r o f i l e

F u g r o ’ s a c t i v i t i e s a n d m a r k e t s

K e y f i g u r e s

T h e m e : F u g r o a n d t h e f o u r e l e m e n t s

M i s s i o n , g e n e r a l a n d f i n a n c i a l

t a r g e t s , s t r a t e g y a n d p o l i c y

R i s k p r o f i l e

I n f o r m a t i o n f o r s h a r e h o l d e r s

R e p o r t o f t h e S u p e r v i s o r y B o a r d

M a n a g e m e n t

M a n a g e m e n t s t r u c t u r e

R e p o r t o f t h e E x e c u t i v e B o a r d

General business development

Acquisition of Thales GeoSolutions (Fugro-TGS)

Financial developments

Dividend proposal

Corporate Governance

Organisation and personnel

Business principles

Research and development

Market development and trends

Post balance sheet date events

Backlog

Prospects

Corporate Governance Code

Tabaksblat Committee

IFRS standards

Geotechnical services

Survey services

Geoscience services

Activities of the different business units

Fugro’s contributions to society

– Music/CDs

– Museum Beelden aan Zee

(Sculptures on the Shore)

– MS 150 (Houston)

2

3

4

5

6

9

10

12

15

22

25

26

28

29

32

36

36

36

39

39

40

41

42

43

47

51

52

56

60

63

64

65

66

68

69

70

71

74

85

86

87

92

92

92

93

94

98

102

102

103

104

A n n u a l a c c o u n t s 2 0 0 3

Consolidated balance sheet

Consolidated profit and loss account

Consolidated cash flow statement

Accounting principles

Notes to the consolidated annual accounts

Holding company’s balance sheet

Holding company’s profit and loss account

Notes to the holding company’s accounts

O t h e r i n f o r m a t i o n

Auditor’s report

Post balance sheet date events

Foundations Boards

Profit appropriation

Historic review

Fugro international directory

Report of Stichting Administratiekantoor Fugro

Declaration of independence

Report N.V. Algemeen Nederlands Trustkantoor

Glossary

C o n t e n t s


2

• In the year under review turnover fell by 12.2% to

E 830.1 million (2002: E 945.9 million). Based on the

average rate of 2002 (USD 1 = E 1.06) turnover would

have amounted to E 921.7 million. For the most part

the decline was due to currency effects brought about

by a lower dollar to Euro exchange rate (9.4%).

In addition, several incidental events towards the end

of the year, like delays of projects and technical

problems on board several ships, occured.

Autonomous turnover reduction was 7.7%.

Acquisitions increased turnover by 4.9%.

• The net result before amortisation of goodwill fell by

37.5% to E 45.1 million (2002: E 72.2 million). This

reduced the net profit margin to 5.4% (2002: 7.6%).

The net result after amortisation of goodwill

amounted to E 32.4 million (2002: E 60.2 million);

a decrease of 46.2%. The negative result of the

acquired Thales GeoSolutions companies over the

period 19 November – 31 December 2003 was

approximately E 4.5 million. This means that Fugro’s

stand-alone result before amortisation of goodwill

would have been around E 50 million.

• Earnings per share (before amortisation of goodwill)

fell by 38.0% to E 3.12 (2002: E 5.03). Taking the

dilutive effect of the subordinated convertible

debenture bond and the outstanding staff share

options into account, earnings per share fell by 36.0%

to E 3.00 (2002: E 4.69). After amortisation of goodwill

and without taking the dilutive effects into account

earnings per share were E 2.24; a decrease of 46.5%.

Taking into account the dilutive effect earnings per

share were E 2.21 (2002: E 3.94).

• The reduced net result was mainly due to a

stagnating (global) economy and the effect of the

much lower rate of the dollar. The development of

almost every business unit, with the exception of the

positioning activities, could best be described as

hesitant. There were also several – predominantly

one-time – causes of the decrease in profit, such as

direct exchange rate losses due to late payments,

delays in projects being awarded and technical

problems on board several vessels.

• In 2003 investments in the oil and gas industry rose

by 4 – 6% (in dollar terms) compared with the

previous year. The suppliers to the oil and gas

industry, however, have not (yet) benefited from

these investments.

• A dividend in cash or (certificates of) shares of E 1.85

per (certificate of) ordinary share is proposed

(2002: E 1.85).

• On 19 November 2003 Thales GeoSolutions (Fugro-

TGS) was acquired. The activities of Thales

GeoSolutions will be integrated into the Offshore

Survey, Offshore Geotechnical and Positioning

divisions. At approximately a quarter of the size of

Fugro, this is the largest acquisition in Fugro’s

history. The acquisition substantially strengthens

our position as a worldwide provider of services to

the oil and gas industry. Fugro-TGS will make a

positive contribution to the result from 2004

onwards.

• On 14 November 2003 Fugro arranged a loan facility

of E 200 million, partly to finance the acquisition of

Thales GeoSolutions (E 139.5 million, see page 29)

and the integration costs (E 25 million). The interest

rate amounts to EURIBOR (2.217% on 14 November

2003) plus 70 basis points. The loan has a term of two

years with no repayment obligations during the first

year.

• In addition to the acquisition of Svitzer and several

other (smaller) acquisitions, Fugro, once again,

invested substantially in technological

developments. For example, in 2003 the Autonomous

Underwater Vehicle (AUV) went into operation.

• In December the Tabaksblat Committee published

the final Dutch ‘Corporate Governance’ Code.

The current situation and the intended adjustments

within Fugro are explained in depth in the section

‘Corporate Governance’ (pages 47 – 50).

• It can be concluded that Fugro can look forward to

2004 with confidence and is excellently positioned

to benefit from any up-swing in the global economy

and from expected increasing investments in

exploration from the oil and gas industry, necessary

to compensate for the production decline in existing

fields.

M a j o r d e v e l o p m e n t s i n 2 0 0 3


3

D e a r s h a r e h o l d e r

A strategically successful year with a disappointing

financial result is behind us. The details are discussed

extensively in the 2003 Annual Report. Other areas given

a great deal of attention in this Report are Corporate

Governance and Fugro’s involvement in the community.

For Fugro the high point of the year was the

acquisition of Thales GeoSolutions in November. This has

further strengthened the company’s foundations, which

is necessary to meet the increasingly stringent demands

set by, in particular, the oil and gas industry.

The disappointing economic developments and the

rapid and steep decline of the dollar exchange rate have

put the turnover (E 830.1 million) and result (E 45.1

million before amortisation of goodwill) under pressure.

Despite the fact that these figures are lower than for

2002, I consider the results to be acceptable in the

circumstances. As has already been announced, the

Executive Board with approval of the Supervisory Board

will recommend to the shareholders that the dividend be

held at E 1.85.

At the end of 2003 the Tabaksblat Committee

published the definitive Dutch Corporate Governance

Code. I endorse this Code because shareholders and

other stakeholders are, indeed, entitled to openness in

business. The best way to implement this openness

is to specify the principles and best practice

specifications in a code. As you can read on pages 47 to

50, Fugro already fulfils most of the stipulations in this

code. The Corporate Governance policy will be discussed

during the Annual General Meeting of Shareholders on

19 May 2004.

I am convinced that Fugro is in an excellent position

to profit from an improvement in the economic climate

foreseen by many. Fugro is a very strong company with

an excellent name and position in its niche markets

throughout the world. We are confident about the future

and we will continue to pursue our proven growth

strategy, resulting in higher margins on average.

Most sincerely,

Fugro N.V.

G-J. Kramer

President and Chief Executive Officer

P r e f a c e f r o m t h e P r e s i d e n t a n d C h i e f E x e c u t i v e O f f i c e r


4

Fugro collects and interprets data related to the

earth’s surface and the soils and rocks beneath.

On the basis of this data the Company provides advice,

generally for purposes related to the oil and gas industry,

the mining industry and the construction industry.

Fugro operates around the world at sea, on land and

from the air, using professional, highly-specialised staff

and advanced technologies and systems, many of which

have been developed in-house.

Fugro’s objective is to occupy a strong market

position supported by technological developments and

the provision of high quality services. This requires a

strong, international or regional market position.

Fugro was founded in 1962, has been listed on

Euronext N.V. in Amsterdam since 1992 and has been

included in the Amsterdam Midkap index since 2002.

With the acquisition of Thales GeoSolutions on

19 November 2003, Fugro now has over 275 offices and

over 8,000 staff stationed in more than 50 countries

worldwide.

Organisationally Fugro comprises three divisions:

Geotechnical, Survey and Geoscience.

G E O T E C H N I C A L S E R V I C E S

S U R V E Y S E R V I C E S

G E O S C I E N C E S E R V I C E S

0 – 1 0 0 m

0 – 6 0 0 m

0 – 6 , 0 0 0 m

E a r t h s u r f a c e

De

pth

G e o s c i e n c e d i v i s i o nS u r v e y d i v i s i o nG e o t e c h n i c a l d i v i s i o n

Investigation of and

advice regarding the

physical characteristics

of the soil, foundation

designs, and materials

for construction.

Precise positioning

services, geological

advice, topographic,

hydrographic and

geological mapping and

support services for

construction projects,

data management.

Gathering and

interpreting geophysical

data, quantitative and

qualitative estimates of

oil, gas, mineral and

water resources and the

optimisation of their

production.

F U G R O G R O U P

P r o f i l e


5

F u g r o ’s a c t i v i t i e s a n d m a r k e t s

Geo techn i ca l

Onshore

Offshore

Su r ve y

Offshore

Onshore

Positioning

Geosc i ence

Development & Production

Airborne Survey

Major clients

Government, industry and

construction contractors

Oil and gas companies,

contractors

Major clients

Oil and gas companies

Government, industry and

construction contractors

Agriculture, mining and

survey services

Major clients

Oil and gas companies

Mining and oil and gas

companies

Market

Local/regional markets

Global market

Market

Global market

Local/regional markets

Global market

Market

Global market

Global market

Market position

Strong regional position,

varying by country/region

Strong leading position

Market position

Leading position

Strong regional position,

varying by country/region

Strong position in niche

markets

Market position

Leading position in niches

Leading position

Fugro has no competitors of the same size and

offering the same range of activities.

The offshore Geotechnical, offshore Survey,

Development & Production, Airborne Survey and

Positioning business units operate worldwide.

In these markets Fugro hold strong global positions.

Fugro’s competitors operate in various segments and

geographical regions. The major customer in these

markets is the oil and gas industry. Douglas-Westwood

estimates that the market for offshore Geotechnical

services and offshore Survey is USD 2.4 billion per

annum.

The onshore activities revolve around local or

regional markets. Fugro has a presence in many

countries and its market position varies by region.

Most customers are located within a hundred kilometres

of the supporting office.


6

20022003

K e y f i g u r e s

R e s u l t (x E mln.)

Turnover

Turnover from own services

Operating result

Cash flow

Net result before amortisation of goodwill

Net margin before amortisation of goodwill (%)

Net result after amortisation of goodwill

Interest cover (factor)

C a p i t a l (x E mln.)

Total assets

Group equity 1) 4)

Solvency (%) 1) 4)

Solvency (%) 1) 2) 4)

Return on shareholders’ equity (%) 1) 4)

Return on invested capital (%) 1) 4)

A s s e t s (x E mln.)

Tangible fixed assets

Investments (including acquisitions) 3)

Depreciation of tangible fixed assets

D a t a p e r s h a r e (x E 1.–)

Capital and reserves 1) 4)

Operating result

Cash flow



Dividend

Share price: year-end

Share price: highest

Share price: lowest

Average price/earnings ratio before amortisation of goodwill

Average dividend yield (%)

I s s u e o f n o m i n a l s h a r e s (in thousands)

At year-end

Entitled to dividend

Average

N u m b e r o f e m p l o y e e s

At year-end

1) After providing for a cash dividend of 50% in 2001 and before.

2) Subordinated convertible debenture bond treated as Group equity.

830.1

543.5

76.3

94.6

45.1

5.4

32.4

3.4

1,030.0

243.7

23.4

33.1

17.6

9.0

236.7

122.3

49.5

15.88

5.27

6.54

3.12

2.24

1.85

40.80

51.45

24.51

16.9

4.9

15,166

14,577

14,464

8,472

(12.2)%

(12.0)%

(31.8)%

(20.6)%

(37.5)%

(28.9)%

(46.2)%

(44.3)%

29.9%

(11.2)%

(31.8)%

(29.4)%

(35.8)%

(41.6)%

23.1%

22.3%

5.5%

(13.1)%

(32.3)%

(21.2)%

(38.0)%

(46.5)%

0.0%

(5.4)%

(22.0)%

(37.9)%

34.1%

40.0%

945.9

617.5

111.9

119.2

72.2

7.6

60.2

6.1

793.2

274.3

34.3

46.9

27.4

15.4

192.3

100.0

46.9

18.28

7.79

8.30

5.03

4.19

1.85

43.13

66.00

39.50

12.6

3.5

14,862

14,395

14,359

6,923

Change in

percentage


7

2001 2000 1999

0

200

400

600

800

1,000

20032002200120001999

0

150

300

450

600

750

20032002200120001999

0

25

50

75

100

125

20032002200120001999

0

15

30

45

60

75

20032002200120001999

0

1

2

3

4

5

6

20032002200120001999

(x E 1 mln.)

T u r n o v e r

(x E 1 mln.)

N e t r e v e n u e

(x E 1 mln.)

C a s h f l o w

(x E 1 mln.)

N e t r e s u l t 3)

(x E 1,–)

N e t r e s u l t p e r s h a r e 3)

3) Before amortisation of goodwill.

4) In 2003 and 2002, no accrual for dividend has been included.

909.8

578.1

98.5

105.3

61.7

6.8

56.3

7.8

814.8

247.6

30.0

42.3

35.7

19.1

163.3

89.4

43.6

16.68

7.42

7.93

4.65

4.24

1.60

50.10

75.65

43.00

14.0

2.7

14,670

14,256

13,276

6,953

712.9

462.8

73.7

85.6

46.0

6.5

46.0

8.1

474.7

104.7

22.2

43.2

42.7

24.7

120.5

49.0

39.6

8.41

5.92

6.87

3.69

3.69

1.36

68.75

71.25

37.25

14.8

2.5

12,762

12,567

12,458

5,756

546.8

370.7

61.8

77.2

40.7

7.4

40.7

13.1

380.5

111.4

29.3

29.3

44.9

25.1

114.0

37.3

36.5

9.18

5.09

6.36

3.35

3.35

1.23

36.90

39.90

16.40

8.3

4.4

12,612

12,335

12,144

5,114


A I R

F I R E

F u g r o a n d t h e f o u r e l e m e n t s

Fugro’s activities are linked in many ways to the four basic

elements: earth, air, water and fire. Every day data are

collected in the air, at sea and on land using among others

34 vessels, 75 sounding trucks and 40 aircraft.

Over 8,000 motivated staff around the world make sure

that, with the help of this data, the Company can provide

its customers with high-value advice.

Fugro collects data about the soil and seabed and advises

its customers on using it for the benefit of their projects.

The oil and gas industry is the most important user of

Fugro’s services. The Company’s other customers include

the construction, mining and agriculture sectors and the

government.

Fugro’s financiers are also based all over the world,

but particularly in Western Europe and the United States.

Fugro’s shares are quoted on the Euronext N.V. Amsterdam

stock exchange.

For many years Fugro has succeeded in converting its

strategy into results. In the four decades since the Company

was founded it has grown into a leading player as a

supplier to the oil and gas industry which has activities

that span the globe.


10

M i s s i o n

Fugro’s mission is to be the world’s leading company

in offshore, onshore and airborne collection and

interpretation of data related to the earth’s surface and

soil, primarily aimed at providing advice to the oil and

gas industry, the mining industry and construction

contractors. To achieve its mission, Fugro focuses on

providing a high-quality service with professional,

highly-specialised staff and advanced, generally unique,

state-of-the-art technologies and systems.

T a r g e t s

Despite the disappointing financial developments

in 2003, showing lower results than in 2002, Fugro’s

target remains the achievement of a sustainable increase

in earnings per share for its shareholders. To this end,

Fugro’s long-term policy is aimed at generating a steady

growth of net profit, achieved by improving the margin

as well as increasing turnover. To achieve this target, a

clear and consistently implemented strategy for all

stakeholders is vital. Sustainability, transparency and

reliability have been core themes for Fugro for a very

long time.

S t r a t e g y

To achieve its targets Fugro seeks equilibrium

between its various activities. This is an essential

element in its strategy. Fugro is aiming for a good

balance between services related to exploration and

production activities for the oil and gas industry and

those related to other markets, and also between

offshore and onshore activities. A balanced range of

services reduces Fugro’s vulnerability to market

fluctuations in one particular sector and the broad

spread of its activities, particularly the geographical

spread, helps mitigate business risks.

Although the acquisition of Thales GeoSolutions

means a greater proportion of Fugro’s activities than

before will be related to the oil and gas markets,

avoidance of (over) dependence on just one or a few

activities, market segments or regions in the future will

remain an essential part of the strategy. Fugro is aiming

for a robust but controlled profit growth within its

current portfolio of activities, financing arrangements

and organisational structure. Profit margins vary per

activity and per division depending on the specific

market circumstances. On average, the target margin is

higher for the more risky and capital intensive activities

than for other activities.

One way a higher margin can be achieved is by

achieving high market shares for Fugro’s core activities

and focus on niche markets. The target margin can be

achieved through the scale of operations, market

position, by being selective about the projects that are

taken on and by acquiring companies with a high added-

value. To sum up, Fugro’s combination of professional

and specialised staff, technologies (mostly developed

in-house) and related high-value services provides more

and more added-value for clients. The company is

managed more on the basis of the net result than on

turnover growth.

P o l i c y

Fugro’s targets and the implementation of its

strategy, also after the acquisition of Thales

GeoSolutions, will be achieved on the basis of the

following policy initiatives:

C o o p e r a t i o n a n d s c a l e a d v a n t a g e s

Effective cooperation between the various business

units and critical mass are key factors for the successful

execution of large assignments. Capacity utilisation is

improved by the exchange of equipment and manpower

between the various activities and by extending staff

training. Fugro stimulates cooperative technological

renewal both within and outside the Group by

leveraging the available knowledge and broadening its

investment base. Integrating information systems and

utilising scale advantages enhances the service provided

to clients.

M i s s i o n , g e n e r a l a n d f i n a n c i a l t a r g e t s , s t r a t e g y a n d p o l i c y


11

R e s e a r c h a n d d e v e l o p m e n t

Research and development are of strategic

importance for Fugro and have been given an extra boost

by the acquisition of Thales GeoSolutions. The Group is

constantly searching for ways to expand and improve its

services to clients. In this respect cooperation with its

clients plays an important role. Many new ideas are

generated, and specific sensing and measuring

equipment and analytical models developed, within the

framework of joint development projects with clients.

M a r k e t p o s i t i o n a n d a c q u i s i t i o n s

Fugro’s policy is based primarily on maintaining and,

wherever possible, expanding its existing strong market

positions. Complementing and expanding its package of

services is a primary objective. Growth in other sectors,

by reacting positively and flexibly to developments in

new growth markets is an equally important policy

component. To broaden its base and ensure continued

sustainable growth, Fugro generally completes several

acquisitions each year, usually to strengthen or acquire a

good market position or to obtain valuable technology.

Acquisition evaluation is based not only on financial

criteria but also on:

• added-value for Fugro;

• cohesion with Fugro’s activities and culture;

• growth potential;

• a leading position in a niche market or region;

• technical and managerial qualities;

• risk profile.

F i n a n c i a l t a r g e t s

Fugro targets a net profit margin before amortisation

of goodwill of 7.5 – 8% of turnover. This equates to an

EBIT of 10 – 12%. The EBITA per division is included in the

developments per division information on page 52 – 62

Partly due to competitive considerations, only infor-

mation is given at divisional level. As the offshore and

airborne activities are carried out using more capital-

intensive equipment, the target EBIT margins for these

sectors are higher than for the onshore activities.

Other important financial targets are:

• maintaining a strong balance sheet;

• a healthy cash flow;

• good solvency (30 – 35%);

• a healthy interest cover (EBIT/Interest > 5);

• average annual growth of earnings per share of 10%;

• average annual growth of cash flow per share of 10%.

Except for the activating of goodwill as an asset and

amortise it over a maximum period of twenty years since

2001, Fugro has not implemented a material change to

its accounting system in several decades.

Fugro’s financial reporting is based on IFRS standards

as far as these are incorporated into Dutch legislation.

Please see page 51 for an explanation of the way in which

IFRS standards are expected to influence Fugro’s annual

accounts. Fugro’s reporting will be based entirely on IFRS

standards by 2005 at the latest.


12

In every aspect of its operations Fugro’s risk

management policy is aimed at ensuring sustainable

growth and focuses on a long-term view of activities.

Because acquisitions always involve an element of risk,

in general an extremely intensive and extensive due

diligence was carried out before the acquisition decision

is made. This has limited the risks considerably.

The company is managed more on the basis of net result

than on turnover growth.

M A R K E T F A C T O R S

A c t i v i t y p o r t f o l i o

Whilst the core activities show a large degree of

cohesion they also target highly diverse markets, clients

and regions. A high proportion of the services provided

offshore and by the Development & Production unit are

related to the oil and gas markets. In recent years,

Fugro’s dependence on the cyclical investment in oil and

cyclical gas exploration has been reduced in favour of the

more stable investment climate for oil and gas field

production. The other activities are dependent on

developments in markets such as infrastructure,

construction and mining. The influence of positive and

negative cyclical effects is moderated by:

• the cohesion between the various activities;

• the wide geographical spread;

• the diversity of clients;

• solid market positions, and,

• the size of the Group.

O r d e r s t r e a m a n d p r i c e c h a n g e s

More and more of Fugro’s orders are being awarded

on the basis of long-term preferred supplier agreements.

Fugro’s broad and varied client base contributes towards

the Group’s independence and improves its stability.

In the course of a year Fugro executes many projects for

customers. The projects carried out for any individual

customer do not, however, account for more than 3% of

total turnover.

To carry out its assignments Fugro has at its disposal

highly trained staff and technically advanced, and

therefore costly, equipment. Much of Fugro’s work

involves short-term orders. Fugro is sensitive, in a sense,

to price changes and sudden changes in exchange rates

to which the Company can adapt rapidly. Fugro’s

budgets are, to a great extent, based on the expected

investments by the oil and gas companies. Substantial

fluctuations in oil prices, whether up or down, do not

lead to these investments being revised rapidly unless

prices drop below USD 15 a barrel and remain at that

level for some time.

C a p a c i t y p l a n n i n g

Fugro remains constantly alert for signals that

indicate changes in market conditions so it can react

quickly and efficiently. Sudden and very unexpected

changes in market conditions are, however, always

possible. Some of Fugro’s surveying activities precede

investment by clients and generally take place at the

start of the activity or investment cycle. In such cases

Fugro’s activities are the first to be affected by changes

in market conditions. Delays and breaks in the flow of

orders can lead to temporary losses due to under-

utilisation of capacity, as occurred during 2003.

The weather and the availability of vessels are key-

factors for offshore activities. Weather influences are

calculated into the budgets and averaged out over the

year and the regions where Fugro is active. As far as

vessels are concerned, Fugro’s objective is to build-up a

well balanced fleet in which almost half the available

vessels are Group owned, about 35% are on long-term

charter and the remaining 15% are chartered on a

project basis. The exchange of equipment and manpower

between the different market-service combinations

enables capacity utilisation to be increased.

R i s k p r o f i l e


13

F I N A N C I A L

B a l a n c e s h e e t

Fugro follows an active policy to optimise its balance

sheet ratios and thus limit financial risks and ensure the

Company’s long-term solvency. Being quoted on the

stock exchange provides a very worthwhile contribution

towards achieving the Company’s financial targets and

means Fugro is in a position to make a well considered

selection of the optimum financing mix when, for

example, involved in an acquisition process.

Future interest rate risks are limited to short-term

loans amounting to around 33% of the balance sheet

total. The company’s objective is to limit the effect of

changes in interest rates on the results.

Fugro applies prudent accounting principles based

on Dutch GAAP. Leasing and off-balance sheet

constructions are avoided as far as possible, with the

exception of the hire of two ships. The Company also

follows a relatively stringent depreciation policy.

No software is capitalised on the balance sheet.

The seismic database is written-off quickly and

systematically with an average term of less than

2.5 years. Research and development costs are charged

directly to the results. A portion of these costs is

accounted for as project-related turnover costs. Fugro

has evaluated the book value of its assets, including

goodwill within the framework of its normal balance

sheet evaluation. This evaluation has shown that no

extraordinary depreciation of these assets is necessary.

F o r e i g n c u r r e n c y e x c h a n g e r a t e s

Fugro limits its ‘exposure’ to changes in foreign

currency exchange rates but is not immune to exchange

rate losses caused by rapid changes in the rates and

exchange rate differences. As most of Fugro’s income in

local currencies is used for local payments, the effect of

negative or positive currency movements on operational

activities at a local level is minimal. Fugro’s

international monetary streams are limited and, like the

receivables and liabilities, are generally in US dollars or

dollar-related currencies. Where possible and desirable,

hedging contracts are signed (at a local level). In

principle, therefore, Fugro mainly has to cope with

translation effects. A change of USD 0.10 in the dollar to

Euro exchange rate has an effect of around E 2.8 million

on the net result. Rapid and radical changes in exchange

rates can influence the balance sheet and results, partly

due to the length of time between submitting estimates

and the (delayed) award of orders, during which period

hedging would not be appropriate. Because of its

financing in Euros, the Group is exposed to a currency

risk.

P e n s i o n p r o v i s i o n s

Fugro operates pension schemes for its staff in the

Netherlands, the United States and the United Kingdom.

In the other countries in which Fugro has permanent

staff, retirement provisions are arranged in accordance

with the regulations and customs of each country. In so

far as obligations will arise in the future as a result of

these provisions, these are covered by the items included

in the balance sheet of the relevant operating company.

In the Netherlands the pension commitments are

fully re-insured on the basis of a guarantee contract.

The pledged commitments are fully financed.

In the United States Fugro has a 401K system for its

staff. Fugro contributes towards the deposits of its staff

in accordance with agreed principles and taking the

regulations of the American tax authorities – the IRS –

into account. This system is free of risk for Fugro.

0.6

0.8

1.0

1.2

1.4

1.6

1999 2000 2001 2002 2003 2004

NOK

HKD

CAD

AUD

GBP

USD

C u r r e n c y r a t e d e v e l o p m e n t J a n u a r y 1 9 9 9 – 1 5 F e b r u a r y 2 0 0 4 ( 1 5 J a n u a r y 1 9 9 9 = 1 )


14

In the UK there are two defined benefit schemes.

One was closed to new members in January 2001 and the

other was closed to all staff, including its existing

members in August 2001. Defined contribution schemes

are now in place for eligible staff. Measures have been

taken to ensure that the necessary reserves are available

when required for the defined benefit schemes and, as

far as is known, no items of a material substance that

will influence the results will arise in the future.

As far as possible, Thales Geosolutions employees will

be incorporated in the existing Fugro pensions schemes.

This holds mainly for the United Kingdom. In the United

States employees have the possibility to participate in

the 401K system. In the United Kingdom Fugro

contributes to the building of pension rights in a

‘defined contribution plan’. Liabilities with regards to

the pension pledges related to the period before the

acquisition remained with the seller.

I n s u r a n c e a n d l e g a l r i s k s

Fugro is insured against a number of risks.

Risks related to occupational liability, general liability

and equipment are covered at a global and Group level.

In addition, adequate cover for aspects related to normal

business operations, such as the vehicle fleet, medical

insurance and buildings, is arranged at a local level.

Several group companies are, within the context of

normal business operations, involved in claims as either

the claimant or defendant. Based on developments thus

far, Fugro’s financial position is not expected to be

noticeably influenced by any of these actions.


15

L i s t i n g o n t h e s t o c k e x c h a n g e

Fugro share certificates (depositary receipts of shares)

are listed on Euronext N.V. in Amsterdam. Since 4 March

2002 Fugro has been included in Euronext’s Midkap-

index (AMX) with an estimated weighting factor on

1 March 2004 of 3.39% of the index. Since 8 July 2003

Fugro share (certificate) options have also been traded on

Euronext Amsterdam Derivative Markets and since May

2000 the convertible subordinated debenture bond has

also been traded on Euronext N.V.

In 2003 trading in Fugro shares on the stock market

was stimulated by four liquidity providers (2002: five).

As far as is known, 72% of the certificates are held by

foreign investors, mainly from the United Kingdom and

the United States.

Data per share can be found on pages 6 and 7

(key figures) and on pages 17 and 84.

D i v i d e n d p o l i c y

Fugro strives for a dividend pay-out ratio of 30 – 50%

of the net result before amortisation of goodwill.

The shareholder may choose between a dividend entirely

in cash or entirely in (certificates of) shares charged to

the reserves. In 2003 around 45% of the shareholders

opted to receive the dividend for 2002 in (certificates of)

shares (in 2002: 51%).

S h a r e / c e r t i f i c a t e h o l d e r s h o l d i n g 5 % o r m o r e

In February 2004 the following share/certificate

holders with an interest of 5% or more were known

to Fugro:

ING Verzekeringen N.V. (incl. certificates) 9.89%

Fortis Utrecht N.V. (certificates) 6.50%

Woestduin Holding N.V. (shares) 6.72%

Stichting Administratiekantoor Fugro (shares) 85.85%

I n f o r m a t i o n f o r s h a r e h o l d e r s

Publication of the 2003 Annual Report, press conference with audio webcast,

analysts’ meeting and ‘conference call’

Annual General Meeting of Shareholders in Leidschendam (Green Park Hotel)

Ex-dividend date

Determination and publication of the optional dividend in

(certificates of shares)

Payment of the 2003 dividend

Press release regarding developments in the first half of 2004

Publication of 2004 half-yearly report and announcement of profit forecast

for 2004: press conference, analysts’ meeting and ‘conference call’

Press release regarding developments in the second half of 2004

Publication of the 2004 Annual Report, press conference with audio webcast,

analysts’ meeting and ‘conference call’

12 March 2004

19 May 2004, 14.00 hrs

21 May 2004

14 June 2004 (after close of business

on the stock exchange)

16 June 2004

Late June/early July 2004

13 August 2004

Late November/early December 2004

11 March 2005

I m p o r t a n t d a t e s

C h a n g e s i n

i s s u e d s h a r e s

Issued on 1/1

Optional dividend

Issued on 31/12

Purchased for option scheme

as of 31/12

Entitled to dividend as of 31/12

Average number of

outstanding shares

Maximum issue through

convertible bond

2003

14,862,214

303,698

15,165,912

588,862

14,577,050

14,464,310

1,557,390

2002

14,669,830

192,384

14,862,214

466,882

14,395,332

14,359,034

1,557,390


16

M o v e m e n t s t o s h a r e s

p u r c h a s e d f o r o p t i o n

s c h e m e

Situation on 1/1

Purchased

Exercised

Situation on 31/12

Granted, not exercised options

as of 31/12

2003

466,882

150,000

(28,020)

588,862

1,196,450

2002

413,522

100,000

(46,640)

466,882

987,100

A t t e n d a n c e

a t A G M s

AGM 15 May 2003*

AGM 17 May 2002

AGM 10 May 2001

AGM 10 May 2000

AGM 12 May 1999

* Certificates with voting authorisation (see page 17).

Shares

(incl. SAF)

13,749,493

13,836,939

12,020,618

11,757,075

11,892,953

Certificates

439,486

191,814

5,546

35,190

711,959

% of

subscribed

capital

99.6%

96.8%

95.0%

93.2%

92.6%

0

16

32

48

64

80

0

600

1,200

1,800

2,400

3,000

2002 2003 20042000 200119991998199719961995199419931992

(Since introduction in April 1992 to February 2004)

C e r t i f i c a t e p r i c e a n d v o l u m e t r e n d

Highest and lowest closing-prices per month in Euros,

(bar diagram, scale left).

Share trade volume per month (x 1,000), (line diagram, scale right).

A n n u a l G e n e r a l M e e t i n g o f S h a r e h o l d e r s

Fugro’s Corporate Governance policy will be

discussed during the Annual General Meeting of

Shareholders on 19 May 2004. Well before this date a

circular explaining this policy will be available from the

Company. For more information see pages 47 – 50.

I n d e p e n d e n c e

While carrying out its assignments Fugro may have

access to clients’ extremely confidential information.

This means Fugro can only carry out its activities whilst

its independence can be guaranteed. For this reason, the

safeguards the company employs include the following:

• only share certificates – not entitled to voting rights –

are listed on Euronext N.V. in Amsterdam;

• Fugro may issue protective preference shares to third

parties;

• Fugro Financial International N.V. and Fugro

Consultants International N.V. (both headquartered

in Curaçao, the Dutch Antilles) may also issue

protective preference shares to third parties.

The restricted convertible certificates are issued by

Stichting Administratiekantoor Fugro and the

Stichting’s management exercises the voting rights of

the underlying shares in such a way that the interests of

the Group, its associated companies and all stakeholders

are safeguarded as far as is possible. For the composition

of the Management of the Stichting Administratie-

kantoor Fugro see page 92.


%

year-

end

17

Certificate holders are entitled to:

• after the timely deposition of their certificates,

attend and speak at shareholders’ meetings;

• request from the Administratiekantoor a proxy to

exercise the right to vote for the shares that underlie

their certificates. The Board of the Administratie-

kantoor may only limit, exclude or recall this proxy

if: a) a public bid for the (certificates of) shares in

Fugro N.V. has been announced or issued or there is a

reasonable expectation that this will occur, without

the consent of the Company; b) when 25% or more of

the subscribed capital of the Company is held by one

holder of (certificates of) shares or by a number of

holders collaborating on the basis of a mutual

agreement, or c) exercising the right to vote may, in

the opinion of the Administratiekantoor, conflict

with the overall interests of the Company;

• exchange their certificates for ordinary shares

up to a maximum of 1% of the share capital per

shareholder as long as they are natural persons.

In 1999 the General Meeting of Shareholders

approved granting Stichting Continuïteit Fugro in the

Dutch Antilles the option of acquiring preference shares

in Fugro Consultants International N.V. (holding

company for the foreign subsidiaries) and Fugro

Financial International N.V. (holding company for the

financing companies).

C h a n g e s t o t h e A r t i c l e s o f A s s o c i a t i o n

o f F u g r o N . V .

During the Annual General Meeting of Shareholders

on 15 May 2003, it was decided to amend the Company’s

Articles of Association. On 6 February 2004, the Articles

of Association were amended by act, executed by

F.K. Buijn, notary in Rotterdam. The amendments mainly

involve: a change in the authorised capital, a change in

the regulation regarding the discharge of managing

directors for their management and of members of the

Supervisory Board of their supervision, cancellation of

the age limit for members of the Supervisory Board and

(x E 1)

D a t a p e r s h a r e

Cash flow



Dividend

Dividend/net result before amortisation of goodwill

Dividend/net result after amortisation of goodwill

2003

6.54

3.12

2.24

1.85

59%

83%

2002

8.30

5.03

4.19

1.85

37%

44%

2001

7.93

4.65

4.24

1.60

34%

38%

1999

6.36

3.35

3.35

1.23

37%

37%

2000

6.87

3.69

3.69

1.36

37%

37%

0

3,200

6,400

9,600

12,800

16,000

End ’96 End ’97 End ’98 End ’99 End ’00 End ’01 End ’02 End ’03

The Netherlands

United Kingdom

United States

France

Germany

Luxemburg

Belgium

Switzerland

Other

(x 1,000)

D i s t r i b u t i o n o f c e r t i f i c a t e h o l d e r s

18.3

1.5

0.2

0.7

2.4

4.3

20.0

24.7

27.9

100.0


E A R T Hs t a b i l i t y

p e r m a n e n c e

Fugro-Inpark assisted with the excavation of a Roman ship on the

site of a new (residential) area in Leidsche Rijn, the Netherlands.

The ship was photographed with the new Cyrax 3D laser scanner.

This enabled the ship to be measured more quickly and accurately

than with conventional measuring methods.

Fugro’s drilling rigs being used to

carry out a geotechnical survey for

the construction of an office build-

ing with 45 floors and a parking

garage in Dallas, the United

States. Fugro’s advice regarding

the building’s foundations will be

based on the information collected

by the survey, which includes data

about the soil structure and the

nature of the various subterranean

layers.


T h e e a r t h i s t h e f o u n d a t i o n o f o u r e x i s t e n c e

The earth provides the raw materials we need. To be able to function we need

to exploit these raw materials and we need infrastructure. Investigating and

advising on the soil and seabed is a continuous activity for Fugro.

Fugro technicians taking three-dimensional measurements of a

breach in the dyke at Wilnis, the Netherlands. The data will be used

to produce a Digital Terrain Model of the actual situation, which will

give the customer a fast and full picture of the dyke displacement.

An undisturbed soil sample, taken in a geotechnical bore hole, is interpreted

and photographed in a geotechnical laboratory. The image shows the soil

stratification.


25

100

175

250

325

400

Jan. 2000 Jan. 2001 Jan. 2002 Jan. 2003 Dec. 2003Jan. 1999

AMX

Fugro

20

At the end of 2003, the number of shares re-

purchased by the Company amounted to 588,862 at an

average price of E 42.03. These shares are held for the

purposes of the option scheme and are not entitled to

dividend. The exercise of options outstanding at the end

of 2003, including the options issued in December, could

– after using the re-purchased shares – lead to the issued

share capital being increased by a maximum of 4.0%.

Since the beginning of 2004, 300 options have been

exercised.

I n v e s t o r R e l a t i o n s

In addition to the dates listed in the agenda,

presentations for analysts and investors are given every

year, particularly during the months of March/April and

August/September. During these presentations Fugro’s

strategy is explained by members of the Board of

Management. In 2003 investors in Amsterdam, Boston,

Brussels, Chicago, Copenhagen, Denver, Dublin,

Edinburgh, Frankfurt, Geneva, Helsinki, London,

Los Angeles, Milan, Munich, New York, Paris, San Diego,

San Francisco, Stockholm and Zurich were visited.

Individual and collective personal contact with investors

and analysts is also maintained via one-on-one meetings

(in 2003 around 250), presentations and telephone

conferences. Fugro also offers information via its

website: www.fugro.com.

Fugro’s Annual Report 2002 was once again

nominated for the ‘Sijthoffprijs’ and, in November 2003,

Fugro won the prize for the best long-term strategy in the

field of mergers and acquisitions. This prize was

presented during the fourth ‘M&A day’, organised by

Alex van Groningen Corporate & Finance Training.

the introduction of a retirement rota for members of the

Supervisory Board. The other amendments can be

described as being of a legal-technical nature.

P a r t i c i p a t i o n s a n d o p t i o n s

As far as is known, about 8.3% of Fugro’s

shareholders’ equity (and an unknown number of

certificates) and 1,196,450 options are held by directors,

management and staff.

Of all the options issued from 1997 to 2003 inclusive,

82% were still outstanding on 31 December 2003.

These options gave rights to 1,196,450 (certificates of)

shares. As of 31 December 2003, 250,650 new options

(exercise price E 40.80, commencing date 1 January 2004)

had been granted to 429 people. Of these options 23.7%

had been granted to directors of Fugro. See also page 84.

Option rights are granted to an extensive group of

employees. The granting of option rights is dependent on

the achievement of the targets of the Group in total and

the individual operating companies. The individual

performance of the relevant employee is also taken into

consideration when deciding the number of option

rights to be granted.

Staff options are granted for an exercise price that is

equal to the stock exchange value of the certificates at

the end of the year. Since 2000 the annually issued

options have had an exercise period of six years.

The exercise of options within the first three years is

financially very unattractive for residents of the

Netherlands and not permitted for foreign option

holders.

D e v e l o p m e n t F u g r o s h a r e s a n d A M X i n d e x ( J a n u a r y 1 9 9 9 = 1 0 0 )


21

Fugro also commissioned a perception study to

ascertain whether, and how, the perception of people

outside Fugro differs from the perception of people

within the company.

T h e i n t e r n a l v i e w ( S t a f f , M a n a g e m e n t ,

S u p e r v i s o r y B o a r d )

• Fugro is conservative, progressive, advanced, down-

to-earth, respectable and sound, honest and tough.

• Growth, both autonomous and through acquisitions,

forms the basis of Fugro’s strategy. Autonomous

through the expansion of niche positions;

acquisitions within existing or related activities.

• Value drivers are: the investment in technology and

services, the quality of the service, the level of

knowledge, the approach to acquisitions and the flat,

decentralised organisational structure.

• The areas where the organisation can differentiate

itself from the competition are the quality and

breadth of its service offering, its global network of

offices and its many years of experience.

• Reasons to invest in Fugro are: its market positions,

good track record and prudence.

• The culture is businesslike and enthusiastic, profit-

oriented. Standards and values (the Golden Rules)

play an important role.

T h e e x t e r n a l v i e w ( s h a r e h o l d e r s , a n a l y s t s

a n d j o u r n a l i s t s )

• Fugro is reliable, conservative and enterprising.

• Growth, both autonomous and through acquisitions,

forms the basis of Fugro’s strategy, but an

unambiguous picture of the Company’s activities

does not exist.

• Value drivers are: technological advancement,

the market position, the level of knowledge,

strong acquisition culture and the staff.

• The area where the organisation can differentiate

itself from the competition is its unique knowledge.

• Reasons to invest in Fugro are: the dividend yield and

the profit growth.

P r e v e n t i o n o f m i s u s e o f i n s i d e i n f o r m a t i o n

Fugro considers the prevention of misuse of inside

information for trading in stock as an important factor

in its relationship with its external stakeholders.

Regulations to prevent the misuse of inside

information, based on Article 46 and in accordance with

the Supervision of Stock Transactions Act 1995, are in

force within Fugro. Fugro has opted to make these

regulations widely applicable, which means they not

only apply to the Company’s Directors and Supervisory

Board but also to members of the Board of Management.

In addition to these regulations several hundred

employees within the Group are bound by internal

regulations – the ‘Model code to prevent the misuse of

inside information’. The restrictions placed on the

employees to whom these regulations apply include not

being allowed to trade in Fugro shares or share

certificates during closed periods and reporting their

transactions each quarter.

A Compliance Officer has been appointed within

Fugro for a number of years to stimulate the application

of the Law and regulations and to prevent the misuse of

inside information.


An interactive version of the Annual Report is

available on the website www.fugro.com. This version

includes extensive functions and allows the annual

accounts to be imported as spreadsheets.

More information about the Fugro share is

available on the website www.fugro.com. Fugro can

be contacted via e-mail: [email protected] and by telephone

(+31 (0)70 – 311 14 22).


22

T o t h e s h a r e h o l d e r s

We are pleased to offer you the Report of the Board of

Management and Annual Accounts for 2003.

In strategic terms the past reporting year was an

important year for Fugro. This holds not only for the

acquisition of Thales Geosolutions, but also for the base

strengthening of the client. Once again there was

considerable investment in technology. From a financial

point of view 2003 was dissapointing but explicable,

considering the (global) economy and the extremely

rapid and dramatic fall of the dollar. The structurally

strong position of Fugro justifies the continuation of the

current strategy and maintaining of targets.

Because we have the opinion that this year’s results

have an incidental character, we endorse the Executive

Board’s profit appropriation proposal, as set out on

page 36 for a dividend per ordinary share (certificate)

comprising either a cash payment of E 1.85 or a

settlement in (certificates of) shares, whichever the

shareholder prefers. This dividend is the same as last

year.

The Annual Accounts for 2003 are accompanied by

a unqualified auditor’s report. We propose that you

approve the Annual Accounts and Report during the

Annual General Meeting of Shareholders on 19 May 2004

and discharge the Board of Management for its

management in 2003. We also propose you discharge

the Supervisory Board for its supervision in 2003.

In the year under review, the Supervisory Board met

five times with the Executive Board in accordance with

a fixed schedule. The full Supervisory Board attended

virtually all the meetings and during each meeting a

strategic topic relevant to Fugro was discussed in depth.

In addition, there were several telephone conferences

concerning the acquisition of Thales Geosolutions and

other issues relevant for Fugro at that time. During the

meetings the major issues discussed were: Fugro’s

strategy, the operational progress as shown in quarterly

and other reports, the acquisition of Thales

GeoSolutions, the optimal financing of this acquisition

and its integration into Fugro. The Executive Board

reported extensively to the Supervisory Board

concerning external advisors’ findings regarding the

acquisition of Thales GeoSolutions and the related risk

analysis. Other topics discussed were the still hesitant

development of the oil and gas markets, economic

developments in general and the dollar exchange rate in

particular. Further to this, there was considerable

consultation with the Executive Board regarding the

press release of 2 December in which, unfortunately, it

had to be announced that profits would be lower.

Other topics discussed indepth were the

developments and consequences for Fugro in the context

of the Tabaksblat Committee. Fugro endorses the

principles included in the definitive Corporate

Governance Code (see the detailed explanation of how

Fugro will apply the Code on pages 47 – 50 of this Annual

Report and the Shareholders’ Circular which Fugro will

publish separately in good time for the Annual General

Meeting of Shareholders) as well as its consequences for

day-to-day business operations. Fugro will make every

effort to comply with the Corporate Governance Code

prescribed for a stock exchange listed company of our

size, taking into account the required independence

which has to be maintained with regard to its clients.

All the Supervisory Board members are independent

persons in the sense of the Corporate Governance Code.

A summary of the required data, relevant for the

execution of the tasks of Supervisory Board, by each

Supervisory Board member is included on page 27 of this

Annual Report. The profile of the Supervisory Board

describes the range of expertise that should be

represented in our Board. The following categories are

mentioned: finance, control, information technology,

management and organisation, HRM, marketing,

innovation and technology development and oil and gas-

industry. In our opinion the Supervisory Board fulfils

these requirements.

R e p o r t o f t h e S u p e r v i s o r y B o a r d


23

The financial reporting implications of the

implementation of IFRS in 2005 were also an important

topic of discussion. The way Fugro will handle this issue

is explained on page 51.

General business development, ICT systems,

investments in rapidly advancing technology, the filling

of various management positions, the adequacy of the

risk management systems and the short and long term

prospects were also discussed regularly. Other topics

discussed were the transparency of the organisation and

the sustainability of Fugro’s strategy as well as its

continuing implementation, partly on the basis of a

reliable financing for Fugro.

Informal meetings between Board members and with

the management took place on a number of occasions.

The functioning of the Executive Board and the

Supervisory Board were discussed in the absence of the

Executive Board.

The findings of the external auditors and financial

reports were discussed with the external auditor.

The audit committee met three times in the presence of

the external auditor and paid specific attention to the

results, risk analysis, IFRS, impairment models,

reporting and administrative organisation.

The remuneration committee met two times and

amongst other things approved the remuneration of the

directors and the option scheme. The level and

construction of such remuneration within comparable

companies was an important factor in the decision-

making process. For more information regarding this

issue see page 81. The remuneration committee

members also function as the nomination committee

which is responsible for the preparation for the

nomination of members of the Supervisory Board and

Executive Board. Proposals for nominations are brought

before the Annual General Meeting of Shareholders for

approval.

In 2003 the remuneration committee has

implemented, unaltered, the policy laid down in 2002

as a result of the Egon Zehnder study of terms of

employment for executive board members in

comparable companies.

Fugro’s ‘two tier’ system appears to be working very

well and, in our opinion, Fugro’s current management

structure also fully complies with many aspects related

to the Corporate Governance required of a company


on 15 May 2003, Mr. John King resigned due to his having

reached the statutory retirement age. The Supervisory

Board’s nominee, Mr. John Colligan, was appointed as

From left to right:

P.J. Crawford, J.A. Colligan, F.H. Schreve

(Chairman), Th. Smith, P. Winsemius and

M.W. Dekker (Vice Chairman).

S u p e r v i s o r y B o a r d


24

Mr. King’s successor. Mr. Colligan (1942) is a British

citizen and has worked for Shell for 37 years in various

capacities. The composition of the Supervisory Board

clearly reflects Fugro’s international character.

Mr. King has served the Company as a member of the

Supervisory Board for six years. We are grateful for his

efforts and the fact that he has shared his broad expertise

with Fugro.

The Supervisory Board of Fugro N.V. will propose to

the Annual General Meeting of Shareholders on 19 May

2004 that, as of that date, Mr. A. Jonkman be appointed

a member of the Executive Board of Fugro N.V.

Mr. Jonkman, after approval by the Annual General

Meeting of Shareholders on 19 May 2004, will join the

Executive Board as Financial Director. Mr. Jonkman

(1954) has worked for the Group since 1988 and is

currently a member of the Board of Management,

responsible for finance and administration.

The Supervisory Board will also propose to the

Annual General Meeting of Shareholders to

re-appoint Mr. P. Winsemius as a member of the

Supervisory Board for four years, who according to the

schedule will resign in May 2004. This proposal is not

binding.

Over the past decade Fugro’s results have shown a

healthy development in constantly changing (economic)

circumstances. This is due to a transparent, sustainable

strategy that is being implemented consistently.

Our staff and management are stakeholders with a

considerable interest in Fugro’s performance. They will,

therefor, continue to give of their best in 2004. The

Company would not be where it is today – in an excellent

position for continuity and growth which takes needs of

the various stakeholders into account – without their

efforts, flexibility and creativity. We would like to

express our thanks to them and are confident that the

future will be bright for Fugro N.V.

Leidschendam, 10 March 2004

F.H. Schreve, Chairman

M.W. Dekker, Vice Chairman

J.A. Colligan

P.J. Crawford

Th. Smith

P. Winsemius



F.H. Schreve (1942), Chairman

M.W. Dekker (1938), Vice Chairman

J. A. Colligan (1942)

P.J. Crawford (1951)

Th. Smith (1942)

P. Winsemius (1942)

A u d i t C o m m i t t e e

M.W. Dekker, Chairman

P.J. Crawford

P. Winsemius

R e m u n e r a t i o n C o m m i t t e e

M.W. Dekker, Chairman

F.H. Schreve

J.A. Colligan

N o m i n a t i o n C o m m i t t e e


M.W. Dekker

Th. Smith

S e c r e t a r y t o t h e S u p e r v i s o r y B o a r d

Ms. J.M.E. Feije (as of 15 April 2004)

M A N A G E M E N T

E x e c u t i v e B o a r d

G-J. Kramer (1942), President and Chief Executive Officer

K.S. Wester (1946), Director

Group activities Onshore geotechnical services

O t h e r M e m b e r s o f t h e B o a r d o f M a n a g e m e n t

A. Jonkman (1954)

Finance and administration

O.M. Goodman (1956)

Group activities Onshore survey and Positioning

J.E. Kasparek (1942)

North and South America

J. Ruegg (1944)

Group activities Offshore survey

and Development & Production

F.E. Toolan (1944)

Group activities Offshore geotechnical services

and Airborne survey

Ms. J.M.E. Feije (1964) (as of 15 April 2004)

General counsel, company secretary

From left to right:

A. Jonkman, J.E. Kasparek, O.M. Goodman,

G-J. Kramer, F.E. Toolan, J. Ruegg and

K.S. Wester.

B o a r d o f M a n a g e m e n t

25


26

M a n a g e m e n t s t r u c t u r e

Fugro N.V. is the holding company for a large number

of operating companies located throughout the world

and carrying out a variety of activities. To promote client

focus and efficiency the Group’s organisation is highly

decentralised.

E x e c u t i v e B o a r d

The managements of the operating companies report

directly to the Board of Management. The Executive

Board, which forms part of the Board of Management,

comprises two people.

name G-J. Kramer (1942), Chairman

function President and Chief Executive

Officer Fugro N.V.

nationality Dutch

employed by Fugro Since 1983

first appointed to

current position 1983

subsidiary functions Include membership of the

Supervisory Boards of

Koninklijke BAM-Groep N.V.,

Damen Shipyards Group N.V.,

Koninklijke Schelde Groep

B.V. (Chairman), Van Leeuwen

Buizen Groep B.V.,

Waterleiding Doorn,

Chairman of the Board of IRO,

member of the Advisory Board

of TNO, various directorships

name K.S. Wester (1946)

function Member of the Executive

Board of Fugro N.V., Director

Onshore Geotechnical

nationality Dutch


first appointed to

current position 1996

subsidiary functions Include directorships of ONRI

and Nedeco

B o a r d o f M a n a g e m e n t

name A. Jonkman (1954)

function Financial Director

nationality Dutch

employed by Fugro since 1988

appointed to current position 2001

name O.M. Goodman (1956)

function Director Onshore Survey

and Positioning

nationality Irish



name J.E. Kasparek (1942)

function Director North &

South America

nationality American



name J. Ruegg (1944)

function Director Offshore Survey and


nationality Swiss



name F.E. Toolan (1944)

function Director Offshore

Geotechnical and

Airborne Survey

nationality British




27


Supervisory Board members do not hold any position

that could adversely affect their independence. During

the year under review no Supervisory Board member

held shares, depository receipts of shares or options on

shares or depository receipts of shares in Fugro. A profile

of the Supervisory Board is available for examination in

the Fugro office in Leidschendam.

name Mr F.H. Schreve (1942)

function Chairman 1) 3)

nationality Dutch

expertise general management,

strategy, management &

organisation, HRM

first appointed 1984

current term up to May 2006

other functions Dean TSM Business School,

Supervisory Board member of

OPG N.V., as well as several

other companies; also various

management functions

name Mr M.W. Dekker (1938) 1) 2) 3)

function Vice Chairman

nationality Dutch

expertise finance and control



other functions Former Chairman of the

Board of NPM Capital N.V.,

Supervisory Board member-

ships including Koninklijke

Boskalis Westminster N.V.,

F. van Lanschot Bankiers N.V.,

IHC Holland N.V.,

Dutch Flower Group B.V.

and JSI International N.V.

name Mr P.J. Crawford (1951) 2)

nationality British

expertise operational management and

information technology



other functions Supervisory Board member of

Crimsonwing Ltd. (Chairman),

and Avanti Capital plc.

(Chairman)

name Mr J.A. Colligan (1942)

nationality British


oil & gas industry



other functions Former Director of Shell

Exploration and Production,

Director Society of Petroleum

Engineers Foundation

name Mr Th. Smith (1942)

nationality American


marketing



other functions Chairman of the Board of

Smith Global Services L.P.,

member of the University of

Houston Board of Regents and

University of Houston College

of Business Dean’s Executive

Advisory Board and Director

of Houston Area Research

name Mr P. Winsemius (1942) 2)

nationality Dutch

expertise strategy, innovation and

technology development



other functions Former Partner of McKinsey

& Company, Member of the

Netherlands Scientific

Council for Government

Policy1) Member of Remuneration Committee

2) Member of Audit Committee

3) Member of Nomination Committee


28

R e p o r t o f t h eE x e c u t i v e B o a r d

G E N E R A L B U S I N E S S D E V E L O P M E N T

From a strategic perspective, 2003 was an excellent

year for Fugro. The acquisition of Thales GeoSolutions

(Fugro-TGS), the largest acquisition in Fugro’s history,

and the continuing high level of investment in

technological developments made a major contribution

towards this. From a financial point-of-view however,

2003 was disappointing for Fugro. The stagnating global

economy, translation differences and exchange rate

losses because of the fast and dramatic fall of the dollar

and several one-time events resulted in net profit being

substantially lower than in 2002.

In the end, turnover fell by 12.2% to E 830.1 million.

Around one third of this reduction was the result of

currency exchange effects caused by the weakening of

the dollar, and dollar related currencies, compared with

the Euro. Partly due to the dollar being under constant

pressure, coupled with delays in (the awarding of) a

number of contracts, some of which are large, net profit

before amortisation of goodwill decreased by 37.5% to

E 45.1 million. The net result after amortisation of

goodwill amounted to E 32.4 million (2002: E 60.2

million). In the light of the predominantly one-time

nature of the reduction in profit it is proposed that the

dividend for 2003 be maintained at E 1.85 per (certificate

of) ordinary share.

Although there was an up-turn in the flow of orders

throughout the third quarter of 2003 this did not

continue into the fourth quarter. In addition, a weak

market meant that margins for the onshore survey and

geotechnical activities and the regular Airborne Survey

activities came under pressure. Although the oil

companies’ investments in the oil and gas sector rose

(in dollar terms) in 2003, this did not lead to more work

for service providers such as Fugro. The over-capacity in

the seismic market continued, which kept the pressure

on prices. The positioning activities remained good

worldwide. This was also true for the offshore survey

activities, especially in Africa and the Gulf of Mexico.

The contribution from all the activities in the Middle

East was excellent.

K.S. Wester, Director G-J. Kramer, President and Chief Executive Officer


29

On 19 November 2003 Fugro acquired Thales

GeoSolutions. For the full year of 2003 the turnover of

Thales GeoSolutions amounts to circa E 210 million.

Assignments mainly are denominated in British pounds,

US dollars and dollar related currencies. When initially

negotiating the acquisition, estimated turnover was

E 240 million. The lower than expected actual turnover

can be largely explained by changes in exchange rates.

At the acquisition date, Thales GeoSolutions had a

workforce of approximately 1,700 people, which does

not materially differ from the situation as of the end

of 2003.

Combining Thales GeoSolutions with Fugro’s world-

wide network has led to a considerable improvement in

efficiency and to synergy. This has made Fugro a more

effective market player – one that can offer its customers

more competitive and efficient service. The new

technologies and talented and experienced people

Fugro-TGS has brought to the Fugro organisation will

accelerate technological developments and R&D

projects. The acquisition will also lead to savings in

overhead costs in areas such as marketing and

administration, will improve the efficiency of the

existing equipment and will prevent duplicated R&D

spending. The estimated annual cost savings amount to

E 30 million.

The acquisition of Thales GeoSolutions strengthens

Fugro’s position in the offshore Survey, Positioning and

offshore Geotechnical markets and reinforces its global

presence, particularly in Latin America and China.

A c q u i s i t i o n p r i c e a n d f i n a n c i n g

The net acquisition price amounted to E 139.5

million (purchase price of E 147.5 million minus

E 8 million receivables to be collected on behalf of the

vendor Thales). The net acquisition price was paid, in

cash, on 19 November 2003. An additional E 25 million

was reserved for integration and termination costs.

The acquisition was financed through a loan facility of

E 200 million, with an interest rate of EURIBOR (2.217%

per 14 November 2003) plus 70 basis points. The loan has

a term of two years with no repayment obligations

during the first year.

I n t e g r a t i o n

Immediately after the acquisition of Fugro-TGS on

19 November 2003, a start was made on integrating the

Group into the Fugro structure. By the end of the year, all

the Fugro-TGS offices had been visited by three members

of the Board of Management. During these visits the

integration plans for each office were discussed and set

in motion: charter agreements with some vessel owners

were foreclosed and in the first week of January 2004 the

necessary dismissal procedures were started. Ultimately

the total Fugro workforce will be reduced by around

400 people.

Thales GeoSolutions, like Fugro, had a decentralised

organisational structure with highly-qualified, talented

and experienced staff who have initiated many new

(technological) developments and introduced them in

the market.

Cooperation between Fugro and Fugro-TGS staff is

excellent, partly due to the fact that the Fugro-TGS staff

are now working within an organisation for which

survey is a core activity.

The financial reporting of the various Fugro-TGS

companies is now in line with the Fugro system and uses

the Fugro accounting principles.

The integration of the various Fugro-TGS offices is

being implemented at a local level under the supervision

of the integration team set-up by Fugro. The integration

is progressing exactly according to plan and is expected

to be finished by the end of April 2004.

A c q u i s i t i o n o f T h a l e s G e o S o l u t i o n s ( F u g r o - T G S )

Fugro-TGS supplies the oil and gas industry worldwide

offshore survey and offshore geotechnical services

during the entire life-cycle of the oil and gas fields. These

services encompass the full spectrum of seismic surveys,

engineering, platform positioning, pipeline inspection,

underwater operations and support when fields are shut

down. Fugro-TGS also provides precise positioning

services. Fugro-TGS has more than thirty offices and is

represented in all the world’s major offshore centres.

P R O F I L E T H A L E S G E O S O L U T I O N S


30

At the end of 2003 solvency amounted to 33.1%.

As was the case before the Thales GeoSolutions

acquisition, there are virtually no off balance sheet

obligations. No large acquisitions are foreseen in 2004.

Any smaller acquisitions in the near future will be

financed via the operating cash flow.

During the year under review Fugro completed six

other small (compared with Thales GeoSolutions)

acquisitions:

• Petcom in the United States (includes petrophysical

software);

• Foundation Exploration Services in the UK (onshore

geotechnical);

• Oceanor Holdings in Norway (includes water

management systems and oceanography services);

• Volumetrix in the UK (reservoir modelling software);

• Svitzer in the UK and Denmark (geophysical survey

services):

• Seiscan in the UK (data management and conversion).

In addition Fugro has increased its holding in

Prodec-Fugro in Nigeria and Fugro-KND Geotech in India

to 100%.

Over the past decades Fugro has built-up a long and

successful track record with regard to the acquisition

and decentralised integration of companies. Since 1984

Fugro has acquired around 100 small and larger

companies. This is one of the reasons why Fugro’s

turnover has increased from E 50 million in 1984 to

E 830.1 million in 2003. Net profit has increased even

more rapidly growing from E 1.6 million in 1984 to

E 45.1 million in 2003. Before a company is considered

a definite acquisition candidate it is evaluated using a

checklist of around 35 Fugro-specific criteria.

In 2003 the Autonomous Underwater Vehicle (AUV)

went into operation for geophysical survey services in

water depths of up to 3,000 metres. This has helped

Fugro to strengthen further its unique and leading

position in deep-water investigation. Our company is

extremely well and, uniquely in its sector, extensively

equipped for the increasing number of large deep-water

projects which will, inevitably, present themselves.

(on 31 December, x E 1 mln.)

T u r n o v e r d i s t r i b u t i o n p e r a c t i v i t y

Geo techn i ca l

Onshore

Offshore

Su r ve y

Offshore

Onshore

Positioning

Geosc i ence


Airborne Survey

Total

* The turnover of Fugro-TGS has been consolidated as from its acquisition date (19 November 2003).

The historical figures for Offshore survey and Development & Production have been recalculated in line with

the structure introduced in 2002.

2003*

182

98

280

274

47

25

346

158

46

204

830

2002

205

118

323

276

65

30

371

184

68

252

946

2001

205

104

309

309

53

30

392

139

70

209

910

1999

157

54

211

213

39

22

274

62

–

62

547

2000

189

92

281

242

46

26

314

74

44

118

713


31

• In the fourth quarter of 2003 the Airborne division in

Africa acquired new orders in Nigeria, Mauritania,

Angola, Madagascar and Mozambique;

• Sibneft has signed a large contract with Fugro-Jason

for a reservoir characterisation at the

Vyngayakinskoe oilfield in Siberia;

• At the beginning of 2004, Fugro-Suhaimi, in

cooperation with Fugro Geoteam, carried out a

survey for Saudi Aramco aimed at the collection of

seismic data in the Kingdom of Saudi Arabia’s waters

in the Arabian Gulf;

• PEMEX signed a contract for the use of TELLUS with

Fugro Robertson. The link between PEMEX’s

geological data and Fugro’s database means the

Mexican oil company is better able to explore the

oilfields in the south of Mexico;

• In the Gulf of Mexico Fugro Multi Client Services

collected 2D data for oil companies on its own

account. In total the survey, called ‘Deep Focus’,

covered 157,000 line kms.

In a sober financial year with delays and setbacks and

no real windfalls, Fugro achieved a clear positive result

with a net profit margin of around 5.4% of turnover.

Unfortunately, this year the margin is below the

medium-term target of 7.5 – 8%. In addition, a major and

leading market player – Thales GeoSolutions – was

acquired. To summarise, Fugro can face 2004 with

confidence and is extremely well positioned for the

future, especially if there is an upswing in the market.

Fugro’s operational progress in 2003 was

influenced by:

• The completion of the reorganisation of Fugro

Inpark B.V., to bring the company in line with the

market situation which still shows no signs of

improvement;

• No recovery of the market for the investigation of

underwater cable routes;

• Investment in several deep-water projects being

postponed or delayed;

• Considerable delay in the awarding of a number of

large projects for the Airborne division in Africa;

• The postponement of new orders and the cutting-

back of the ongoing land-reclamation project in

Hong Kong and the Bay Area Rapid Transport System

project in San Francisco;

• The technical problems with some vessels, now

resolved, which lasted three to four weeks longer

than expected.

During the financial year Fugro once again received

a number of important and interesting orders:

• A two-year contract with the Burullus Gas Company

(Egypt) for the survey of underwater cables and

pipelines in Egyptian gas fields;

• An order for survey services (by the Skandi Inspector)

from Technip-Coflexip;

• Fugro-Jason signed a contract with Chevron Texaco

and will supply 3D Integrated Quantitative (3DiQ)

Reservoir Characterisation software;

• Fugro Project in Moscow has signed a contract for

work related to the Sakhalin II project;

• Fugro-Jason signed a contract with Petróleos

Mexicanos (PEMEX) for the supply of software,

consultancy and support;

(on 31 December, x E 1 mln.)

G e o g r a p h i c a l d i s t r i b u t i o n o f t u r n o v e r *

The Netherlands

Europe (excluding the Netherlands)


Asia and Australia

Near East, Middle East and Africa

Total

* Based on the place of business of the company that executes the project.

** The turnover of Fugro-TGS has been consolidated as from its acquisition date (19 November 2003).

110

303

226

135

56

830

2002

136

307

278

150

75

946

2001

125

298

273

162

52

910

1999

83

191

155

98

20

547

2000

101

205

227

143

37

713

2003**


32

F I N A N C I A L D E V E L O P M E N T S

T u r n o v e r g r o w t h

In 2003 turnover fell by 12.2% to E 830.1 million,

compared with E 945.9 million in 2002. Although most

of this decrease was caused by currency exchange effects

related to a lower dollar rate, Fugro also had to cope with

a number of setbacks in 2003. The reduction in turnover

is itemised in the table on top of this page.

The average dollar exchange rate in 2003 was E 0.88

compared with an average of E 1.06 in 2002.

C o s t s

The costs of work contracted out and other external

costs fell by 12.8% to E 286.5 million.

Staff costs fell 6.4% to E 300.2 million.

Depreciation of tangible fixed assets rose by 5.4% to

E 49.5 million.

Other operating costs fell by 14.8% to E 117.6 million.

I n t e r e s t a n d t a x e s

After balancing, interest liabilities amounted to

E 18.5 million (2002: E 16.5 million).

Tax charges on the net result before amortisation of

goodwill fell to 20.2% (2002: 23.6%). Tax charges on the

net result after amortisation of goodwill amounted to

25.9% (2002: 27.0%).

N e t r e s u l t b e f o r e a m o r t i s a t i o n o f g o o d w i l l

Mainly due to predominantly one-time causes,

resulting in lagging turnover, the net result before

amortisation of goodwill fell by 37.5% to E 45.1 million

(2002: E 72.2 million) after deducting third party

interests in the profits of subsidiary companies.

This amounts to E 3.12 per share (2002: E 5.03). In 2003

there were no extraordinary income and expenses.

(in percentages)

T u r n o v e r g r o w t h

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

Average (1994 – 2003)

Autonomous

(7.7)

3.4

18.4

10.9

(9.5)

18.5

18.5

20.0

(9.3)

3.8

6.7

Acquisitions

4.9

4.0

8.6

8.9

1.8

3.2

6.0

3.0

1.0

28.5

7.0

Disinvest-

ments

(0.6)

(7.4)

(0.8)

Total

(12.2)

4.0

27.6

30.4

(5.4)

20.0

28.0

27.0

(1.2)

35.5

15.4

Exchange rate

differences

(9.4)

(3.4)

0.6

10.6

2.9

(1.7)

10.9

4.0

7.1

3.2

2.5

I n d i c a t i o n o f

t u r n o v e r

p e r c u r r e n c y

US dollar

US dollar related

Pound sterling

Euro and other currencies

Total

2003

50%

14%

9%

27%

100%

2002

52%

11%

14%

23%

100%

E x c h a n g e r a t e s

( i n E )

31 December 2003

30 June 2003

31 December 2002

30 June 2002

31 December 2001

30 June 2001

USD

average

0.88

0.90

1.06

1.11

1.13

1.13

GBP

at

year-end

1.42

1.45

1.53

1.54

1.64

1.66

GBP

average

1.45

1.46

1.59

1.61

1.62

1.62

USD

at

year-end

0.79

0.88

0.95

1.00

1.13

1.18


33

In 2003 the net result before amortisation of goodwill

declined E 27.1 million compared to 2002. About

E 6 million of this difference can be explained by

translation differences and E 8 million is due to

exchange rate losses caused for example by late

payments. Furthermore, losses in 2003 of acquired

Thales GeoSolutions companies are included up to an

amount of E 4.5 million. The remaining balance of

approximately E 8 million can be explained by delay of

projects and utilisation related losses.

M a r g i n

The net profit margin over the financial year before

amortisation of goodwill was 5.4% compared with 7.6%

in 2002 (the target remains 7.5% – 8%).

N e t r e s u l t a f t e r a m o r t i s a t i o n o f g o o d w i l l

The net result after amortisation of goodwill was

E 32.4 million; 46.2% lower than in 2002 (E 60.2 million)

after deducting third party interests in the profit of

subsidiary companies. This amounts to E 2.24 per share

(2002 E 4.19). At E 63.3 million EBIT was 36.3% lower than

in 2002 (E 99.9 million).

C a s h f l o w a n d i n v e s t m e n t s

In 2003 the total cash flow from operations

amounted to E 94.6 million (2002: E 119.2 million).

This equates to E 6.54 per share (2002: E 8.30).

Investments in tangible assets (including

acquisitions) against this cash flow amounted to

E 122.3 million (2002: E 100.0 million). Investments,

excluding acquisitions, (E 51.4 million) were average

for Fugro but clearly lower than in the previous year

(E 75.2 million) in which the Fugro Explorer and two

specialised ships were acquired.

B a l a n c e o f r e c e i v a b l e s

The average days outstanding for receivables

excluding Fugro-TGS is 75 days (2002: 86 days).

G o o d w i l l

In 2003 goodwill on acquisitions amounted to

E 91.5 million (2002: E 3.2 million) and comprised the

amount paid over and above the book value of the assets

and liabilities plus provisions for reorganisations and

adjustment to Fugro’s accounting principles.

D e v e l o p m e n t o f g o o d w i l l *

1984 – 1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Total

* Up until 2000 goodwill was deducted directly from

the shareholders’ equity.

Goodwill

(E mln.)

–

0.3

0.5

0.1

0.7

17.1

14.1

2.9

40.3

5.2

3.0

18.1

16.9

35.3

37.4

242.8

3.2

91.5

529.4

Book value

as of

31 December

–

0

0

0

0

0

0

0

0

0

0

0

0

0

0

237.9

218.0

291.9

0

15

30

45

60

75

200320022001200019990

25

50

75

100

125

20032002200120001999

(x E 1 mln.)

O p e r a t i n g r e s u l t *

(x E 1 mln.)

N e t r e s u l t *

* Before amortisation of goodwill.* Before amortisation of goodwill.


W AT E Rt r a n s p a r e n t

m o v e m e n t

The ‘Skandi Carla’, one

of Fugro’s survey vessels,

providing support during

the laying of a pipeline off

St. Fergus, Scotland. Fugro

is inspecting the pipeline

using ROV video technology

to ascertain whether the

pipes have been laid in

exactly the right place and

whether there are still any

obstacles on the route.

A Fugro technician registering one of the water samples taken to determine

the water quality over a large area. He is using the Omnistar DGPS posi-

tioning system which can, via satellite signals, determine the precise loca-

tion from which the sample has been taken.

The geotechnical drilling

vessel ‘Bucentaur’ investi-

gates anchor locations for

an FPSO in the Campos

Basin off the coast of Rio de

Janeiro, Brazil. Based on

the collected data, advice

can be given regarding the

number, type and size of

the anchors to hold the FPSO

in position.


W a t e r f o r m s a n e v e r - e n d i n g c y c l e

A well-founded strategy and a sound financial policy ensure that the cost

of using specialised staff and state-of-the-art equipment is converted into

substantial results. These results are used to reward stakeholders.

The AUV, operational since early

2003, returns to the surface after

an assignment in the Gulf of

Mexico where it collected data

about possible anchor locations

in 800 metre deep water.

The information was used to place

a drilling ship in the optimum

position.


36

Since Fugro acquires companies as long-term

investments, for most acquisitions the goodwill is

amortised over a period of up to twenty years. At the

end of 2003 the book value of the goodwill was

E 292 million (2002: E 218 million). The total amount of

goodwill in the period 1984 – 2003 was E 529.4 million.

B a l a n c e s h e e t r a t i o s

Fugro’s balance sheet ratios remain acceptable,

despite the large acquisition. Solvency at the end of 2003

was 33.1% (end of 2002: 46.9%). Shareholders’ equity,

excluding the subordinated convertible bond, amounted

to E 240.8 million. At the end of 2003 the current ratio

amounted to 1.4 (end of 2002: 1.6). Working capital

increased by E 8.6 million to E 137.6 million.

Fugro follows a sound financial policy. Investments

in intangible assets (excluding goodwill), such as

research and development and software, are charged

directly against profit. Tangible fixed assets, including

vessels, equipment and survey and geotechnical

instruments, are depreciated relatively quickly.

The value of seismic survey data is itemised on the

balance sheet as ‘Stocks and work in progress’. Such a

data library is typical of companies that carry out this

type of exploratory survey and contains valuable

information that is offered and sold to various interested

parties. Virtually no data acquired during or before 2001

is included on the balance sheet and the capitalised book

value, on the basis of cost price less depreciation,

amounts to only E 22 million (2002: E 10 million).

The Airborne Survey data library is valued at zero on the

balance sheet.

D I V I D E N D P R O P O S A L

As the lower profit was due to predominantly

incidental causes it is proposed that the dividend for

2003 be maintained at E 1.85 per ordinary share

(certificate) (2002: E 1.85) and paid, depending on the

choice of the shareholder, either:

• in cash; or

• in (certificates of) ordinary shares.

The proposed dividend corresponds to a dividend

percentage of 60% of the net result before amortisation

of goodwill. After amortisation of goodwill this amounts

to 83%.

Shareholders and certificate holders have until

10 June 2004 to indicate their dividend preference.

The number of (certificates of) ordinary shares that

entitle the shareholder to one new share (certificate) will

be determined on 14 June 2004 based on the average

share price at the close of business of the Euronext Stock

Exchange on the preceding three days. To arrive at a

whole number, a maximum of 5% of the share price will

be added or deducted. The dividend will be made payable

on 16 June 2004.

C O R P O R A T E G O V E R N A N C E

Fugro recognises the value of the current trend

aimed at the development of good business

management. Fugro also endorses, in broad terms, the

definitive Corporate Governance Code drawn-up by the

Tabaksblat Committee (see the in depth explanation of

how Fugro is applying the Code on pages 47 to 50, and

the document for shareholders to be made available

in April).

O R G A N I S A T I O N A N D P E R S O N N E L

O r g a n i s a t i o n a l s t r u c t u r e

Fugro is organised in three divisions: Geotechnical,

Survey and Geoscience. The Executive Board is

responsible for Group policy, strategy, acquisitions and

internal coordination. The holding company also

handles matters which, for reasons of efficiency,

specialisation or financing, are best handled centrally.

Fugro’s philosophy is that the divisions’ operating

companies should be able to operate as autonomously

as possible within the framework of the Group’s policy

and business principles. This enhances the quality of

the operating companies’ managements. Delegation is

firmly interwoven into the Company’s culture. Where

appropriate for the client, cooperative links are created

between or within the divisions. This results in synergy

developing naturally, particularly when complex and

integrated projects are involved and enhances

profitability. It also increases the creativity and

involvement of the organisation as a whole, as well as

the staff’s opportunities for professional challenges and

self-development.

P e r s o n n e l p o l i c y

The advice and services provided by Fugro must be

state-of-the-art and reliable. This is why Fugro’s

personnel policy is aimed at attracting and employing


37

professional and skilled people and offering them

opportunities to develop as far as possible, Fugro’s goal is

to be a good employer and one which takes local customs

into account. The very low outflow of highly trained

managers and staff indicates the company’s success in

this respect.

Partly as a result of the acquisition of Thales

GeoSolutions the number of professionals has risen

substantially and the opportunities for development

available to all employees have also increased

significantly. A proper internal career development

policy is conducted in order to optimise the availability

of high-quality staff and specific skills within the

organisation. The policy is aimed at developing staff who

are flexible and experienced enough to be promoted to

management positions or become technical specialists.

To this end Fugro has developed good contacts with

universities. Business and management skills are

becoming increasingly important. Fugro supports talent

development and management development and this is

reflected in the operating companies’ training schemes.

Fugro also has at its disposal a worldwide pool of

experienced freelance professionals who are employed

by Fugro regularly on a project basis.

Staff pension schemes and other such benefits are

maintained and take the local situation and regulations

into account. Absence due to sickness is also monitored

on an individual operating company basis. In the view of

the differences between the many countries in which the

Group is active, Fugro does not consider that it would be

constructive to give a total picture of all the Human

Resources policies within the Group in its Annual Report.

Flexibility through exchangeability is an important

aspect of Fugro’s policy. To this end, the same systems

are used throughout the Group wherever possible and

both short and long term staff exchange programmes

have been developed. During 2003 several employees

were again asked to work in fields other than those for

which they were primarily employed. This policy

contributed towards maintaining a high level of capacity

utilisation and allowed (valuable) employees to be

retained. The total number of employees at the end of

the year rose, mainly due to acquisitions, by 1,549 to

8,472 (2002: 6,923). The average number of employees

over the year was 7,160 (2002: 7,003).

F l e x i b l e s a l a r y s y s t e m s a n d o p t i o n s c h e m e

Fugro stimulates participation. Effort and results are

rewarded. Flexible salary systems and an option scheme

have been in operation for many years and directors and

staff are encouraged to own Fugro shares. 8.3% of Fugro’s

issued shares, excluding share options yet to be

exercised, is held by Directors and staff. In the last few

years around 515 staff have been granted options.

For more information please refer to the information

for shareholders on page 20 and page 91 of the Annual

Accounts.

S a f e t y , q u a l i t y a n d t h e e n v i r o n m e n t

Fugro is very aware of its responsibilities as a

company within the community. In this context Fugro

follows codes of behaviour for health and safety,

environmental policy, quality control, personnel policy,

integrity and maintaining Fugro’s good reputation.

Fugro complies with demands related to safety,

especially those stipulated within the airborne and oil

and gas industries. Health and safety in the workplace

and while carrying out projects is a primary concern and

safeguarding health and safety is a fundamental element

of Fugro’s policy, particularly when Fugro’s activities are

carried out in a potentially hazardous environment.

Fugro is striving to make our stringent safety standards

for the airborne geophysics business the norm within

this industry.

Fugro pays a great deal of attention to quality.

The trustworthiness of the data or advice provided is a

high priority. By developing the right systems, such as

those for use in deep water, Fugro remains abreast of its

clients’ changing needs. A programme for monitoring

client satisfaction has been in operation for many years.

In Fugro’s view, quality should not apply only to the

service provided to clients; it should also apply to general

standards and values, a people-friendly working

environment and mutual respect.

In the year under review the results of customer

satisfaction surveys in the offshore geotechnical and

airborne survey sectors became available.

Customers have indicated that they value the fact

that Fugro has full ownership of most of the ships used

for Geotechnical surveys as this means the ships meet


the most stringent safety requirements specified by the

industry.

The recommendations resulting from these studies

have now been implemented into the business processes.

In the near future a customer satisfaction survey will be

carried out in the offshore survey sector.

In general Fugro’s activities have little or no effect on

the environment. Even so, Fugro adopts a responsible

attitude towards the environment and is careful to

protect it. Preventing or reducing environmental

damage is a fundamental policy element. Thanks to its

work within its own disciplines, Fugro has gained

extensive knowledge of environmental problems and

contributes towards their solution. A high proportion of

Fugro’s activities is carried out on behalf of the oil and

gas industry and, when involved in these activities,

Fugro complies with the stringent demands the industry

places on contractors.

I C T ( I n f o r m a t i o n , C o m m u n i c a t i o n & T e c h n o l o g y )

ICT systems play an increasingly important role in

Fugro’s activities. This trend is being driven by the need

to improve communication and efficiency and maintain

the current competitive position. Another driver is the

need to develop new business opportunities for the

Group. ICT provides the tools with which productivity

can be improved and new activities can be developed

throughout the Group.

The Company pays a great deal of attention to

security aspects related to the use of ICT systems in

general and the Internet in particular. To guarantee the

stringent demands specified for the safety and security

of ICT systems Fugro uses external companies for advice

regarding its ICT policy and to monitor the security of

the Company’s ICT infrastructure.

P e r s o n n e l f i g u r e s

Average number of employees during the year

Turnover per employee (x E 1,000)

Turnover own services per employee (x E 1,000)

Geog r aph i ca l d i s t r i b u t i o n a t y ea r - e nd

The Netherlands

Europe excluding the Netherlands


Asia and Australia

Near East, Middle East and Africa

Total at year-end

2003

7,160

115.9

75.9

993

2,238

2,333

1,776

1,132

8,472

2002

7,003

135.1

88.2

1,121

1,717

1,663

1,444

978

6,923

2001

6,523

139.5

88.6

1,164

1,749

1,658

1,449

933

6,953

1999

4,910

111.4

75.5

1,017

1,216

1,178

983

720

5,114

2000

5,492

129.9

84.3

1,041

1,122

1,440

1,202

951

5,756

Fugro is a company that aims to

be at the centre of society. Positive

involvement is important to the

company and its staff. In this

desire to create a socially responsi-

ble business it supports a large

number of social initiatives.

Whilst this is often through

financial contributions, active

participation is also encouraged.

Fugro focuses on many aspects of

society, including: education,

music, art and culture as well as

general social goals.

F U G R O ’ SC O N T R I B U T I O N S

T O S O C I E T Y

38


During 2003, virtually all the operating companies

were connected to Fugro’s secured global data

communications network. This network is used for

both internal (Intranet) and external (Extranet)

communications as well as for applications such as

e-mail, data transfer and Internet access.

The data traffic over Fugro’s network is protected

from hackers through the use of the latest VPN (Virtual

Private Network) encryption technology. The security of

Fugro’s network is maintained and monitored by an

independent company 24 hours a day and seven days a

week. This approach ensures most of the data

communications traffic between the operating

companies is secured effectively and cost efficiently.

External communications to the Internet pass

through a limited number of internet gateways which

are constantly monitored for incoming viruses or

hacking attempts. Staff can only access the network from

locations outside the company via a token-based access

system.

B U S I N E S S P R I N C I P L E S

Within Fugro a number of ‘Golden Rules’ have been

developed which cover Fugro’s most important

organisational, operational and other characteristics.

These are not unbreakable rules and deviation is

permitted, if this can be justified. They do, however, put

Fugro’s culture and way of working into words.

The most important rules concern market position,

authorisation levels, divisional cooperation,

communication and the use of company standards.

When a group company takes these rules to heart they

have grasped the essence of the Fugro culture.

The other rules are based on experience and either

concern Group relationships, such as the use of resources

within the Group and the sharing of technology, or

concern the control of risks and offer advice regarding

the expansion of activities. Operational issues, such as

quality and safety, project and contract management

and training are explained and financial guidelines are

also provided.

The Golden Rules sometimes appear to be very

obvious. Implementing the rules can involve a great deal

of work, result in decisions being overturned or that a

certain business opportunity is not acted upon. However,

applying the Golden Rules not only protects managers,

and Fugro as a whole, against a great many risks, but also

stimulates fellowship within the Group.

M U S I C

The British Season in the

Concertgebouw, the Delft

Chamber Music Festival,

Vereniging Entree, the

Residentie Orkest, the Van

Zweden School of Music,

the international tour of

the Dutch Youth Orchestra

and the Dutch Bach Choir

in Leiden are resounding

examples of the music

Fugro is very pleased to

support.

Fugro aims to interest young

people in matters relating to our

planet. Our staff contribute

towards the knowledge of second-

ary school pupils and university

students. Fugro participates in a

geography project in the

Netherlands, an environmental

ramble in Belgium and the Earth

Sciences week in the United States.

Fugro staff also teach civil engi-

neering and land and marine

surveying at universities

and occupational training

establishments in several

countries.

E D U C A T I O N


R E S E A R C H A N D D E V E L O P M E N T

Fugro’s services rely, to a large extent, on state-of-the-

art equipment and systems that facilitate ever improving

and more precise data acquisition and effective

interpretation. The acquisition of Thales GeoSolutions,

and the bundling of its knowledge and experience with

that of Fugro which has already taken place, will speed

up technological developments and R&D projects.

Research and development have played a very important

role in Fugro’s business operations for a long time. In

many cases this development takes place in close

cooperation with the client as it is specialised in solving

a specific problem. In 2003 Fugro again made

considerable investments in a number of important

technologies, of which the main ones are mentioned

below:

• Inertial navigation; a new system that is aimed at

significantly improving (acoustic) positioning in

(deep) water. This system, which is based on standard

sensors but with additional Fugro-specific

applications, will go into operation during 2004.

• The implementation and integration of several

geographical information systems, with real time

navigation systems and equipment. These

developments will be continued in 2004 and will

result in better information being collected during

work in the field and more efficient reporting to the

customer.

• The further improvement of the Starfix-HP system so

that changes in tide level can be compensated for at

any offshore work area. Because tides are calculated

integrally in the systems the vertical position of a

ship can be determined with an accuracy of within

five centimetres.

• Many smaller software developments related to the

improved reporting and processing of data.

• The introduction of the Autonomous Underwater

Vehicle (AUV), which has led to excellent, high-value

data being collected more efficiently in deep water.

• The digital video that will replace analogue tapes in

the Remotely Operated Vehicles. The video quality is

excellent, which means that from now on everything

will be stored digitally.

• Further development by Fugro-Jason of the

FastTracker software system which, thanks to its

unique ‘UpdateAbility’ concept, enables users to

construct and maintain reservoir models in an

extremely efficient way.

ship and sophisticated technology.

Fugro supports the foundation

that wants to preserve, renovate

and exploit this ship as a floating

legacy.

C U I D A D D EC A R M E N

In Mexico Fugro supports Casa

Hogar, a reception centre for

homeless children. Fugro collects

Christmas presents for these

children, has given the centre an

air conditioning

system and Fugro

employees work on

projects for Casa

Hogar during office

hours.

S E A - G O I N G T U G

The Dutch ocean tug ‘Holland’,

in her active period the fastest

salvage tug in the world, is living

proof of maritime entrepreneur-


41

M A R K E T D E V E L O P M E N T S A N D T R E N D S

T h e o i l a n d g a s m a r k e t

The acquisition of Thales GeoSolutions will increase

the proportion of Fugro’s activities that are related to

developments in the oil and gas market to over 70%

(2002: 65%). For 2003 this number was 67%, because

Fugro-TGS is only included for six weeks. In line with its

strategy, Fugro’s activities in this market are aimed very

clearly at two different segments with two separate

money streams: field exploration, development and

production. Although the number of mergers and

acquisitions in the oil and gas industry has continued to

fall, external investments in production by oil and gas

companies have hardly risen for us. This is partly the

result of share buy-back programmes within the

industry, which have profited Fugro and kindred service

providers hardly at all. But, for the ‘majors’ just to

maintain their production levels, new fields must,

slowly but surely, be found and developed.

As far as the global economy is concerned, it is vital

that the international oil companies and the

government owned oil companies can answer the

increasing demand for oil and gas. Much of the increased

demand comes from countries such as China and India.

Many of the anticipated exploration and development

activities, especially deepwater projects, will be in the

Gulf of Mexico, West Africa and Brazil. At the same time,

the Middle East, the Caspian Sea, Mexico and parts of

Asia and Australia will again become interesting regions.

The demand for gas is also increasing in certain

regions. The supply of liquified gas (LNG) answers some

of this demand. The increasing number of LNG terminals

under development makes the development of gas fields

some distance away from the commercial markets more

attractive. This is particularly true for the Middle East,

which is within acceptable transport-range of India,

China and Japan and which has substantial gas reserves.

Australia and Indonesia can also export gas very easily.

The possibility of using LNG means that purchasing

countries can more easily comply with the Kyoto

Agreement stipulations. The oil and gas industry sees

LNG as one of the growth markets for the coming years.

The use of LNG will accelerate the shift from local to

global gas markets and will ensure that gas prices will

remain attractive compared with the alternatives.

During 2003 Fugro again invested selectively in order

to be able to answer the market’s needs in the (near)

future. According to market research, in 2004 the level of

investment by oil and gas companies (in dollars) will

increase by between 4% and 6% compared with the

upwards adjusted growth of nearly 5% in 2003. The

majority of the growth is expected to take place outside

North America. The forecast is that in the coming period

over USD 10 billion will be spent each year on the

development of oil and gas fields in regions where the

sea is more than 500 metres deep. The advantage of

deepwater oilfields is that they are generally larger and

more productive. So, although they involve higher

investments for the oil companies, a better margin can

be achieved more rapidly.

Oil & gas

Construction/infrastructure

Mining

Other

8%

67%

4%

21%

(on 31 December 2003)

I n d i c a t i o n b r e a k d o w n

t u r n o v e r p e r s e c t o r


Despite the stagnating global economy the oil price

remained well above USD 25 per barrel for virtually all of

2003 with an average price for one barrel of Brent in 2003

of USD 28.48 (2002: USD 25.03). Oil prices are expected to

remain relatively (and historically) high for the time

being. An oil price of over USD 15 is sufficient to ensure

the continuity of Fugro’s services. In addition, the drop

in production from old, existing fields is accelerating

(depletion effect) and oil companies do not adjust their

investment budgets to (perhaps temporary) low oil

prices very quickly. This depletion effect again offers

opportunities for Fugro as there is an increasing interest

in detailed reservoir information so that production

levels can be maintained as long as possible.

The Geoscience division focuses on, among other things,

the collection and analysis of geological, geophysical and

production data aimed at increasing production from

existing fields.

Recent publications have indicated that, due to

decreased production, oil companies have started basing

their viability calculations on an oil price of USD 20 per

barrel, compared to approximately USD 15 previously.

This will make more projects appear economically

viable. Taking the development time of projects into

account, Fugro expects to be able to profit from this

situation in 2004 and 2005.

Over the years Fugro has steadily strengthened its

position. This is partly because clients prefer to assign an

increasingly broad spectrum of tasks to a single supplier.

The acquisition of Fugro-TGS has reinforced the

Company’s foundations in this market as well. Fugro’s

unique combination of activities, specialisms,

equipment and technologies, as well as its size and

leading market positions, mean that Fugro can profit

from this trend to the full. The result is a more robust

base for technological development and more

cooperation between the Group’s business units.

The clustering of activities is particularly apparent in

large infrastructure projects.

O t h e r m a r k e t s e g m e n t s

During the 2003 financial year Fugro’s non oil and

gas related activities came under pressure due to a

vacillating global economy, governments giving priority

to projects aimed at security rather than construction

and/or infrastructure projects and the SARS epidemic in

Asia. This led to delays in the award of contracts.

Nevertheless, the long-term requirements for the

development of construction and infrastructure works

remains high. Since the acquisition of Fugro-TGS, this

sector, which as far as the market is concerned, is very

regionally-linked, accounts for around 21% of Fugro’s

activities. Fugro, which is now permanently represented

in 51 countries, carries out large assignments for

airports, land reclamation, harbour extension, railways

and tunnels in various places around the world.

The demand from the mining industry, mainly

served by the Airborne Survey division is rising, because

of increasing investments in this sector.

P O S T B A L A N C E S H E E T D A T E E V E N T S

No post balance sheet events have occured that

require to be included here.

F U N D R A I S I N GB Y R U N N I N G

Staff of Fugro in Rotterdam and

Dubai took on a sporting chal-

lenge. They reached the finishing

line of the marathons held in these

cities and were financially

rewarded for this performance by

Fugro. Most of the proceeds went to

the scholarship fund of the

European Association of

Geoscientists & Engineers (EAGE)

and various good causes in the

Middle East.

Fugro is a knowledge-intensive

company employing highly edu-

cated staff. To motivate young

people to follow technological

courses Fugro grants scholarships

S C H O L A R S H I P S

to talented students.

In Australia there is a

‘Fugro mapping

scholarship’ and in

the UK scholarships

are awarded to

oceanography students.

Each year Fugro also

offers a number of

students the opportunity

to gain working

experience abroad.


B A C K L O G

The backlog at the beginning of the year amounts to

E 573.1 million. This figure shows a strong increase

compared to the year before (2003: E 465.9 million).

The backlog is calculated using year-end exchange rates.

The numbers for 2003 and before have been adjusted

accordingly for comparison reasons.

The volume of work in Euros increased by 23%

compared to 2003, despite the decline of the dollar from

E 0.95 to E 0.79 for USD 1. Based on stable exchange

rates, the volume of work has increased by 29%

compared to 2003.

Hope Air in Canada offers

free flights to people need-

ing urgent medical help

not available in their imme-

diate neighbourhood.

Terry McConnell, Manager

of Fugro Airborne in

Quebec, is the Chairman of

this Foundation and Fugro

provides the organisation

with financial support.

Three times a year the Regional

Blood Center in Texas comes to

Fugro’s head office in the United

States. For over twenty years

Fugro staff have given blood

during office hours. These Fugro

donors are contributing towards

health care in the region.

H O P E A I R

B L O O D D R I V EH O U S T O N

See page 64 for other

Fugro contributions

to society.

43

(x E 1 mln.)

B a c k l o g a t s t a r t o f t h e y e a r

( f o r t h e n e x t t w e l v e m o n t h s )

Geo techn i ca l

Onshore definite

Onshore probable

Offshore definite

Offshore probable

Su r ve y

Offshore definite

Offshore probable

Onshore definite

Onshore probable

Positioning definite

Positioning probable

Geosc i ence

Development & Production definite

Development & Production probable

Airborne survey definite

Airborne survey probable

Total

Applicable USD-rate (see page 32)

Recalculated at the exchange rates of 31 December 2002, the backlog would have been E 27.5 million more

(E 600.6 million).

Backlog comprises turnover for the coming twelve months and includes:

– awarded projects not yet started, as yet, unfinished elements of on-going projects (definite);

– projects that are highly likely to be awarded (probable).

2004

50.9

35.8

24.3

20.4

131.4

118.6

122.5

7.4

13.2

12.9

3.8

278.4

64.8

60.1

26.2

12.2

163.3

573.1

E 0.79

2002

78.2

32.1

30.8

24.5

165.6

69.9

119.1

11.8

24.4

14.6

2.6

242.4

38.5

32.2

25.8

17.4

113.9

521.9

E 1.13

2001

64.4

42.3

23.1

36.9

166.7

80.2

96.9

18.9

19.5

14.3

2.9

232.7

11.5

19.8

9.5

7.1

47.9

447.3

E 1.08

2000

39.5

25.9

7.7

7.4

80.5

51.5

65.1

9.5

21.0

10.5

7.5

165.1

12.2

32.2

8.5

7.8

60.7

306.3

E 1.00

2003

61.5

32.8

35.7

17.1

147.1

79.6

84.5

10.2

15.6

13.2

6.6

209.7

37.0

42.2

20.4

9.5

109.1

465.9

E 0.95


A I Rd y n a m i c

t r a n s f o r m a t i o n

A technician tests the Fugro Dighem system, which forms part of the equipment of a survey helicopter. It is used to

collect information about the composition of the soil and rock strata below the ground. This system is often used for

mineral exploration, but can also be used for geotechnical and environmental applications.

The FLI-MAP system ‘measures’ a first line of defence dyke at

Ouddorp, the Netherlands. The collected data will be used for draw-

ing-up management records and to check the height and stability

of the dyke. This contributes towards the achievement of a safe place

in which to live.


A i r i s o f v i t a l i m p o r t a n c e

So too is the care of our staff. Which is why safety, health and the

environment are always at the top of Fugro’s agenda.

The Dash 7, the showpiece of

Fugro’s fleet of aircraft, carrying

out a MEGATEM survey in Canada.

Thanks to this electromagnetic

system a zinc and copper holding

layer, not revealed by other

technologies, was discovered

50 – 150 metres below the surface.

Fugro carries out quarterly surveys at one of Australia’s largest open-cast

gold mines. The survey uses airborne photography to chart the mine so that

the extent of excavation can be determined. The information is also used for

environmental purposes.


46

P R O S P E C T S

Fugro is ideally equipped to answer the needs of oil

and gas related clients – now and in the future.

Investments in this sector in 2004 are expected to be

around 4 – 6% higher than in 2003. How much of this will

end up in the pockets of the suppliers is, however, not

known. Despite the disappointing financial progress in

2003, positive developments are expected with regard to

deep-water projects, especially in the Gulf of Mexico,

West Africa and Brazil. Good capacity-utilisation is also

anticipated for the activities in the Middle East, the Gulf

of Mexico and Asia. It is anticipated that developments in

the North Sea and in Canada will stagnate. It is delightful

that by now two of the largest oil companies will use

USD 20 instead of circa USD 16 per barrel as hurdle rate

to calculate the economic feasibility for the development

of new and the improvement of existing fields.

As a result of the acquisition of Thales GeoSolutions

Fugro is in even better shape to prove its position as the

leading market player. The Company’s global presence

has also been strengthened, particularly in Latin

America and China. In line with the strategy, Fugro-TGS

has reinforced Fugro’s position in the offshore Survey,

Positioning and Offshore Geotechnical market segments.

Thanks to this acquisition Fugro has not only become a

more competitive and efficient market player, but also a

Company that keeps offering increasingly high-value

services. The integration of Fugro-TGS is progressing

according to plan and promises Fugro considerable cost

advantages and synergy.

The Geoscience activity will enable Fugro to reap the

benefits of its sharper focus on production from

(existing) oil and gas sources. The Airborne Survey

activities, in addition to traditional markets such as

mining, will increasingly profit from the developments

in the oil and gas market and the demand for the

identification of water reserves.

The focus on land usage remains high worldwide.

In this sector Fugro is in a good position to increase its

share of large infrastructure projects in 2003 should

there be an upturn in the market

The positioning activities are expected to increase

their turnover and result during 2004. There is a

structural increase in the demand for very accurate

systems, such as those offered by Fugro.

Strategically Fugro has an excellent starting position.

Although the global economic developments still do not

encourage excessive optimism, most of Fugro’s activities

are developing well, which is supported by the size of the

backlog at the start of 2004. As in previous years, it is still

too soon to make a reliable forecast regarding turnover

and profit development for the whole of 2004.

Our forecast for the entire year will be published with

the interim report in August 2004.


G-J. Kramer, President and Chief Executive Officer

K.S. Wester, Director


47

G e n e r a l

Fugro sets great store by achieving a balance between

the interests of its various stakeholders. Enterprise,

integrity, openness and transparent management as well

as good supervision of the management are the starting

points for Fugro’s Corporate Governance policy.

The Company also endeavors to treat social/community

interests with respect.

The definitive version of the Dutch Corporate

Governance Code (the Code) was published on

9 December 2003. In broad terms the principles

expressed in the Code already match Fugro’s philosophy.

Fugro’s Corporate Governance policy will be discussed

during the Annual General Meeting of Shareholders on

19 May 2004. A circular explaining this policy will be

available from Fugro well ahead of the meeting.

C o r p o r a t e G o v e r n a n c e s t r u c t u r e

The Executive Board is responsible for managing the

Company and, thus, for the achievement of Fugro’s

goals, its strategy and its policy. The Executive Board

ascertains that the internal risk management and

control systems of the Group and its companies are

efficient and effective.

Besides the audit by the external auditor and the

extended periodical internal reporting, Fugro N.V.

executes additional internal audits. These audits are

executed systematically and frequently. Results are

reported directly to the Executive Board. The Audit

Committee also discusses the results. Furthermore, ‘peer

reviews’ in which operating companies are audited by a

team of managers of other operating companies, are

conducted.

The task of the Supervisory Board is to supervise the

Executive Board’s management and the general business

progress of the Company and its associated companies

and advises the Executive Board.

The Executive Board and Supervisory Board members

are appointed by the General Meeting of Shareholders on

the basis of a non-binding recommendation by the

Supervisory Board. The General Meeting of Shareholders

is also authorised to suspend or dismiss members of the

Executive Board and the Supervisory Board. As Fugro

qualifies as an international holding as defined in the

Dutch Structure Act, the Company is exempted from the

application of this Act.

The composition of the Supervisory Board is balanced

and comprises six independent people whose

background and experience is in fields related to Fugro’s

core activities and who have international (economic,

social and political) experience. The Supervisory Board’s

supervision is aimed at the achievement of the

Company’s goals, the strategy and the execution of the

strategy. The Board also supervises the properly

functioning of the top management, the setup and

functioning of the internal risk management and

control systems and financial reporting procedures and

the compliance with legislation and regulations.

The Supervisory Board elects an Audit Committee,

a Remuneration Committee and a Nomination

Committee from amongst its members. In the spirit of

the Code Fugro has drawn up more detailed regulations

for these Committees regarding their roles and

authority.

In addition to having the authority to appoint,

suspend and dismiss Executive Board and Supervisory

Board members, the General Meeting of Shareholders

also has core authority with respect to decisions

regarding changes to the Articles of Association, legal

mergers or divisions and approval of the annual

accounts and the appropriation of profit.

The General Meeting of Shareholders also determines

the remuneration policy for the Executive Board,

following the recommendations of the Supervisory

Board and the remuneration of members of the

Supervisory Board.

C o r p o r a t e G o v e r n a n c e C o d e T a b a k s b l a t C o m m i t t e e


48

The remuneration of new members of the Executive

Board, following the recommendations of the

Remuneration Committee, is fixed by the Supervisory

Board, taking into account the remuneration policy

drawn up by the Supervisory Board and approved by the

General Meeting of Shareholders. Arrangements with

members of the Executive Board regarding

compensation in shares or the rights to hold shares, as

well as major changes to such arrangements, will be

presented to the General Meeting of Shareholders for

approval. The current package of remuneration can be

described as balanced and in line with the market.

At this moment Fugro still does not make use of the

possibility for shareholders/certificate holders to vote

remotely by proxy. In the experience of a number of

listed funds which allow shareholders to vote via

Stichting Communicatiekanaal Aandeelhouders, a

relatively small number of shareholders make use of this

option. The related costs are, nonetheless, substantial.

Legislation currently being drawn-up will make voting

by proxy easier, more transparent and more cost

effective. When this new legislation comes into force

Fugro will, in so far as it is able, offer its shareholders/

certificate holders the opportunity to vote by proxy.

Fugro will propose to the General Meeting of

Shareholders that the possibility of fixing a registration

date for the exercise of the right to vote and attend

meetings is included in the Articles of Association. If the

General Meeting of Shareholders approves this proposal,

the Executive Board will determine a registration date

for the exercise of right to vote and to attend meetings

starting in 2005.

T h e D u t c h C o r p o r a t e G o v e r n a n c e C o d e

Fugro has compared its Corporate Governance

structure with the Principles and Best Practice

stipulations included in the Code and has come to the

conclusion that, at this moment, Fugro complies with

these Principles and Stipulations, in so far as they are

applicable, with the following exceptions:

B e s t p r a c t i c e s t i p u l a t i o n I I . 1 . 1

Appointment of directors, maximum term of four years

The duration of the existing employment contracts

with members of the Board of Management is at variance

with this stipulation. The contracts were signed before

the Code came into force; rights that have been agreed

cannot be rescinded.


Adjustment of conditions of granted options

In 2003 the term of the options granted in 1997 –1998

were adjusted in connection with the successive closed

periods, which resulted in a situation that the option

holders did not have the opportunity to exercise their

rights they should have had (see also the notes to the

option policy on page 20).


Maximum compensation for forced dismissal of directors

The duration of the employment contracts Fugro has

signed with the current members of the Executive Board

are at variance with this stipulation. The contracts were

signed before the Code came into force; rights that have

been agreed cannot be rescinded. This stipulation will be

taken into account for new appointments.

B e s t p r a c t i c e s t i p u l a t i o n I I I . 3 . 5

Maximum term for members of the Supervisory Board is

three periods of four years

Messrs. Schreve and Dekker do not fulfil the

condition contained in this stipulation. They were

appointed as members of the Supervisory Board by the

General Meeting of Shareholders before the Code came

into force; rights that have been agreed cannot be

rescinded. At the moment that members of the

Supervisory Board will resign in accordance with the

schedule, the General Meeting of Shareholders may

decide how they wish to handle this stipulation.

B e s t p r a c t i c e s t i p u l a t i o n I V . 2 . 1

Board of ‘Administratiekantoor’ is trusted by holders of

certificates and operates independent of the Company

It is crucial for Fugro to maintain its operational

independence on behalf of its clients (see page 16 for

the reasons for this). One of the ways to safeguard this

independence is to issue certificates (depositary receipts)

of shares. The issue of share certificates is, therefore,

considered by Fugro to be a necessary protective measure

to continue its successful business.

Stichting Administratiekantoor Fugro’s regulations

include a provision regarding the granting of a proxy to

exercise the right to vote to holders of share certificates.

The proxy can, however, be limited, excluded or recalled

in the circumstances stated in the administrative

conditions of Stichting Administratiekantoor Fugro

(see page 16 – 20 for an explanation of this regulation).


49

This is in accordance with the stipulations included in

the Bill approved by the Second Chamber regarding the

amendment to the structural legislation.

Stichting Administratiekantoor Fugro’s

administrative conditions do not specify in which

instances or under what conditions the certificate

holders may request the Administrative Office to

convene a meeting. The Board of Stichting

Administratiekantoor Fugro is considering how the

administrative conditions should be amended with

regard to this issue.


Members of the Board of the ‘Administratiekantoor’ are

appointed by the Board of the ‘Administratiekantoor’

The current Articles of Association of Stichting

Administratiekantoor Fugro stipulate that the Board

comprises five members: one A Board Member and four B

Board Members. The A Board Member is appointed by the

Executive Board of Fugro with the approval of the

Supervisory Board. The B Board Members are appointed

by the Board of Stichting Administratiekantoor Fugro

with the approval of the Executive Board of Fugro, which

decision must have the prior approval of the Supervisory

Board. During 2004 the composition of the Board of

Stichting Administratiekantoor Fugro will be discussed

further.


Maximum term for members of the Board of the

‘Administratiekantoor’ is three periods of four years

On the grounds of the Articles of Association of

Stichting Administratiekantoor Fugro, the Members

resign in accordance with a roster to be drawn-up by the

Board of Stichting Administratiekantoor Fugro. No

restrictions have been stipulated regarding the number

of times a Member may be reappointed. In 2004 the

Board of Stichting Administratiekantoor Fugro will

discuss whether the Articles of Association must be

amended with regard to this issue.


‘Administratiekantoor’ gives, without any limits and in all

circumstances, a proxy to vote to certificate holders

requesting as such

See the note to stipulation IV.2.1.

P r o t e c t i v e m e a s u r e s

The centre of gravity of Fugro’s protection against an

unwanted take-over rests, on the one hand on the issuing

of certificates of ordinary shares and, on the other hand,

on the possibility of issuing protective cumulative

preference shares. In addition, protective preference

shares may also be issued by the Fugro subsidiaries

Fugro Consultants International N.V. and Fugro

Financial International N.V. to Stichting Continuïteit

Fugro (see page 16). This has been proposed to the Annual

General Meeting of Shareholders in 1999 and approved

accordingly.

The protective measures are primarily intended to

safeguard Fugro’s independence in relation to its

customers.

Any issuing of protective preference shares will be

carried out by Stichting Beschermingspreferente

Aandelen Fugro. Most recently on 15 May 2003 the

General Meeting of Shareholders designated the

Executive Board of Fugro as the body which, for the

period until 15 May 2006, is authorised, with the

approval of the Supervisory Board, to (a) issue and/or

grant rights to acquire all preference shares – by which

is understood both protective preference shares and

financing preference shares, – and ordinary shares in

the subscribed capital and, (b) limit or exclude the

priority rights on shares to be issued.

If no option agreement between Fugro and Stichting

Beschermingspreferente Aandelen Fugro is signed and

the threat of an unwanted take-over is such that an

immediate issue of preference shares by Stichting

Beschermingspreferente Aandelen Fugro is advisable,

the Executive Board of Fugro should, on the basis of its

appointment as the body authorised to issue shares, with

the approval of the Supervisory Board, decide to issue

preference shares.

The objective of Stichting Beschermingspreferente

Aandelen Fugro is the promotion of the interests of

Fugro and the companies which are maintained by Fugro

and the companies in the Fugro Group, in such a way

that the interests of Fugro and the operations of all

involved with Fugro are safeguarded in the best possible

manner and influences which could damage the

independence and/or continuity and/or the identity of

Fugro and its associated companies to the detriment of


50

those interests are prevented as far as this is possible,

and also the execution of everything that is related to or

can be beneficial to the above. The options on protective

preference shares granted to Fugro Consultants

International N.V. and Fugro Financial International N.V.

were approved by the General Meeting of Shareholders

in 1999. The objective of Stichting Continuïteit Fugro is

the same as that of Stichting Beschermingspreferente

Aandelen Fugro.

The protective measures described above will,

especially in a take-over situation, be put into effect

when this is in the interests of protecting the

confidentiality of the data of clients, safeguarding

Fugro’s independence and define Fugro’s position in

relation to that of the aggressor and the aggressor’s plans

and will create the possibility of seeking the necessary

alternatives. The protective measures will not be put into

effect to protect the Executive Board’s own position.

Due to the uncertainty regarding the situations with

which Fugro could be confronted, the use of the

protective measures in circumstances other than those

described above cannot be discounted.

C o r p o r a t e g o v e r n a n c e o n t h e w e b s i t e

Fugro has drawn-up various regulations which

formulate the functioning of the various bodies and give

shape to the rules applicable within Fugro.

These regulations have been adjusted to the Code.

They will be on the Company’s website – www.fugro.com

– under corporate area, corporate governance, in April.

Further information regarding Corporate Governance

can also be found on the website.


51

The integral application of the International

Financial Reporting Standards (IFRS) in its annual

reporting will be obligatory for Fugro – as a company

quoted on the stock exchange – as of 2005.

In this context, in 2003 a start was made preparing an

inventory and detailed comparison of the differences

between the Dutch accounting principles currently

applied by Fugro and those required under the IFRS.

It has become clear that, owing to the far-reaching

demands of the IFRS, changes in the way results, assets

and liabilities are determined will be necessary.

The notes to the various items in the annual accounts

will also have to be expanded. As it happens, some of the

information the IFRS requires to be included in the notes

to the annual accounts has already been included

elsewhere in Fugro’s Annual Report for some years now.

The items in Fugro’s annual accounts which will be liable

to changes in valuation and/or presentation when the

IFRS standards are fully introduced are:

• Goodwill as far as this application leads to assets and

liabilities that valuations differ from those valid at

the time of acquisition (whether or not they were

identified separately before);

• Taxation through the capitalisation of tax losses

carried forward as far as it is expected that these will

be realised;

• Development costs which could under stringent

conditions lead to capitalisation;

• Provision for major repairs and maintenance which will

disappear as a consequence of the application of the

component approach;

• Pension obligations because ‘defined benefit plans’

must be expressed in the balance sheet. In the

Netherlands it has been proposed to the workers’

council to replace the current plan by a scheme,

which will qualify as a ‘defined contribution scheme’.

• Other provisions as far as these are not currently

included at their cash value;

• Certain specific long-term financial lease agreements

related to two ships in shared property which can no

longer be presented ‘off-balance sheet’;

• Financial instruments which will be included at market

value;

• Work in hand and advance payments which must be

balanced at a contract level;

• Classification of items into short and long-term.

In addition it may be expected that, due to the

extremely detailed IFRS stipulations, the explanation of

the principles of valuation applied and the explanation

regarding the nature and composition of the various

items in the annual accounts will be longer.

A full picture of the consequences of the introduction

of the IFRS, including the quantitative effects, will be

available in the course of 2004. The introduction of the

IFRS as of 1 January 2005 will, therefore, lead to an

adjustment of shareholders’ equity as of that date. More

information regarding this issue will be included in the

2004 Annual Report.

I F R S s t a n d a r d s


52

G o a l s a n d s t r a t e g y

The Geotechnical services division investigates, and

advises on, the physical characteristics of soils and rocks,

both onshore and offshore. It also tests soils, rocks and

other materials for use in construction.

The onshore services are oriented primarily towards

infrastructure, land reclamation and construction

activities. Fugro is active in many countries and

generally occupies strong local positions.

The developments of local economies determine the

results. In addition to its regular work the business unit

concentrates primarily on larger and technically

challenging projects which have better margins.

The division’s longer-term target is an improvement of

the results through a better margin on the division’s

growing turnover. Where it is worthwhile the

geographical spread will be broadened.

The offshore activities focus mainly on the oil and

gas industry but also on large projects in coastal waters.

The size of the oil and gas companies’ investment

budgets influences the results. Owing to its strong

leading position and scale advantages, Fugro intends to

maintain its technological lead and focus on new

markets or niche markets such as deep-water projects.

G e n e r a l b u s i n e s s d e v e l o p m e n t

Onshore Geotechnical services came under pressure

as a result of the vacillating development of the global

economy. The offshore activities also had to cope with a

somewhat reticent market, particularly with regard to

the development of new oil and gas fields. The combined

turnover fell by 13% to E 280 million (2002: E 323

million).

The operating result before amortisation of goodwill

fell by 14% to E 30 million (2002: E 35 million).

This equals a margin on turnover of 11% (2002: 11%).

Expressed as a percentage of the invested capital the

operating result was 19% (2002: 23%).

G e o t e c h n i c a l s e r v i c e s

Left: K.S. Wester, Geotechnical services onshore

Right: F.E. Toolan, Geotechnical services offshore

(amounts x E 1 mln.)

K e y f i g u r e s G e o t e c h n i c a l

Turnover onshore Geotechnical

Turnover offshore Geotechnical

Total

Operating result before amortisation of goodwill (EBITA)

Invested capital


Investments

Ope r a t i ng r e su l t ( EB I TA )

as a % of turnover

as a % of invested capital

2003

182

98

280

30

160

13

13

11

19

2002

205

118

323

35

153

11

63

11

23

2001

205

104

309

26

109

10

14

8

24

1999

157

54

211

20

74

9

7

9

27

2000

189

92

281

30

90

10

11

11

33

0

70

140

210

280

350

20032002200120001999

(x E 1 mln.)

T u r n o v e r


53

O n s h o r e G e o t e c h n i c a l

The development of the European activities was

disappointing due to the sluggish growth in the

economy. The positive exception was the UK where the

division profited from the acquisition of Foundation

Exploration Services Ltd. in early 2003 and its

subsequent clustering with the existing onshore

organisation. This has strengthened the activities in the

UK considerably. The integration proceeded smoothly. In

the Netherlands the construction market was hesitant

and Fugro was involved in fewer large infrastructure

projects. In Germany and France business remained

difficult.

In the United States, and particularly in California,

activities related to both the government and industry

declined in 2003. After completing several large

infrastructure projects in 2002 no follow-up orders were

received from the government until the end of 2003.

The (ICT) industry was also reticent to grant orders due to

the sombre economic situation. In the South (Texas)

business developed well thanks to the relationship with

the buoyant oil and gas sector.

In the Far East the market in Hong Kong did not live

up to expectations, partly due to the SARS epidemic

which discouraged people from doing business and

partly due to work stopping in the second half of 2003

as a result of environmental issues – a new phenomenon

for Hong Kong. This delay also led to fewer follow-on

orders. The activities in China, although modest in scale,

increased.

Contrary to expectations business progressed well in

the Middle East in 2003. After the rapid conclusion of the

war in Iraq the order flow picked up well in the second

and third quarters. Both the United Arab Emirates and

Saudi Arabia developed better than in 2002.

O f f s h o r e G e o t e c h n i c a l

Fugro’s activities in West Africa developed as

expected in 2003 despite the postponement of a major

deep-water project. The Far East’s development exceeded

expectations, but work in two important oil regions –

the Gulf of Mexico and the North Sea – declined. In the

Gulf of Mexico the volume of work on the continental

shelf was as expected but this was negated by the

postponement of several deep-water projects.

The North Sea is in a transition phase: the large,

international oil companies are leaving the region and

the larger independent companies are taking their place.

Very few projects are being carried out in this interim

period. The reduction in European activities was, to some

extent, offset by orders for windfarm projects and other

infrastructure projects, such as harbours, bridges and

tunnels in several Western European countries. This type

of work is characterised by the great distance between

projects (for example, a tunnel under the Bosporus in

Turkey and a windmill project off the coast of Germany).

This means that the ships have to sail from one place to

another, which reduces their availability on station and,

therefore, has a negative effect on the utilisation and on

the average daily income from a ship.

Fugro has, however, developed new initiatives which

will enable it to profit from the change in activities in

the North Sea. These initiatives are aimed at the larger

independent oil companies and are related to oil fields in

the last phase of their life-cycle. Fugro expects these

services to bear fruit in 2004.

The market for underwater cable route surveys

showed no activity in 2003.

Due to the substantial investment in equipment over

the past years, plus the acquisition of Thales

GeoSolutions, Fugro is now extremely well equipped and

uniquely positioned for the anticipated increase in the

number and scale of deep-water projects. Fugro’s deep-

water investigation expertise often plays a decisive role

in the acquisition of projects. One result of this in 2003

was that the ‘Fugro Explorer’ achieved a new world-

record by drilling in 2,200 metre deep water where

geotechnical data of the seabed were collected.


54

I n v e s tmen t s


Merger between Fugro Consultants International BV and

McClelland Engineers Incorporated, McClelland

International Ltd.

McClelland Management Services, Inc. (50%)

Gulf testing Ltd.

Gulf testing Ltd.

McClelland Management Services, Inc. (50%)

MateriaLab Ltd.

Umwelt- und Wirtschaftsgeologie mbH (UWG)

Geotechnical Instruments Hong Kong Ltd.

Ecolyse Nederland BV and Ecodemka BV

IEP Inc.

Staal, Gardner & Dunne Inc.

McClelland Management Services Inc.

BSN Bodemsanering Nederland BV (50%)

Aegis Environmental Inc.

Hoogovens Technical Services Ecoplan BV and M & O BV

Studiebureau VFD N.V. (25%)

Fugro Geologic BV

Fugro Ecolyse BV

Ubac, G&P Leipzig, G&P Cottbus GMBH

Environmental training center

De Groff laboratory

Prodec Fugro Ltd. (50%)

IEP Inc.

Rapid Optical Screening Tool (Rost)

Instituut Geotechniek Nederland BV

Studiebureau VFD N.V. (50%)

Terra Technologies Inc.

Maxim Inc.

Brent Rauhut Engineering Inc.

Instituut Geotechniek Nederland BV

Terraform Ltd. (50%)

VFD – Fugro NV (25%)

Sarg Enterprise S.A. and SEERS Foralo S.A.

Gulf Coast Testing Laboratory, Inc.

Sicsol SA

Sores SA

Sol Essais SA

Infrasol

Foundation Engineering Ltd., Middle East

Crystal Drilling NV

Via NDT Inc.

Surbsurface Consultants Inc.

Maxim Technologies Inc.

USA

UAE

UAE

USA

HK

GER

HK

NL

USA

USA

USA

NL

USA

NL

BEL

NL

NL

GER

USA

USA

NIG

USA

USA

NL

BEL

USA

USA

USA

NL

HK

BEL

FRA

USA

FRA

FRA

FRA

FRA

UAE

BEL

USA

USA

USA

–

4

*

–

4

5

4

1

2

6

6

–

5

3

3

1

1

–

1

*

*

1

–

*

6

3

*

*

3

–

3

–

4

1

3

7

2

1

4

1

2

5

1

–

0.3

0.5

0.1

0.2

0.1

1.9

1.0

1.5

1.6

4.5

0.4

1.1

0.6

0.5

0.6

0.5

0.2

0.4

0.1

0.1

0.1

0.3

0.3

1.8

1.3

0.1

0.1

0.4

(0.2)

1.3

0.1

0.9

0.7

0.8

1.7

0.1

0.3

5.2

0.6

0.8

1.6

0.1

–

0.7

0.7

–

0.7

1.6

4.7

0.5

1.3

1.4

4.5

–

1.6

0.9

0.1

0.6

0.3

–

0.2

0.1

0.1

0.3

–

0.8

0.7

1.2

0.1

0.1

0.7

–

1.8

0.1

1.3

0.6

1.0

2.9

0.2

0.3

5.3

0.4

0.6

1.6

0.2

1987

1987

1988

**1989

1991

1991

1992

1992

1992

1992

1992

**1992

1993

1994

1994

1994

1995

**1995

1995

1995

1995

1996

**1996

1996

1997

1997

1997

1997

1997

**1998

1998

1998

1998

1998

1999

1999

1999

1999

2000

2000

2000

2001

2001

–

96

*

–

96

223

125

26

46

74

36

–

21

38

25

4

18

–

24

*

*

20

–

3

70

27

*

*

37

–

32

–

24

20

28

82

13

*

140

10

15

32

15


O v e r v i e w o f a c q u i s i t i o n s a f t e r t h e m e r g e r

b e t w e e n F u g r o a n d M c C l e l l a n d i n 1 9 8 7

Year Price Goodwill Country Annual Employees

turnover


55

I n v e s tmen t s

Onshore Geotechnical (continued)

Harza Engineering Corp.

Foundation Exploration Services Ltd.

Offshore Geotechnical

Merger between Fugro Consultants International BV and

McClelland Engineers Incorporated, McClelland

International Ltd.

Seafloor Service Inc.

Oserco BV

Alluvial Mining Ltd.

BEL Geophysics Ltd.

Seabed Expl. Services

Geocean Solmarine S.A. (Assets)

Marsco Inc.

Subsea 7 (Assets and business)

Thales GeoSolutions

D i s i n ves tmen t s


Environmental activities

MEO B.V.

Fugro Milieu Laboratorium B.V. (business)

Stability Department VFD Fugro N.V.

Environmental activities

Crystal Drilling N.V.

* Incorporated in existing Fugro companies.

** Concerns additional goodwill.

*** See offshore Survey.

USA

UK

USA

NL

UK

UK

USA

FRA

USA

NOR

UK

UK/USA

NL

NL

BEL

NL

BEL

4

15

–

*

1

3

*

*

*

4

20

–

0.5

3.0

–

0.1

0.2

1.3

0.4

0.1

2.2

5.8

0.0

–

1.3

6.3

–

2.2

0.3

1.3

0.4

0.1

2.4

7.1

22.9

–

2002

2003

1987

1990

1990

1996

1997

1997

2000

2001

2002

***2003

1997

1998

1999

2001

2002

2003

39

111

–

*

1

28

*

*

*

15

2

–





turnover


56


The Survey Services division comprises three business

units and concentrates on mapping the topography and

geological composition of the earth’s surface and

positioning services.

Most of the offshore services are carried out on behalf

of the oil and gas industry and are offered all over the

world. Fugro’s technological lead, particularly since the

acquisition of TGS, provides opportunities to capture a

large share of the growing market for the development

of deep-water fields.

The investments of the oil companies are important

for the results of this business unit.

The onshore services focus on local/regional markets

in the governmental, utility, industrial and construction

sectors. The company differentiates itself from

traditional land survey competitors by focussing on

technologically advanced solutions and new

applications. This also means that further growth of this

business unit is possible.

The Positioning unit offers precise satellite

positioning services in onshore markets such as

agriculture and mining worldwide and specific niche

market applications offshore. Fugro also makes a great

deal of use of these systems in-house. With the

introduction of the advanced HP (High Performance)

system with sub-decimetre accuracy, Fugro has

differentiated itself from the growing number of free

GPS systems available. In addition, The High

Performance service generates opportunities in new

markets, such as automated guidance systems.

S u r v e y s e r v i c e s

Left: O.M. Goodman, Positioning and Survey services onshore

Right: J. Ruegg, Survey services offshore


K e y f i g u r e s S u r v e y

Turnover offshore Survey*

Turnover onshore Survey

Turnover Positioning

Total

Operating result before amortisation of

goodwill (EBITA)**

Invested capital


Investments


as a % of turnover


* Offshore Survey’s historical figures have been recalculated in line with the structure introduced in 2002.

** Including circa E 4.5 million negative from Fugro-TGS.

2003

274

47

23

346

33

182

23

94

10

18

2002

276

65

30

371

50

111

22

19

13

45

2001

309

53

30

392

65

110

22

50

17

59

1999

213

39

22

274

39

70

22

17

14

56

2000

242

46

26

314

41

87

17

28

13

47

0

90

180

270

360

450

20032002200120001999

(x E 1 mln.)

T u r n o v e r


57

High reliability, excellent service and clustering with

other Fugro services increase the competitive advantage.

The target is to achieve both growth and a further

margin improvement.

G e n e r a l b u s i n e s s d e v e l o p m e n t

In the year under review the Survey division achieved

a turnover of E 346 million compared with E 371 million

in 2002, a decline of 7%. The operating result before

amortisation of goodwill dropped to E 33 million (2002:

E 50 million). This corresponds to 10% of the turnover

(2002: 13%). Expressed as a percentage of the invested

capital the operating result amounted to 18%

(2002: 45%).

O f f s h o r e S u r v e y

The acquisition of Thales GeoSolutions on

19 November 2003, and the resulting substantial

increase in activities, means this division became

considerably stronger towards the end of the year. Up to

the time of the acquisition the volume of work had

remained stable, due to factors such as interest in deep

water projects, amongst others. The margins were,

however, under pressure as a result of exchange rate

differences.

The activities profited from the worldwide

development of established fields, particularly in the

Middle East, India, West Africa and South-east Asia.

In addition, in the summer of 2003 a contract was signed

for a pre-construction survey along the east coast of

Russia as part of the Sakhalin II project. The level of

activities in the North Sea remained low.

The development of the exploration services, including

positioning and construction-related services, was

slightly below expectations as a result of the sanctioning

of projects being delayed.

The specialised nature of the other services also

contributed towards an improved flow of orders. In early

2003 Oceanor Holdings in Norway was acquired. This has

strengthened Fugro’s position in the growing market for

large-scale systems for oceanography surveys.

In mid 2003 the Danish company Svitzer – a leading

company in the field of geophysical survey services – was

purchased. The acquisition of Svitzer has added a multi-

facetted fleet of three vessels for geophysical site and

route surveys, environmental surveys, pipe line

inspection and geotechnical projects for the oil and gas

sector and telecommunications companies to Fugro’s

existing fleet.

In 2003 the Autonomous Underwater Vehicle (AUV)

went into commercial operation for clients in the Gulf

of Mexico. The AUV is used to collect geophysical data in

water depths of up to 3,000 metres, improving both

efficiency and the quality of the data, especially in

deeper water. The AUV was developed in cooperation

with Boeing and Oceaneering.

O n s h o r e S u r v e y

The onshore survey activities had a difficult year,

mainly due to the completion of several large projects.

In the Netherlands the NUON data conversion project

was completed at the end of 2002.

As a result, in 2003 capacity at Fugro-Inpark had to

be brought in line with market requirements.

The workforce was reduced by 123, which included

25 short-term contracts not being extended.

Fugro-Inpark’s organisation has now been adjusted

to the market situation which still shows no sign of

improvement.

2003 was a profitable year for the FLI-MAP activities,

although less so than had been anticipated owing to

reduced utilisation in the field of infrastructure surveys.

In the year under review field survey activities for the

oil and gas industry developed positively and better than

expected, especially in Canada, North America and the

Middle East.

The services offered by onshore surveying companies

must answer increasingly stringent demands in both

technical and procedural terms. At the same time,

opportunities and (international) market potential are

increasing. In many respects Fugro is in a unique

position to respond to these changes and benefit from

the resulting opportunities. Fugro is also strengthening

its role as a service provider for geo-spatial data

management and conversion projects with back offices

in low-cost countries.

P o s i t i o n i n g

In general, the positioning activities developed well

in 2003 despite the availability of the less precise ‘free

services’. In Australia the revenues from subscriptions in

the agriculture sector remained under pressure as a

result of the drought which appears to be over at the end

of 2003. Fugro continued to focus, successfully, on newly


58

developing markets without ‘free services’ such as Africa

and the Middle East and on the high-performance sector

where free services exist.

Fugro is one of the leading players in the high-

performance market. The acquisition of Fugro-TGS,

including the very precise Skyfix-XP positioning system,

has resulted in a further strengthening of the Company’s

market position. Thanks to the development of

innovative products and systems, sometimes together

with strategic partners, Fugro can offer positioning

systems with a far greater accuracy (sub-decimetre) than

those offered by competing commercial service providers

and free public services.

Fugro concentrates on the professional user who

needs high-value global services and has also developed

services in the field of asset monitoring (OmniSTAR AM)

for the tracking of vehicle and vessel fleets and pipeline

monitoring, etc. In 2003 the OmniSTAR-HP system was

well received by the market and forms a basis for a

strenghtening of the positioning activities. Much is

expected of this system in 2004, especially in Australia

and North America.

I n v e s tmen t s

Offshore Survey

Oretech BV

John E. Chance & Associates, Inc.

Ocean Sciences International Pte Ltd.

Associated Survey Int. Pty Ltd.

John E. Chance & Associates, Inc.

Surveying activities Marconi –UDI

Oceansismica S.p.A.

K-C Geotechnical Associates Inc. (West coast division)

Fugro Geoteam AS

Surveying activities Marconi – UDI

Wimpol Ltd.

Geodetic & Construction Surveys Ltd.

Geos New Zealand

Wimpol Ltd.

Geoteam AS

Carnegie Inc.

Fugro Geodetic AG

International Subsea Mapping SA

Geos Ltd.

Fugro Geodetic AG

Fugro Geoteam AS

International Subsea Mapping SA

Geos Ltd.

Surveying and positioning activities Oceonics Group Plc

Oceaneering International Inc., Survey division

Paras Ltd.

Underwater Surveys Pty Ltd.

Marine Weather Services Pte Ltd.

Geoid SA

NL

USA

SIN

AUS

USA

UK

ITA

USA

NOR

UK

UK/USA

SWI

NSL

UK/USA

NOR

USA

SWI

FRA

NSL

SWI

NOR

FRA

UK

UK

USA

UK

SAF

SIN

FRA

8

29

6

8

–

12

1

1

27

–

25

15

*

–

–

*

–

7

6

–

–

–

–

8

3

2

2

1

4

0.4

16.5

0.1

0.1

2.0

1.3

0.5

0.4

21.4

0.6

9.7

5.7

0.2

0.1

0.2

0.1

0.7

3.6

0.1

(1.0)

(1.1)

1.2

0.9

11.3

2.2

1.5

0.6

0.1

0.9

0.3

61.7

0.4

0.6

–

5.3

0.5

0.1

26.5

–

14.8

5.6

0.1

–

–

0.1

–

8.5

2.6

(0.4)

(1.1)

–

–

9.6

2.0

1.5

0.7

0.2

1.3

1990

1991

1991

1991

**1992

1993

1994

1994

1994

**1994

1994

1994

1994

**1995

**1995

**1995

**1995

1995

1995

**1995

**1996

**1996

**1996

1997

1997

1998

1998

1998

2001

37

400

16

93

–

101

12

12

200

–

200

140

2

–

–

*

–

32

51

–

–

–

–

79

6

11

10

6

30





turnover


59

I n v e s tmen t s

Offshore Survey (continued)

Exploration Mining Consultants Pty Ltd.

Galileo Geophysical Inc.

Osiris BV

Installocean Ltd.

Noble Denton Ltd.

Oceanor Holdings ASA

Svitzer

Thales GeoSolutions

Onshore Survey

Inpark BV

Inpark BV

Elbocon BV

Raneiri Bateman Surveying Pty Ltd.

Van Mourik BV

Sesl Geomatics Ltd.

Photec Air Surveys Pty Ltd.

Clarke Land Surveys Inc.

Nortech Geomatics

Positioning

GeoMetius BV and Commetius BV

Satloc (assets and business)

Thales GeoSolutions

D i s i n ves tmen t

Offshore Survey

Equipment Department UDI

* Incorporated in existing Fugro companies.

** Concerns additional goodwill.

*** See offshore Survey.

AUS

USA

NL

UK

UK

NOR

UK/DK

UK

NL

NL

NL

AUS

NL

CAN

AUS

CAN

Oman

NL

USA

UK

UK

1

1

10

1

1

9,1

20

210

4

–

1

*

*

5

1

1

2

1

*

–

0.3

0.8

6.7

0.4

0.4

7.7

8.2

63.7

1.2

0.5

(0.1)

0.2

0.1

4.2

0.2

0.8

0.4

0.5

6.2

–

0.3

0.8

7.0

0.4

0.3

5.3

0.0

139.5

1.8

–

–

0.2

0.1

2.4

0.2

0.5

0.3

0.4

3.8

–

2001

2001

2001

2002

2002

2003

2003

2003

1992

**1993

1994

1995

1998

1998

1998

2000

2002

1997

1999

***2003

1999

10

3

67

6

5

56

110

1,686

349

–

4

*

2

85

2

7

35

6

*

–





turnover


60


The Geoscience division concentrates on the

gathering and interpreting of geophysical data and the

quantitative and qualitative estimation of resources

including oil, gas, mineral and water resources and

the optimisation of their production The Geoscience

division comprises two business units: Development

& Production and Airborne Survey.

In addition to the gathering and interpretation of

data and providing advisory services based on advanced

technology, Development & Production focuses

primarily on improving production within the oil and

gas industry. Cost savings and efficiency improvements

for the oil and gas industry offer particularly good

growth possibilities and high profit margins and are

generally funded out of less cyclical production budgets.

The division operates at a global level and occupies a

strong position as a supplier of high value services in the

field of integrated geophysical and geological data,

aimed at improving knowledge regarding reservoirs.

The upstream oil and gas industry is the major client for

the services provided by this division with which Fugro

clearly targets the end users in the sector.

Airborne Survey gathers geophysical data worldwide

primarily for the mining industry but also increasingly

for the oil and gas companies. Since the consolidation of

the players in the market the improvement of safety and

technology have offered growth opportunities within

other markets, such as the oil and gas industry and

organisations such as the World Bank.

A further expansion and development of the

Geoscience division must, in the future, lead to

improved margins and increased turnover.

G e o s c i e n c e s e r v i c e s

Left: J. Ruegg, Development & Production

Right: F.E. Toolan, Airborne Survey


K e y f i g u r e s G e o s c i e n c e

Turnover Development & Production*

Turnover Airborne Survey

Total

Operating result before amortisation of goodwill (EBITA)

Invested capital


Investments


as a % of turnover


* The historical figures for Development & Production have been recalculated in line with the structure introduced in 2002.

2003

158

46

204

13

233

13

15

6

6

2002

184

68

252

27

251

14

18

11

11

2001

139

70

209

7

250

8

25

3

3

1999

62

–

62

3

57

6

4

5

5

2000

74

44

118

3

74

13

10

3

4

0

60

120

180

240

300

20032002200120001999

(x E 1 mln.)

T u r n o v e r


61

G e n e r a l b u s i n e s s p r o g r e s s

The Geoscience division achieved a turnover of

E 204 million (2002: E 252 million). Development &

Production’s turnover fell by 14% to E 158 million (2002:

E 184 million. Airborne Survey’s turnover also

fell by 32% to E 46 million (2002: E 68 million).

Operating result (EBITA) amounted to E 13 million

(2002: E 27 million). This corresponds with a 6% margin

on turnover (2002: 11%). Expressed as a percentage of the

invested capital the operating result amounted to 6%

(2002: 11%).

D e v e l o p m e n t & P r o d u c t i o n

For Development & Production 2003 was a year that

began reasonably well but then fell short of expectations

during the second half. On balance the results were

down, one main reason being the dollar exchange rate

development.

The seismic activities are still waiting for the market

to improve. In addition, in the last quarter of 2003, Fugro

was confronted with technical problems on board two

seismic vessels, which are now resolved. On the other

hand, the sale of non-exclusive (multi-client) data was

satisfactory across a broad front.

The activities in the field of reservoir-modeling

(Fugro-Jason) progressed as expected in North America,

Mexico, Russia, South-east Asia and India as did the

turnover in terms of dollars. Because most of the costs

are incurred in Euros the result was lower than expected.

During the second quarter an exclusive contract for the

supply of software, consultancy and support was signed

with PEMEX and, at the beginning of the fourth quarter a

large contract for the optimisation of the exploitation of

an oil field in Siberia was signed with the Russian

Sibneft.

The Geoscience activities of Fugro-Robertson showed

a mixed picture. The classic, technical, services in

support of exploration activities developed satisfactorily

in the first half of the year and then tailed off to slightly

below expectations. In 2003 the activities in the field of

Data Solutions (data management, storage and

manipulation), a fast growing market, progressed well

thanks to interesting contracts.

The operations in Wales are being expanded with

associated companies in the Middle East, the USA and

South-east Asia.

A i r b o r n e S u r v e y

The growth of the Airborne Survey activities in North

and South America and, to a lesser degree, in Australia

was nullified by the reduced or delayed activities in

Europe, Africa and the Middle East. In the Middle East

the activities were hindered by the war with Iraq and in

Africa the postponement of the awarding of several large

projects played a major role. Because of this, and because

a large project in Saudi Arabia was completed in early

2003 without any follow-on projects being forthcoming,

the results were lower than in 2002. In general the

margins on projects that were carried out were

satisfactory.

Fugro is by far the largest supplier in this global

market. Traditionally the mining industry is the most

important market for the Airborne activities although

the use of the various technologies is growing in both the

water resource mapping (primarily in the Middle East)

and in the oil and gas sectors. Airborne surveying is one

of the most cost effective methods of geological

mapping, particularly over large areas and remote

locations.

At the end of 2003 Airborne Survey was awarded new

contracts in Nigeria, Mauritania, Angola, Madagascar

and Mozambique. In combination with other Fugro

companies there are additional growth possibilities

through synergy and (technological) cooperation within

and outside the Geoscience division. This, plus a focused

structure and management and health & safety systems,

provide a solid foundation for this business unit and will

lead to an improvement in the result as soon as the

market recovers.


62

I n v e s tmen t s


Lafehr Chan Technologies Inc.

Seismic Australia Pty Ltd.

Geologic Consulting Services BV

Robertson Research International Ltd.

Jason Information Systems BV

Petcom Inc.

Volumetrix Ltd.

Seiscan Ltd.

Airborne Survey

World Geoscience Corporation Pty Ltd.

Geoterrex-Dighem Ltd. and High Sense Geophysics Ltd.

Geoterrex-Dighem Ltd. and High Sense Geophysics Ltd.

World Geoscience Corporation Pty Ltd.

Geodass (Pty) Ltd.

Sial Geosciences Inc.

Spectra Exploration Geosciences Corp.

Kevron Pty Ltd.

Tesla 10 Pty Ltd.

Airesearch Mapping Pty Ltd.

Lacoste Romberg - Scintrex, Inc. (10%)

* Concerns additional goodwill.

USA/UK

AUS

NL

UK

NL

USA

UK

UK

AUS

CAN

CAN

AUS

SAF

CAN

CAN

AUS

AUS

AUS

CAN

10

2

1

46

16

1

1

1

16

30

–

–

6

4

2

9

5

5

3

7.3

12.5

0.6

93.5

95.9

3.3

3.6

0.4

6.2

20.0

1.3

6.9

7.1

6.2

1.8

14.8

8.1

3.3

2.4

9.1

12.4

0.6

103.4

101.5

2.9

2.3

0.3

1.0

21.2

(2.9)

(0.4)

6.0

5.1

1.7

13.4

10.0

2.4

2.8

1998

2000

2001

2001

2001

2003

2003

2003

1999

1999

*2000

*2000

2000

2001

2001

2001

2001

2001

2001

75

7

14

500

90

8

5

6

200

222

–

–

40

35

6

70

50

60

25

(amount x E 1 mln.)




turnover


63

G E O T E C H N I C A L

O n s h o r e

• probing, drilling and measuring;

• quality testing of construction materials;

• laboratory and environmental testing;

• advisory and design assignments related to

foundations for buildings and land reclamation.

O f f s h o r e

• seabed soil investigations;

• advising on foundations for offshore structures,

tunnels, bridges and harbour construction;

• collecting data for a variety of purposes including

the laying of underwater pipelines and cables;

• monitoring large structures such as offshore

platforms, bridges and tunnels.

S U R V E Y

O f f s h o r e

• geophysical and site surveys related to the

positioning of drilling rigs;

• route surveys for pipelines and underwater cables;

• positioning services above water (Starfix and Skyfix)

and underwater;

• survey support for construction projects at sea,

generally using dynamic positioning (DP) ships and

ROVs (Remote Operated Vehicles – unmanned

underwater vehicles) and AUV’s (autonomous

underwater verhicles);

• annual inspection of pipelines;

• oceanography.

O n s h o r e

• advanced land survey activities;

• data management, conversion and mapping;

• photogrammetry;

• geographic registration for asset management

(FLI-MAP).

P o s i t i o n i n g

• development and operation of accurate positioning

services such as OmniSTAR, SkyFix and SeaSTAR-DP;

• provision of positioning services to professional end

users on land, at sea and in the air;

• tracking services for ships, vehicles, etc.

G E O S C I E N C E

D e v e l o p m e n t & P r o d u c t i o n

• seismic investigations and gravity measurements;

• reservoir engineering;

• quantifying and qualifying oil and gas reserves;

• data management;

• provision of information to enhance reservoir

recovery.

A i r b o r n e S u r v e y

• collection of geophysical data for industries

including mining and oil and gas;

• mineral and water stocks location and saline layer

detection;

• geological mapping;

• environmental studies.

The three business units are engaged in the following activities:

A c t i v i t i e s o f t h e d i f f e r e n t b u s i n e s s u n i t s


64

Classical music occupies a prominent place in

Fugro’s sponsorship policy. For many years the company

has had a soft spot for this aspect of our culture.

The means Fugro makes available are used for, among

other things, concerts, festivals, scholarships, orchestras,

choirs and the restoration of old musical instruments.

Fugro also contributes financially towards the

production of CDs and, since 1985, nine have been

produced partly thanks to Fugro’s support.

P e r f o r m a n c e s

The latest CD, ‘Trocadero’ (2003), from a series made

possible by Fugro is a performance of several major

works by organist Leo van Doeselaar. The photograph on

the sleeve of this CD is of the Maarschalkerweerd organ

in Amsterdam’s Concertgebouw.

Earlier productions supported (in part) by Fugro are:

• Beethoven symphonies 1 – 9, performed by

the Residentie Orkest under the leadership of

Jaap van Zweden (2002 – 2003);

• Vocals for Fugro; Concertante in concert;

• Nico de Raad plays the Van Hagerbeer organ and the

Thomas Hill organ (1994 and 1999);

• De vlinder tilt de kat op, original soundtrack (1994);

• Fuga in Leiden, Nico de Raad plays the

Van Hagerbeer organ and the Thomas Hill organ

(1994/1995);

• Lyric for Cyril – Didy van Heyst plays Rachmaninoff,

Chopin & Liszt (1993);

• Schubert symphonies 3 & 4, performed by the

Residentie Orkest (1985).

M u s i c / C D s

Music crosses all bound-

aries of time and culture

and creates a bond between

people. This is why Fugro

is pleased to link the com-

pany’s name to initiatives

in this field.

F U G R O ’ SC O N T R I B U T I O N S

T O S O C I E T Y


Scheveningen’s Museum Beelden aan Zee displays

modern and contemporary sculptures. Man – the prin-

ciple theme of sculptors from all ages and cultures – is

the central figure in all the exhibitions. The museum can

rightly be called unique: in the sand of the dunes by the

sea. A place where the visitor can enjoy the sculptures in

peace and quiet and the fresh air.

P a r t i c i p a n t s

The characteristics of the Museum Beelden aan Zee,

such as its international character and its focus on

people, fit in very well with the culture of Fugro.

This is why the company supports the museum so that

its unique and personal character can be preserved for

the Netherlands.

M u s e u m B e e l d e n a a n Z e e ( S c u l p t u r e s o n t h e S h o r e )

Museum Beelden aan Zee was established in 1994 to promote modern

sculpture. In 2001 the museum was extended with the Sculptuur

Instituut (Sculpture Institute), a scientific research centre for inter-

national modern and contemporary sculpture.


M S 1 5 0 ( H o u s t o n )

the team the ‘Mission Possible

Award’. A year earlier Fugro won

the award for the best company

‘promoting the mission’.

In 2003 the Fugro team collected

over US$ 90,000 for the MS

Foundation. This puts Fugro in

eighth place on the company

league table. The team is also in

tenth place for the number of par-

ticipants. This performance gained

The BP MS 150 was a two-day cycling event.

Thousands of cyclists rode from Houston to Austin with

the goal of raising money for, and drawing attention to,

the National Multiple Sclerosis Foundation in the United

States. The most important goal of the Fugro team is to

support people suffering from MS and their families and

to make a financial contribution to the Foundation

which is conducting research into the cause and cure of

MS. A Fugro team has participated in the event for the

past four years and interest in the event has increased

year by year. This underlines the importance the

company attaches to involvement in major social

themes.

F u g r o ’ s e f f o r t s

In 2003, 142 Fugro employees made the trip from

Houston to Austin on racing bikes or tandems. The team

reflected the company’s international character. In

addition over 150 Fugro volunteers helped with the

organisation of the event and hundreds of Fugro

supporters encouraged their colleagues and the other

participants from the roadside. In addition to the social

contribution, participation in the cycle race also created

a special bond between the cyclists and the supporters

and promoted good relations among the staff. In 2004 a

Fugro team will once again participate in the race.

‘We cycle for people with MS who cannot participate

themselves.’


A n n u a l

A c c o u n t s 2 0 0 3FUGRO N .V.


C o n s o l i d a t e d b a l a n c e s h e e t

(before proposed profit appropriation)

(x E 1,000)

F i x e d a s s e t s

(1) Intangible fixed assets

(2) Tangible fixed assets

(3) Financial fixed assets

C u r r e n t a s s e t s

(4) Consumables and work in progress

(5) Receivables

Liquid assets

T o t a l a s s e t s

(6) C a p i t a l a n d r e s e r v e s

Minority interests

G r o u p ’ s e q u i t y

(7) P r o v i s i o n s

(8) L o n g - t e r m l i a b i l i t e s

(9) C u r r e n t l i a b i l i t i e s

T o t a l l i a b i l i t i e s

68

291,942

236,689

24,421

553,052

72,102

339,543

65,288

476,933

1,029,985

240,783

2,949

243,732

34,246

412,700

339,307

1,029,985

218,016

192,293

21,096

431,405

62,279

274,784

24,777

361,840

793,245

271,698

2,552

274,250

12,706

273,520

232,769

793,245

31-12-2002

( ) refers to notes to the consolidated annual accounts.

31-12-2003


C o n s o l i d a t e d p r o f i t a n d l o s s a c c o u n t

(x E 1,000)

(10) T u r n o v e r

Third party costs

(11) Staff costs

Depreciation

(12) Other operating expenses

O p e r a t i n g r e s u l t b e f o r e a m o r t i s a t i o n g o o d w i l l

Amortisation goodwill

O p e r a t i n g r e s u l t ( E B I T )

(13) Interest receivable

(13) Interest payable

R e s u l t b e f o r e t a x a t i o n

(14) Taxation

R e s u l t a f t e r t a x a t i o n

Minority interests

N e t r e s u l t


(15) R e s u l t s p e r o r d i n a r y s h a r e b e f o r e a m o r t i s a t i o n g o o d w i l l

Net result

Net result after full dilutive effects

R e s u l t s p e r o r d i n a r y s h a r e a f t e r a m o r t i s a t i o n g o o d w i l l

Net result

Net result after full dilutive effects

69

830,067

(286,520)

(300,195)

(49,483)

(117,576)

(753,774)

76,293

(12,686)

63,607

1,405

(19,928)

(18,523)

45,084

(11,660)

33,424

(1,004)

32,420

45,106

3.12

3.00

2.24

2.21

945,899

(328,401)

(320,757)

(46,941)

(137,927)

(834,026)

111,873

(12,002)

99,871

1,328

(17,798)

(16,470)

83,401

(22,484)

60,917

(699)

60,218

72,220

5.03

4.69

4.19

3.94

2003 2002


C o n s o l i d a t e d c a s h f l o w s t a t e m e n t

(x E 1,000)

C a s h f l o w f r o m o p e r a t i o n s

Net result

Depreciation tangible fixed assets

Amortisation goodwill

Change in minority interests

Changes in consumables and work in progress

Changes in receivables

Changes in provisions

Changes in current liabilities

Net cash flow from operations

C a s h f l o w f r o m i n v e s t m e n t a c t i v i t i e s

Goodwill

Investments in tangible fixed assets

Disposal of tangible fixed assets

Investments in financial fixed assets

Disposal of financial fixed assets

Net cash flow from investment activities

C a s h f l o w f r o m f i n a n c i n g a c t i v i t i e s

Option rights exercised

Acquisition/sale of own shares

New long-term loans

Redemption of long-term loans

Changes in short-term loans

Dividend paid

Net cash flow from financing activities

E x c h a n g e r a t e d i f f e r e n c e s

L i q u i d i t y

Total net cash flow

Liquid assets as at 1 January

Liquid assets as at 31 December

70

32,420

49,483

12,686

397

(9,823)

(64,759)

21,540

105,946

147,890

(91,475)

(122,325)

7,959

(7,229)

1,918

(211,152)

(129)

(4,124)

143,233

(4,053)

592

(14,616)

120,903

(17,130)

40,511

24,777

65,288

60,218

46,941

12,002

(397)

3,556

18,451

4,650

(193,658)

(48,237)

(2,486)

(100,036)

11,407

(2,193)

7,874

(85,434)

(214)

(1,961)

157,032

(4,962)

170

(11,210)

138,855

(8,480)

(3,296)

28,073

24,777

2003 2002


G e n e r a l

The annual accounts are prepared in accordance

with the Generally Accepted Accounting Principles for

financial reporting in the Netherlands and meet the

legal requirements in this report as included in part 9 of

book 2 of the Netherlands Civil Code. The annual

accounts are prepared in Euros on the principle of

historical costs. Assets and liabilities are valued on

nominal value, unless sated differently. The accounting

principles are applicable on the annual accounts in its

entirety and therefore also on the consolidated annual

accounts that are contained therein.

C o n s o l i d a t i o n

The consolidated accounts include those companies

in which Fugro N.V. exercises direct and/or indirect

management control. The financial data of these

companies are included for 100% – the share of minority

interests in the equity and result is reported separately.

The results of participations are brought into the

consolidation from the date of acquisition or

incorporation. The companies involved in the

consolidation have been valued according to uniform

principles.

Consolidation of the results of participations cease

on the date of sale.

F o r e i g n c u r r e n c i e s

Assets and liabilities denominated in currencies

other than euros, including foreign associated

companies, are translated at the official rates of

exchange ruling at the balance sheet date.

Turnover and costs in local currencies have been

translated using average rates of exchange. Exchange

profits or losses arising from investments in subsidiaries

are credited to or charged against equity. Other currency

differences are reflected in the profit and loss account.

C h a n g e i n a c c o u n t i n g p r i n c i p l e s

P r e s e n t a t i o n u n a p p r o p r i a t e d r e t a i n e d

e a r n i n g s

Following the changed accounting rules with respect

to post balance sheet events, the proposed distribution of

dividend can no longer be presented as current liability.

Only existing liabilities with respect to the appropriation

of earnings are included in the annual accounts. The net

result for the year is presented as separate balance sheet

item (unappropriated retained earnings). The balance

sheet per 31 December 2002 has been adjusted for

comparison purposes.

P r e s e n t a t i o n

Referring to article 362, clause 4 of part 9 of book 2 of

the Netherlands Civil Code, there is a deviation from the

rules on Models of Annual Accounts for the presentation

of the profit and loss account. This deviation is amongst

others because of comparison purposes, especially with

respect to the presentation of the amortisation of

goodwill. It is expected that a systematical amortisation

will no longer be allowed under IFRS.

V a l u a t i o n p r i n c i p l e s

The Group is deeply committed to research and

development. However, as research and development is

frequently contained within projects at cost price, or

lower, a precise quantification of the amounts incurred

is not possible.

I n t a n g i b l e f i x e d a s s e t s – g o o d w i l l

Goodwill is understood as the difference between

the acquisition price and the real value of the acquired

assets and liabilities. The real value is determined

internally. As of the first of January 2001, the goodwill

payment is capitalised and amortised over the estimated

lifetime, with a maximum of twenty years using a

straight line method.

T a n g i b l e f i x e d a s s e t s

Tangible fixed assets, with the exception of land to

which depreciation is not applied, are valued at cost less

depreciation calculated on a straight line basis.

Plant and machinery constructed by the company is

brought into the accounts at cost (including man hours

own staff at internal rates, excluding overheads and

profit) and is subject to straight-line depreciation at the

rates applied to other similar assets.

F i n a n c i a l f i x e d a s s e t s

Financial fixed assets include interests in the equity

of associated companies which are stated in accordance

with the most recent accounts. Participations over which

a significant influence can be exercised are valued at the

net capital asset in accordance with the accounting

principles of Fugro N.V. Participations over which no

71

A c c o u n t i n g p r i n c i p l e s


significant interest can be exercised are valued at the

acquisition price. Long-term receivables included here

are stated at nominal value less any provisions

considered necessary.

E x t r a o r d i n a r y d e p r e c i a t i o n o f

f i x e d a s s e t v a l u e

Fixed assets are evaluated for extra ordinary

depreciation when this is called for due to events or

changed conditions. For this evaluation the assets are

grouped on the basis of separately assignable and mostly

stand-alone cash flows. If it appears that the value of the

relevant asset is lower than the book value the difference

is charged to the profit and loss account as a special

devaluation. Assets to be divested are valued at the

estimated proceeds value.

S t o c k s o f c o n s u m a b l e s a n d w o r k i n p r o g r e s s

Stocks of consumables include primarily materials

and spare parts. Materials and parts supplied by third

parties are stated at cost. Items created in-house are

valued at staff cost without uplifts for overhead and

profit. Provisions for obsolescence have, where

necessary, been deducted.

The multi-client seismic library comprises completed

and in process data-sets that, without limitation, can be

sold on a non-exclusive basis to one or more clients.

The collecting and processing of the seismic data is

valued at the chargeable direct costs of all vessel and

third party costs and man-hours and equipment together

with an uplift for overheads, but excluding profit.

A straight line depreciation charge is applied which

commences in the month following completion of a

dataset so that full amortisation will be achieved thirty

six months after the year end in which it was completed.

Additional amortisation charges are based upon the

sales of seismic data whereby 75% of the sales value is

taken as depreciation. Other data libraries are not

included in the balance sheet, as is customary in the

industry.

Work in progress is stated at cost, which includes the

costs of direct materials and staff plus attributable

overheads and profit, unless profit cannot be allocated to

the work performed. On long term projects completion

of a stage is considered to have been effected upon the

issuing of an invoice to the client.

Provisions have been made for anticipated losses.

Advance instalments relating to current projects are

included in current liabilities.

R e c e i v a b l e s

Receivables are stated at invoice value less provisions

for doubtful amounts as necessary.

L i q u i d a s s e t s

Liquid assets are stated at nominal value.

L i a b i l i t i e s a n d l o a n s

Long-term and current liabilities and loans are stated

at their nominal amounts.

P r o v i s i o n s

Provisions are built up for actual or legally

enforceable obligations and are taken into account at

nominal value except for those relating to the group’s

obligations for pension backservices, which are based

upon actuarial valuations.

D e f e r r e d t a x e s

Deferred taxes may arise as a result of temporary

differences between the business economic and fiscal

valuation of assets and liabilities. The deferred taxes are

included at nominal value and calculated using the tax

rates valid on the balance sheet date.

Deferred tax receivables are only included as far as

they are offset by deferred tax obligations that relate to

the same periods, or if in some other manner there is a

high degree of probability that these deferred receivables

can be achieved. Deferred tax assets are included as other

receivables.

C o n t i n g e n t l i a b i l i t i e s

These include liabilities from contracts which exceed

a period of one year to complete such as guarantees and

lease obligations.

R e s u l t r e c o g n i t i o n

T u r n o v e r

Turnover comprises the invoiced amounts of goods

sold and services rendered to third parties, net of taxes,

the net change in work in progress. Turnover on long-

term projects is included upon completion of a phase.

72


T h i r d p a r t y c o s t s

These are costs charged by third parties and allocated

directly to projects.

D e p r e c i a t i o n

Tangible fixed assets, excluding land, are written

down to nil over their anticipated useful lives.

Depreciation is applied at the following rates per annum:

Buildings 2.5% – 5%

Plant and machinery 25%

Vessels and jack-up rigs 10% – 50%

Rov’s 16%

Survey equipment 20% – 33%

Oceanographic equipment 50%

Computers and other equipment 33%

Motor vehicles 25%

Used plant and machinery 50% – 100%

S t a f f c o s t s a n d o t h e r o p e r a t i o n a l c o s t s

Staff costs and other operational costs are accounted

for in the period they are related to.

I n t e r e s t r e c e i v a b l e ( p a y a b l e )

These items relate solely to third charges received or

paid respectively during the reported period.

P r o f i t ( l o s s ) o n e x t r a o r d i n a r y i t e m s

These are items which are of an unusual, non-

recurring nature and lie outside the ordinary activities of

the group.

T a x e s

These are computed on the commercial result before

tax and after taking into account all fiscal facilities

available. Taxes on profit are computed in accordance

with the rates of taxation in the various countries in

which companies of the group operate. Amounts of tax

which have not yet fallen due and are caused by timing

differences are included in the deferred tax assets /

liabilities.

A c c o u n t i n g p r i n c i p l e s f o r

t h e c a s h f l o w s t a t e m e n t

The cash flow statement has been prepared in

accordance with the indirect method. The cash flow

statement distinguishes between cash flows from

operations, investments and financing. Cash flows in

foreign currencies are calculated at the average

exchange rate for the year. Exchange rate differences

are shown separately in the cash flow statement.

Both interest and tax charges are included in the section

relating to operations. The cash flow derived from the

acquisition or disinvestment of financial interests (group

companies and participations) is included in the section

relating to investment activities, taking the liquid assets

into account. Dividends paid are shown in the section

relating to financing activities.

73


N o t e s t o t h e c o n s o l i d a t e d a n n u a l a c c o u n t s

(x E 1,000)

(1) I n t a n g i b l e f i x e d a s s e t s

Intangible fixed assets only refer to goodwill.

B a l a n c e a t 1 J a n u a r y

Cost

Accumulated depreciation

Book value

C h a n g e s d u r i n g t h e y e a r

Goodwill related to the acquisition of group companies

Change goodwill previous year

Depreciations

Currency exchange differences

Net change

B a l a n c e a t 3 1 D e c e m b e r

Cost


Book value

During 2003 E 157.4 million regarding to acquisitions have been added to the Fugro Group. This results in a book

value of goodwill of E 91.5 million, taking into account the net asset value of acquisitions, adjustment to the Fugro

principles and the reorganisation provisions (E 20.3 million). For a more detailed description and explanation of these

acquisitions reference is made to developments per divisions on page 52 to 62.

The goodwill related to the acquisition of Thales GeoSolutions amounts to E 63.7 million per the end of 2003. Given

the acquisition date, the submission of draft completion accounts and the complexity of the transaction, the final

consideration will only be known in the course of 2004. The completion accounts will form the basis for the

determination of the purchase price. The final calculation of goodwill will take into account the valuation of potential

claims to the Seller.

74

234,240

(16,224)

218,016

91,475

–

(12,686)

(4,863)

73,926

320,463

(28,521)

291,942

242,780

(4,883)

237,897

3,203

(717)

(12,002)

(10,365)

(19,881)

234,240

(16,224)

218,016

2003 2002


(2) T a n g i b l e f i x e d a s s e t s

B a l a n c e a t 1 J a n u a r y 2 0 0 3

Cost


Book value


Additions regarding group companies

Additions

Disposals

Depreciation


Net change

B a l a n c e a t 3 1 D e c e m b e r 2 0 0 3

Cost


Book value

The very nature of the group’s plant and equipment influences its market value. In view of the high rates of

depreciation the actual value is not expected to be lower than the book value shown.

‘Vessels’ includes ancillary operating equipment.

The net book value of the assets amounted to:

Geotechnical division E 67 mln. (2002: E 75 mln.)

Survey division E 129 mln. (2002: E 74 mln.)

Geoscience division E 41 mln. (2002: E 43 mln.)

‘Other equipment’ includes assets under construction to a value of E 2.6 mln. (2002: E 2.5 mln.), together with

computers and electronics, office equipment and motor cars. In 2003 no significant single investment was incurred.

‘Land and Buildings’ includes E 21 mln. (2002: E 22 mln.) in the Netherlands, E 4.6 mln. (2002: E 5.0 mln.) in the United

Kingdom, in Hong Kong E 4.7 mln. (2002: E 5.6 mln.) and in Australia E 1.8 mln. (2002: E 1.6 mln.) serve as security for

mortgage loans. The amounts mentioned refer to the development costs of the real estate.

75

80,661

(23,607)

57,054

2,439

8,746

(2,198)

(2,911)

(4,917)

1,159

82,200

(23,987)

58,213

269,179

(221,005)

48,174

19,825

23,788

(911)

(27,991)

(3,990)

10,721

351,759

(292,864)

58,895

71,535

(12,986)

58,549

2,300

6,819

(96)

(4,972)

(9,642)

(5,591)

75,019

(22,061)

52,958

129,619

(101,103)

28,516

46,325

12,083

(4,754)

(13,609)

(1,938)

38,107

215,578

(148,955)

66,623

550,994

(358,701)

192,293

70,889

51,436

(7,959)

(49,483)

(20,487)

44,396

724,556

(487,867)

236,689

Plant and

equipment

Land and

buildings

Other

equipment

TotalVessels


(3) F i n a n c i a l f i x e d a s s e t s


Acquired capital interests

Disposal of capital interests


Other


No repayment schedules have been agreed for the long-term loans. The repayment schedule for the sundry receivables

is less than five years.

(4) C o n s u m a b l e s a n d w o r k i n p r o g r e s s

Consumables

Seismic survey data

Work in progress


(5) R e c e i v a b l e s

Trade receivebles

Sundry receivables and prepayments


All receivables fall due within one year. The amount of trade receivables is after the creation of provisions by

operating companies to an amount of E 7.6 mln. (2002: E 8.3 mln.). No individual item exceeds 5% of the total of the

receivables.


Details are to be found in the notes to the holding company’s accounts.

76

9,577

5,655

(44)

(974)

(20)

14,194

10,257

526

(1,849)

(990)

37

7,981

6,625

22,351

43,126

72,102

255,480

84,063

339,543

1,262

1,048

(19)

(22)

(23)

2,246

21,096

7,229

(1,912)

(1,986)

(6)

24,421

4,960

10,209

47,110

62,279

227,573

47,211

274,784

2003 2002

TotalOther

receivables

Loans to

associated

companies

Associated

companies

2003 2002




Additions

Increase from acquisitions

Withdrawals/Releases


Pension plans have been agreed for employees in the Netherlands and the United Kingdom. Obligations relating to

these arrangements are fully covered by reputable insurance companies.

The pension obligations in the Netherlands have been insured on the basis of a guarantee contract. The provision for

pensions has been calculated using an interest rate of 3% (2002: 3%). In 2001, the back service in the Netherlands has been

paid to the insurance company.

In the UK there are two defined benefit schemes. One was closed to new members in January 2001 and the other was

closed to all staff, including its existing members in August 2001. Defined contribution schemes are now in place for

eligible staff. Measures have been taken to ensure that the necessary reserves are available when required for the defined

benefit schemes and, as far as is known, no expenses of a material substance that will influence the results will arise in

the future.

In the United States employees can make use of 401K facilities. In other countries pensions and similar arrangements

for employees, if customary, are maintained, taking local circumstances and regulations into account. Resulting future

obligations have been covered in the Balance Sheet of the companies concerned.

The provisions for reorganisation relate to one-time costs and payments concerning re-structuring and staff cut-back.

Sundry provisions are provisions primarily for maintenance E 2.9 mln. (2002: E 5.1 mln.) and insurance of own-risks

E 0.1 mln. (2002: E 0.2 mln.). The provision insurance own-risks will be systematically reduced until 2005. Approximately

E 6.0 mln. (2002: E 6.5 mln.) of the provisions are of a term of more than one year.

(8) L o n g - t e r m l i a b i l i t i e s

Subordinated convertible debenture bond

Private Placement

Mortgages

Bank loan

Sundry liabilities


On 29 March 2000 subordinated convertible debenture bond with a coupon of 4.75% was issued for an amount of

E 100 mln. Conversion to depositary receipts of shares in Fugro is permitted with effect from 12 May 2000.

The conversion price is set at E 64.21 per depository receipt of a share with a nominal value of E 0.20. The settlement date

of the coupon of 4.75% is 3 April in each year, commencing on 3 April 2001. The bond expires on 3 April 2005.

Early repayment of the whole bond by Fugro is possible should the share price of depository receipts of shares in Fugro

after 3 April 2003 be at least 130% of the conversion price for a period of 30 subsequent trading days.

77

100,000

156,364

12,092

142,489

1,755

412,700

2003 2002

Longer than

5 years

TotalTotal Longer than

5 years

–

156,364

6,535

–

–

162,899

100,000

156,364

13,740

–

3,416

273,520

–

156,364

7,369

–

–

163,733

4,749

142

70

(601)

4,360

49

2,876

–

(8)

2,917

2,204

185

20,252

(567)

22,074

5,704

1,067

83

(1,959)

4,895

12,706

4,270

20,405

(3,135)

34,246

8,056

3,647

4,409

(3,406)

12,706

Total

2002

Total

2003

SundryReorga-

nisation

Deferred

tax

Pensions


Early 2002 long-term loans have been established with twenty American and two British institutional investors.

The terms are: 10 years E 70 mln.

12 years E 44 mln.

15 years E 42 mln.

The average interest for the loans is 6.5%. The exchange rate risks, as far as applicable, have been covered.

The conditions of the loans are: Capital and reserves > E 200 mln.

EBITDA/Interest > 2.5

Debt/EBITDA < 3.0

Debt (excluding subordinated convertible debenture bond, private

placement and long-term bank loan) < 15% of consolidated total balance

In 2003 all conditions were fulfilled.

In the middle of November 2003 a loan of up to E 200 million was agreed with Rabobank Nederland to finance the

acquistition of Thales GeoSolutions. The loan has a term of two years with no repayment during the first year. The

interest rate is fixed at EURIBOR plus 70 basis points. The loan conditions are the same as for the long-term loan taken out

in 2002, as stated above.

The average rate of interest on mortgages and sundry liabilities maturing after one year amounted to 4.8% per annum

(2002: 5.8%).


Bank overdrafts

Trade creditors

Interest to be paid

Loan repayments in following accouting year

Advance installments on work in progress

Salaries, benefits and bonuses

Tax and social security premiums

Payments related to acquisitions

Other


Other current liabilities do not include individual items that exceed 5% of the sum of current liabilities.

Each subsidiary has its own bank facilities, denominated in local currency for its activities. In principle the subsidiary

has sufficient shareholder’s equity to facilitate this arrangement and no (international) financial cross guarantees exist

between subsidiaries.

C o m m i t m e n t s n o t a p p e a r i n g o n t h e b a l a n c e s h e e t

Long-term lease and rental agreements

Bank guarantees

Backservices pensions (United Kingdom)

Of the commitments as stated above, E 30.3 mln. relate to the period after 2004, and E 2.2 mln. to the period after

2008. No capital commitments exist (2002: nil).

78

2003 2002

50,249

1,061

7,107

30,327

7,496

6,596

44,436

75,169

5,934

2,354

29,773

27,950

27,772

26,812

99,107

339,307

18,338

56,548

5,064

1,762

28,095

27,766

17,902

2,973

74,321

232,769

2003 2002


F i n a n c i a l i n s t r u m e n t s

In its normal operations Fugro N.V. and its group companies make use of various financial instruments according to a

policy established by the Board of Management. These include financial instruments accounted for under assets and

liabilities such as financial fixed assets, current assets, receivables and short- and long-term liabilities. Financial

instruments that are not shown in the balance sheet are (apart from the cover for exchange rate fluctuations on the

‘Private Placement’) rarely employed.

The estimated value of financial instruments at 31 December 2003 reflects the nominal value.

I n t e r e s t e x p o s u r e

The company’s goal is to minimise the effect on the annual results of interest rate changes and to limit the total

interest paid. To this end interest rates on current bank balances are subject to frequent review.

E x c h a n g e r a t e r i s k

Fugro N.V. and its group companies attempt to limit and control the effect of transaction risks deriving from

fluctuations in exchange rates on the annual results. Income in local currency is principally used for payments in the

same local currency. Therefore, the international cashflows are relatively limited and are primarily in US dollars, as are

receivables and liabilities. As a consequence exchange rate fluctuations have a limited effect (with the exception of

extreme volatilities) on the normal operations. However, exchange rate fluctuations can occur as translation differences

on the balance sheet and in the profit and loss account.

C r e d i t r i s k

Fugro N.V. has made no loans other than to solvent group companies. The working methods and geographical spread

of the group companies’ activities limit Fugro’s exposure to risks related to concentrations of credit and market risks.

C o n t i n g e n t l i a b i l i t i e s

The holding company has issued a net worth statement for a line of credit for the companies in the USA.

Some of the group companies are, as a result of their normal business activities, involved either as plaintiffs or

defendants in claims. Based on information presently available the financial position of the group is not likely to be

significantly influenced by any of these matters.

The holding company and some of the Dutch operating companies form a fiscal unit for corporate tax. Furthermore

one fiscal unit for corporate tax exist in the Netherlands.

Each of the operating companies is severally liable for tax to be paid by all companies that belong to the fiscal unit.

(10) T u r n o v e r

Sales

Net change in work in progress*

G e o g r a p h i c a l b r e a k d o w n o f t u r n o v e r b y b i l l i n g o r i g i n

The Netherlands

Other European countries


Asia and Australia

Near and Middle East, Africa

79

830,321

(254)

830,067

136,054

306,639

278,355

150,072

74,779

945,899

110,134

303,472

225,435

135,360

55,666

830,067

946,134

(235)

945,899

2003 2002

2003 2002

* Excluding exchange rate differences and acquisitions.


T u r n o v e r p e r a c t i v i t i y

G e o t e c h n i c a l

Onshore geotechnical services

Offshore geotechnical services

T o t a l G e o t e c h n i c a l

S u r v e y

Offshore surveying services

Onshore surveying services

Positioning

T o t a l S u r v e y

G e o s c i e n c e


Airborne Survey

T o t a l G e o s i e n c e

T o t a l

Operating result before amortisation of goodwill from Geotechnical activities was E 30 mln. (2002: E 35 mln.), Survey

activities E 33 mln. (2002: E 50 mln.) and Geoscience activities E 13 mln. (2002: E 27 mln.). For more detailed information

is referred to developments per division on pages 52 – 62.

(11) S t a f f c o s t s

Wages and salaries

Social security costs

Pensions

The remuneration of the Statutory Directors can be reported as follows:

(in euros)

Remuneration

Bonus

Pension contributions (including AOV insurance)

80

182,156

98,497

280,653

274,389

46,619

25,089

346,097

157,266

46,051

203,317

830,067

205,421

117,534

322,955

275,516

64,820

30,167

370,503

184,321

68,120

252,441

945,899

2003 2002

2003 2002

G-J. Kramer K.S. Wester

232,320

110,085

505,881

848,286

392,000

189,912

359,731

941,643

442,000

228,666

359,075

1,029,741

265,615

135,520

344,363

745,498

2002 20022003 2003

260,958

25,295

13,942

300,195

280,130

25,528

15,099

320,757


The company has made available to each of the current Statutory Directors the use of a company car and a mobile

phone. Furthermore they receive a small monthly compensation to cover expenses.

The remuneration of the Statutory Directors is determined annually by the Remuneration Committee. In 2002 an

external, independent investigation into the level and composition of the remunerations to Statutory Boards was

carried out.

The conclusion of the survey was that the remuneration of the Executive Board has not entirely kept pace with the

company’s rapid growth in the past decade. It has been decided that the arrears will be made up over a period of three

years (2002 – 2004). The back service obligations related to Mr. G-J. Kramer’s pension will be significant. It has been

decided that these liabilities will be limited to approximately one third of the total recompense contractually mandatory.

This pension regulation has been agreed for the period up to and including 2007. The remuneration for 2003 has been

amended based on the outcome of this investigation. The achievement of the company’s targets are relevant for the

determination of the size of the salaries and bonuses.

No guarantee obligations have been entered into on behalf of Statutory Directors.

The company has pre-paid the tax for the Dutch participants related to the options issued in 1999. Of the total amount

of E 308,944, E 181,486 relates to the Statutory Directors (Mr. G-J. Kramer E 98,992; Mr. K.S. Wester E 82,494).

The remuneration of the members of the Supervisory Board can be specified as follows:



P.J. Crawford

J.A. Colligan

J.A.C. King

Th. Smith

P. Winsemius

B. Stallworth

Total

No options are granted and no company assets are made available to the members of the Supervisory Board.

No loans have been extended to the members of the Supervisory Board. No guarantee obligations have been entered

into on behalf of the members of the Supervisory Board.

The following concerns the options allocated to the Statutory Directors:

Number per 1 January

Issued option rights

Exercised options

Number per 31 December

The average exercise price of the options per 31 December 2003 was E 45.43 (2002: E 46.09) for Mr G-J. Kramer and

E 45.43 (2002: E 46.09) for Mr K.S. Wester.

81

2003 2002

2003 2002

G-J. Kramer K.S. Wester

67,500

27,000

–

94,500

94,500

27,000

–

121,500

81,000

32,400

–

113,400

113,400

32,400

–

145,800

40,000

33,000

31,000

28,000

16,800

38,000

31,000

–

217,800

27,227

22,689

22,689

–

22,689

15,126

22,689

12,912

146,021

2002 2003


82

N u m b e r o f e m p l o y e e s a t y e a r - e n d

Technical staff

Management and administrative staff

Temporary and contract staff

Average number of employees during the year

(12) O t h e r o p e r a t i n g e x p e n s e s

These are non-project related costs, such as supplies and consumables, occupancy costs, insurance and ICT costs.

The most important task of the external auditor is the audit of the annual accounts of Fugro N.V. Furthermore,

the auditor is assisting with due diligence processes and annual accounts related work. Tax advice is in principle given by

specialist firms or specialised departments of local audit firms. Other than these advisory services, Fugro makes only

limited use of external advisers. In the case that these services are required specialists are engaged that are not associated

with the external auditor.

The fees paid for the above mentioned services are evaluated on a regular basis and conform with the market.

(13) I n t e r e s t

This relates mainly to the cost of bank facilities and long -term loans.

(14) T a x

The consolidated tax position of the Group shows:

A c t u a l t a x c h a r g e

Current year

Prior year adjustments

D e f e r r e d t a x o b l i g a t i o n s

Timing differences between fiscal and commercial assessments

Change from utilisation of tax losses

T a x c h a r g e a s s t a t e d i n t h e

c o n s o l i d a t e d p r o f i t a n d l o s s a c c o u n t

10,817

184

11,001

1,857

(1,198)

659

11,660

20,070

(1,967)

18,103

4,359

22

4,381

22,484

2003 2002

2003 2002

6,304

1,521

647

8,472

7,160

5,129

1,241

553

6,923

7,003


Tax charge based on

local rates

Effective tax charge on

non local activities

Disallowed items

Use of agreed tax losses

Prior year adjustments

Other

T a x c h a r g e a s s t a t e d

i n t h e c o n s o l i d a t e d

p r o f i t a n d l o s s

a c c o u n t

Deferred tax assets

Deferred tax liabilities

A v a i l a b l e t a x l o s s e s ,

n o t s h o w n o n

t h e b a l a n c e s h e e t

* Percentage calculated over the net result after amortisation of goodwill.

The tax assets relate to the differences between the fiscal and the commercial valuation of mainly tangible fixed

assets, as well as for fiscal available tax losses as far as there is a high probability that these will be realised. The tax

liabilities relate to the differences between the fiscal and commercial valuation of tangible fixed assets and work in

progress.

(15) D i l u t i v e e f f e c t o n e a r n i n g s p e r s h a r e

Net result (x E 1,000)

Average number of ordinary shares outstanding (x 1,000)

N e t r e s u l t p e r o r d i n a r y s h a r e ( x € 1 . – )

Net result including dilutive effects (x E 1,000)

Weighted average number of ordinary shares

including dilutive effects (x 1,000)

Change in the net result per ordinary share as a result of:

• Option rights (x E 1.–)

• Subordinated convertible debenture bond (x E 1.–)

D i l u t i v e e a r n i n g s p e r o r d i n a r y s h a r e ( x € 1 . – )

83

32,420

14,464

2.24

35,508

16,080

(0.01)

(0.02)

2.21

60,218

14,359

4.19

63,306

16,048

(0.03)

(0.22)

3.94

11,909

365

195

(1,343)

184

350

11,660

1,097

–

38,216

%

20.6

0.6

0.4

(2.3)

0.3

0.6

20.2

%*

26.4

0.8

0.5

(3.0)

0.4

0.8

25.9

23,316

840

1,289

(1,929)

(1,967)

935

22,484

439

686

23,018

%

24.4

0.9

1.4

(2.0)

(2.1)

1.0

23.6

%*

28.0

1.0

1.5

(2.3)

(2.3)

1.1

27.0

2003 2002

2003 2002


The weighted average number of ordinary shares in issue is calculated including the dividend in shares and the use of

shares purchased by the company for the option plan.

For the calculation of the net result including dilution effects the interest charges from the convertible subordinated

bonds have been taken into account.

S e g m e n t a l i n f o r m a t i o n

For supplemental information on the geographical spread and the core activities reference is made to the report of

the Board of Management and the divisional reports.

A r t i c l e 4 0 2

The profit and loss account of the holding company has been prepared in accordance with article 402, Part 9, Book 2 of

the Netherlands Civil Code.

84


H o l d i n g c o m p a n y ’s b a l a n c e s h e e t

(before proposed profit appropriation)

(x E 1,000)

F i x e d a s s e t s

(1) Intangible fixed assets

(2) Tangible fixed assets

(3) Financial fixed assets

C u r r e n t a s s e t s

(4) Receivables

Liquid assets

T o t a l a s s e t s


Issued and paid-in share capital

Share premium reserve

Other reserves

Unappropriated retained profit


(7) L o n g - t e r m l i a b i l i t e s


T o t a l l i a b i l i t i e s

85

82,558

651

448,859

532,068

16,573

–

16,573

548,641

3,033

207,159

(1,829)

32,420

240,783

324

256,364

51,170

548,641

87,174

883

345,499

433,556

8,656

109,904

118,560

552,116

2,971

207,159

1,350

60,218

271,698

463

260,977

18,978

552,116

31-12-2003 31-12-2002

( ) refers to notes to the holding company’s Annual Accounts.


H o l d i n g c o m p a n y ’s p r o f i t a n d l o s s a c c o u n t

(x E 1,000)

Result of group companies

Other results

Net results before amortisation of goodwill

Amortisation of goodwill

Net result

The result of the company is shown after charges to group companies.

86

39,298

(2,262)

37,036

(4,616)

32,420

61,230

3,638

64,868

(4,650)

60,218

2003 2002


N o t e s t o t h e h o l d i n g c o m p a n y ’s a c c o u n t s

(x E 1,000)

(1) I n t a n g i b l e f i x e d a s s e t s

G o o d w i l l

B o o k v a l u e a t 1 J a n u a r y

Cost


Book value


Change goodwill previous year

Depreciations

Net change

B o o k v a l u e a t 3 1 D e c e m b e r

Cost


Book value

(2) T a n g i b l e f i x e d a s s e t s

B o o k v a l u e a t 1 J a n u a r y

Net investments

Depreciation

Book value

B o o k v a l u e a t 3 1 D e c e m b e r

Cost


Book value

(3) F i n a n c i a l f i x e d a s s e t s

In compliance with the relevant legal regulations a schedule of investments is available for inspection at the Chamber

of Commerce in The Hague.

87

93,024

(5,850)

87,174

–

(4,616)

(4,616)

93,024

(10,466)

82,558

883

10

(242)

651

1,676

(1,025)

651

95,940

(1,200)

94,740

(2,916)

(4,650)

(7,566)

93,024

(5,850)

87,174

133

879

(129)

883

1,666

(783)

883

2003 2002

2003 2002


F i n a n c i a l f i x e d a s s e t s


Net result of group companies

Acquisition of subsidiaries

Loans subsidiaries

Goodwill on purchase of group companies

Paid out dividends


Other


* This includes one loan to a group company with an interest rate of 5%. In principle redemption will take place in two years.

(4) R e c e i v a b l e s

Receivables from group companies

Tax and social security premiums

Other receivables




Shares issued related to

stock dividend 2002

Cash dividend 2002

(2001 respectively)

Addition to other reserves

Exercise option rights

Purchase/sale of depository

rights

Exchange results on

group companies

Other

Profit for the year


88

282,703

39,298

101,807

–

–

(11,985)

(41,323)

(1,545)

368,955

62,796

–

–

18,414

–

–

(1,306)

–

79,904

4,969

6,856

4,748

16,573

345,499

39,298

101,807

18,414

–

(11,985)

(42,629)

(1,545)

448,859

262,024

61,230

2,500

59,049

1,195

(5,109)

(33,611)

(1,779)

345,499

1,587

2,941

4,128

8,656

Loans to/

receivables

from group

companies*

Shares in

group

companies

Total

2002

Total

2003

20022003

2,971

62

–

–

–

–

–

–

–

3,033

207,159

–

–

–

–

–

–

–

–

207,159

1,350

–

–

45,540

(129)

(4,124)

(42,629)

(1,837)

–

(1,829)

271,698

–

(14,616)

–

(129)

(4,124)

(42,629)

(1,837)

32,420

240,783

256,060

–

(11,210)

–

(214)

(1,961)

(29,416)

(1,779)

60,218

271,698

Other

reserves

Unappro-

priated

retained

profit

Total

2003

Share

premium

reserve

Issued

share

capital

Total

2002

60,218

(62)

(14,616)

(45,540)

–

–

–

–

32,420

32,420


S h a r e c a p i t a l

The authorised share capital of the company is composed of 57,554,500 shares of E 0.20 nominal value of which

17,266,350 are denominated as ordinary shares of which 15,165,912 shares have been issued and paid up. No preference

shares have been issued.

S h a r e p r e m i u m r e s e r v e

For tax purposes these amounts are largely regarded as being tax-fee.


Pensions

Sundry


P e n s i o n s

The provision for pensions in the Netherlands has been calculated using an interest rate of 3% (2002: 3%).

In 2001, the back service in the Netherlands is paid to the insurance company.

(7) L o n g - t e r m l i a b i l i t i e s

Subordinated convertible debenture bond

Private Placement

Group companies


For further information on the subordinated convertible debenture bond and the private placement reference is

made to page 77 – 78.

The long-term liabilities, the private placement excluded, mature within a period of less than five years. The average

rate of interest for long-term liabilities is 5.8% per annum (2002: 5.8%).


Banks, current accounts

Trade creditors

Interest Private Placement

Interest subordinated convertible debenture bond

Group companies

Other liabilities


89

233

91

324

281

182

463

2003 2002

100,000

156,364

–

256,364

–

156,364

–

156,364

100,000

156,364

4,613

260,977

–

156,364

–

156,364

2003

Total Longer than

5 year

Total Longer than

5 year

2002

35,561

1,832

1,502

3,562

–

8,713

51,170

–

1,515

1,502

3,562

81

12,318

18,978

20022003


P a r e n t c o m p a n y g u a r a n t e e s

In principle the company does not provide parent company guarantees in favour of its subsidiaries unless significant

commercial reasons exist.

The company has deposited declarations of joint and several liability for a number of Dutch subsidiaries at the

relevant Chambers of Commerce.

At the Chamber of Commerce a schedule containing the interest in the capital of subsidiaries is available for

inspection. On this list the companies for which such a declaration has been issued are identified.

C h a n g e s i n n u m b e r o f i s s u e d s h a r e s


Optional dividend 2002 (45% in shares)

Issued at 31 December 2003

Purchased for option plan at end of 2003

E l i g i b l e f o r d i v i d e n d a t t h e e n d o f 2 0 0 3

C h a n g e s i n n u m b e r o f s h a r e s p u r c h a s e d f o r t h e o p t i o n p l a n


Purchased during 2003 (at an average cost of E 34.36)

Used in 2003 (at an average excersise price of E 25.30)


Option rights are granted to an extensive group of employees. The granting of rights is dependent on the achievement

of the targets of the operating companies and their staff. The individual performance of the relevant employee is also

weighed in the granting of the number of option rights.

The company has purchased (certificates of) its own shares for the purpose of the option plan. During the financial

year 150,000 certificates with an average purchase price of E 34.26 and a nominal value of E 0.20 were purchased. In the

context of the exercise of options, 28,020 certificates with a nominal value of E 0.20 were sold at an average exercise price

of E 25.30.

The number of issued own shares held at the end of the financial year amounted to 3.9% of the number of issued

shares.

90

14,862,214

303,698

15,165,912

(588,862)

14,577,050

466,882

150,000

(28,020)

588,862


O p t i o n p l a n

In 2003 no shares were issued in the context of the exercise of option rights.

On 31 December 2003 the following option rights were in existance (including options to the Statutory Directors):

One option right entitles to one (depositary receipt of) share in Fugro N.V.

With 31 December 2003 as the year of offer 17.7% are classified as incentive stock options for the USA tax code.

In 2003 it was decided, after proper notification and approval, to extend the exercise period of the options granted in

1997 and 1998 and not yet exercised by one year because the contiguous closed period resulting from the acquisition of

Thales GeoSolutions means there has been no opportunity to exercise these rights.

The monetary value of the outstanding options has not been calculated for 2003. This calculation will be included in

the annual accounts after the IFRS principles have become final.


E x e c u t i v e D i r e c t o r s

G-J. Kramer, President and Chief Executive Officer

K.S. Wester, Director




J.A. Colligan

P.J. Crawford

Th. Smith

P. Winsemius

91

5 years

5 years

5 years

6 years

6 years

6 years

6 years

31-12-1997

31-12-1998

31-12-1999

31-12-2000

31-12-2001

31-12-2002

31-12-2003

194

231

266

336

347

406

429

166,000

170,850

166,700

226,400

227,700

246,650

250,650

1,454,950

58,100

75,300

162,200

219,400

225,450

246,650

–

987,100

5,300

14,600

6,250

6,500

4,450

4,200

–

41,300

52,800

60,700

155,950

212,900

221,000

242,450

250,650

1,196,450

28.04

19.97

36.90

68.75

50.10

43.13

40.80

Exercise price

(x E 1.–)

Outstanding

at 31-12-2003

Exercised/

expired

in 2003

Outstanding

at 01-01-2003

IssuedNumber of

participants

DurationDate of issue



A U D I T O R ’ S R E P O R T

I n t r o d u c t i o n

We have audited the annual accounts of Fugro N.V.,

Leidschendam for the year 2003. These annual accounts

are the responsibility of the company’s management.

Our responsibility is to express an opinion on these

annual accounts based on our audit.

S c o p e

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

annual accounts are free of material misstatement.

An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the annual

accounts. An audit also includes assessing the

accounting principles used and significant estimates

made by management, as well as evaluating the overall

presentation of the annual accounts. We believe that our

audit provides a reasonable basis for our opinion.

O p i n i o n

In our opinion, the annual accounts give a true and

fair view of the financial position of the company as at

31 December 2003 and of the result for the year then

ended in accordance with accounting principles

generally accepted in the Netherlands and comply with

the financial reporting requirements included in Part 9,

Book 2, of the Netherlands Civil Code.

The Hague, 10 March 2004

KPMG Accountants N.V.

P O S T B A L A N C E S H E E T E V E N T S

No post balance sheet events have occured that

require to be included here.

F o u n d a t i o n s B o a r d s

S t i c h t i n g A d m i n i s t r a t i e k a n t o o r F u g r o

The Board of the Stichting Administratiekantoor Fugro

comprises Messrs.:

name function

R. van der Vlist, Chairman Board member B

J.V.M. Commandeur Board member B

J.F. van Duijne Board member B

W. Schatborn Board member B

G-J. Kramer Board member A

Apart from Mr. Kramer no Board member has any links

with Fugro.

S t i c h t i n g B e s c h e r m i n g s p r e f e r e n t e

A a n d e l e n F u g r o

The Board of the Stichting Beschermingspreferente

Aandelen Fugro comprises Messrs.:

name function

S.C.J.J. Kortmann, Chairman Board member B

J.V.M. Commandeur Board member B

J.C. de Mos Board member B

P.H. Vogtländer Board member B

F.H. Schreve Board member A

Apart from Mr. Schreve no Board member has any links

with Fugro.

S t i c h t i n g C o n t i n u ï t e i t F u g r o

The Board of the Stichting Continuïteit Fugro in the

Dutch Antilles is composed as follows:

name function term

F.D. Leo Boardmember B and Chairman 2006

A.C.M. Goede Boardmember B and Secretary 2005

R. De Paus Boardmember B and Treasurer 2007

M.A. Pourier Boardmember B 2004

F.H. Schreve Boardmember A Fixed

Apart from Mr. Schreve no Board member has any links

with Fugro.

92


93

P r o f i t a p p r o p r i a t i o n

Article 36 of the Articles of Association:

3 6 . 2 a. From the profit, first of all and if possible, shall be

paid the percentage referred to under b. below of the

compulsory amount paid-up on the protective

preference shares at the start of the financial year for

which the distribution is made.

b. The percentage referred to under a. shall equal

the average Euribor interest rate calculated for loans

with a term of one year – weighted according to the

number of days for which this interest rate applied –

during the financial year for which the distribution is

made, plus a maximum of four percentage points;

this last increase shall, each time, be fixed for a

period of five years by the Board of Management,

subject to the approval of the Supervisory Board.

3 6 . 3 a. Subsequently and if possible a dividend shall be

paid on the financing preference shares of each

series, respectively the convertible financing shares

of each series, equal to a percentage calculated on the

effective amount paid-up on the financing preference

shares of the relevant series, respectively the

convertible financing preference shares of the

relevant series, at the time the relevant series was

first issued including any share premium, which

percentage shall be related to the average effective

return on ‘general government loans’ with a term of

7 to 8 years, calculated and determined in the

manner specified below.

b. The percentage of the dividend for the financing

preference shares of each series, respectively the

convertible financing preference shares of each

series, shall be calculated by taking the arithmetic

average of the average effective return on the loans

referred to above, as calculated by the Central Bureau

of Statistics and published in the Official List of

Euronext N.V. for the last 5 trading days prior to the

date of the first issue of financing preference shares

of the relevant series, respectively the convertible

financing preference shares of the relevant series, or

prior to the day on which the dividend percentage is

adjusted, if necessary raised or lowered by an

increase or decrease determined at the time of issue

by the Board of Management and approved by the

Supervisory Board and amounting to a maximum of

two percentage points depending on the market

conditions, which increase or decrease may differ for

each series.

3 6 . 4 In the event that in any financial year the profit is

insufficient to make the distributions referred to in

Paragraph 3 of this article, the provisions contained

in Paragraph 3 shall only be applied in subsequent

financial years after the deficit has been made good

and after the provisions contained in Paragraph have

been applied. The Board of Management shall be

authorised, subject to the approval of the Supervisory

Board, to resolve to distribute an amount equal to the

deficit referred to in the previous sentence from the

reserves, with the exception of the reserves formed by

way of a share premium on the issue of financing

preference shares, respectively convertible financing

preference shares.

3 6 . 5 In the event that the first issue of financing

preference shares, respectively convertible financing

preference shares of a series, takes place during the

course of a financial year, the dividend on the

relevant series of financing preference shares,

respectively the convertible financing preference

shares, will be proportionately decreased to the first

day of issue.

3 6 . 6 After application of the provisions contained in

Paragraphs 2 to 5 inclusive, no further dividend

distributions shall be made on the protective

preference shares or the financing preference shares,

respectively the convertible financing preference

shares.

3 6 . 7 From the profit remaining after application of the

provisions contained in Paragraphs 2 to 5 inclusive,

the Board of Management – subject to the approval of

the Supervisory Board – shall make such reservations

as the Board of Management deems necessary. To the

extent that the profit is not reserved by application of

the previous sentence, it shall be at the disposal of

the General Meeting either to be wholly or partially

reserved or to be wholly or partially distributed to

holders of ordinary shares in proportion to the

number of ordinary shares they hold.

P r o p o s e d p r o f i t a p p r o p r i a t i o n

In accordance with Article 36 of the Articles of

Association, we propose a dividend of E 27 million

be paid out in the form of a cash payment of E 1.85

per (depositary receipt of) share with a nominal value of

E 0.20 or in the form of (depository receipts of) ordinary

shares with a nominal value of E 0.20 charged to the

reserves.


1) Unlike preceding years the figures as from the year 1999 have been calculated

based upon the weighted average number of outstanding shares.

2) Before amortisation of goodwill.

3) In 2003 and 2002 no accrued dividend has been incorporated.94

2001

909,817

331,685

578,132

98,470

105,301

61,732

–

163,298

89,352

11,196

43,569

(50,514)

814,772

8,056

121,450

244,660

10.8

6.8

10.7

35.7

30.4

7.8

16.68

7.42

7.93

4.65

1.60

50.10

75.65

43.00

6,953

14,670

2002

945,899

328,401

617,498

111,873

119,161

72,220

–

192,293

100,036

24,852

46,941

129,071

793,245

12,706

273,520

271,698

11.8

7.6

11.7

27.4

34.6

6.1

18.28

7.79

8.30

5.03

1.85

43.13

66.00

39.50

6,923

14,862

2003

830,067

286,520

543,547

76,293

94,589

45,106

–

236,689

122,325

70,889

49,483

137,626

1,029,985

34,246

412,700

240,783

9.2

5.4

8.3

17.6

23.7

3.4

15.88

5.27

6.54

3.12

1.85

40.80

51.45

24.51

8,472

15,166

2000

712,934

250,132

462,765

73,697

85,596

46,024

–

120,526

49,008

3,686

39,572

92,269

474,741

6,746

120,713

101,453

10.3

6.5

9.9

45.4

22.1

8.1

8.41

5.92

6.87

3.69

1.36

68.75

71.25

37.25

5,756

12,762

1999

546,760

176,067

370,648

61,805

77,233

40,704

–

114,035

37,301

9,257

36,529

15,066

380,495

10,573

23,234

107,909

11.3

7.4

11.0

41.0

29.3

13.1

9.18

5.09

6.36

3.35

1.23

36.90

39.90

16.40

5,114

12,612

1998

578,207

197,258

380,948

61,669

74,057

37,800

–

108,181

61,487

6,081

36,257

7,170

338,021

8,894

24,368

90,575

10.7

6.5

9.9

45.0

27.9

12.1

7.62

5.19

6.23

3.18

1.13

19.97

43.97

16.25

5,136

12,170

1997

482,096

172,346

309,750

46,195

60,670

31,084

3,630

93,479

58,220

5,763

29,586

6,308

289,512

7,805

17,153

77,370

9.6

6.4

10.0

44.8

27.7

10.4

6.60

3.93

5.17

2.65

1.00

28.04

33.13

13.75

4,429

11,918

H i s t o r i c r e v i e w

R e s u l t (x E 1,000)

Turnover

Third party costs

Net revenue

Operating result before goodwill

Cash flow

Net result before goodwill

of which non-recurring items

B a l a n c e s h e e t (x E 1,000)

Tangible fixed assets

Investments

of which in acquisitions


Net current assets 3)

Total assets

Provisions

Long-term liabilities

Capital and reserves 3)

K e y r a t i o s (in %) 2)

Operating result/turnover

Net result/turnover

Net result/net revenue

Net result/capital and reserves 3)

Group’s equity/total assets 3)

Interest cover

D a t a p e r s h a r e (x E 1.–) 2)

Capital and reserves 3)

Operating result 1)

Cash flow 1)

Net result 1)

Dividend

S h a r e p r i c e (x E 1.–)

Year-end share price

Highest share price

Lowest share price

N u m b e r o f e m p l o y e e s

At year-end

S h a r e s i n i s s u e (thousands)

Of nominal E 0.20 at year-end

Of nominal ƒ 1.– at year-end




95

1996

375,276

123,337

251,939

25,911

39,479

16,018

–

68,521

27,000

1,724

23,460

11,571

216,272

4,447

18,741

61,260

6.9

4.3

6.4

28.5

28.9

–

5.44

2.30

3.51

1.42

0.68

13.93

14.84

7.71

4,222

11,513

1995

296,636

99,378

197,258

12,434

26,773

7,170

(4,538)

64,800

24,776

3,222

19,603

9,121

170,122

2,723

23,823

51,050

4.2

2.4

3.6

13.1

30.4

–

4.44

1.08

2.33

0.62

0.32

7.85

16.56

5.81

3,968

11,511

1994

300,130

100,104

200,026

21,146

33,625

13,931

–

65,254

39,434

11,662

19,694

23,733

176,702

2,450

30,449

58,402

7.0

4.6

7.0

23.1

33.8

–

5.57

2.01

3.20

1.33

0.68

15.52

19.01

14.75

3,557

11,510

1993

221,490

65,344

156,146

18,015

26,728

12,388

–

55,497

25,639

4,901

14,339

17,334

141,579

3,403

7,260

62,168

8.1

5.6

7.9

20.9

44.7

–

6.84

1.98

2.94

1.37

0.68

16.70

17.83

10.57

2,824

9,092

1992

178,926

52,412

126,514

13,568

20,465

8,849

–

48,055

14,294

5,854

11,617

19,694

121,522

4,629

6,671

56,586

7.6

4.9

7.0

19.1

47.0

–

6.58

1.57

2.38

1.03

0.59

11.75

17.92

9.76

2,664

9,086

1991

140,808

41,249

99,559

15,746

19,467

11,526

–

48,237

36,212

24,913

7,941

20,783

104,143

635

33,217

35,803

11.2

8.2

11.6

44.5

34.7

–

6.97

3.06

3.79

2.24

0.68

49.99

–

–

2,029

716

1990

107,637

42,338

65,299

7,941

10,165

5,491

–

21,010

10,664

4,084

4,674

1,543

55,996

771

5,218

15,973

7.4

5.1

8.4

37.3

30.0

–

3.63

1.81

2.31

1.25

0.45

36.22

–

–

1,275

441

1989

80,591

27,091

53,501

6,625

8,077

4,629

–

15,202

4,765

–

3,449

4,810

45,287

817

5,400

13,432

8.2

5.7

8.7

38.0

31.3

–

3.14

1.55

1.89

1.08

0.36

31.42

–

–

1,105

428

1988

77,007

28,997

48,010

3,630

5,445

2,087

–

14,929

6,262

–

3,358

3,948

43,336

953

6,489

10,936

4.7

2.7

4.3

20.2

27.9

–

2.80

0.10

1.40

0.54

0.18

28.03

–

–

969

390

1987

65,798

20,057

45,741

1,588

4,220

272

–

10,482

1,860

–

3,948

4,129

35,168

1,180

3,358

9,711

2.4

0.4

0.6

3.8

30.2

–

2.43

0.39

1.05

0.07

–

24.26

–

–

941

400

1986

35,440

12,207

23,234

(2,950)

(45)

(2,995)

–

10,664

5,128

–

2,950

(681)

22,916

1,860

3,585

4,629

(8.3)

(8.4)

(12.9)

(48.3)

20.2

–

2.46

(1.57)

(0.02)

(1.59)

–

24.63

–

–

524

188

1985

45,786

16,518

29,269

1,225

5,082

2,087

–

8,486

6,171

–

2,995

3,313

28,089

1,225

2,904

7,714

2.7

4.5

7.1

33.1

24.4

–

5.25

0.83

3.46

1.42

–

524.60

–

–

587

15

1984

49,644

22,507

27,136

2,314

3,766

1,588

–

5,627

2,768

–

2,178

2,904

27,862

1,316

2,314

4,810

4.7

3.2

5.9

39.6

17.3

–

3.27

1.57

2.56

1.08

–

327.10

–

–

553

15


F I R Em o b i l e

e n e r g y

A laboratory technician prepares

a sample of a high-value type of

steel. Fugro is testing whether the

material meets pre-specified

demands related to a number of

aspects including hardness and

strength.

The ‘Bavenit’ near a production

platform in the EA field off the

coast of Nigeria where a geotechni-

cal survey for the positioning of

new platforms is being carried out.

The customer used the survey

results to aid design of these

constructions.


F i r e i s e s s e n t i a l

Fugro’s services are, in many ways, related to the provision of the world’s

energy. Fugro’s staff, who with considerable zeal make these services possible,

are the driving force of Fugro.

The Chirag 1 platform in an oilfield 80 kilometres east of Baku, Azerbaijan

seen from the Fugro vessel the ‘STM Markab’. Here a comprehensive study

of seabed characteristics under the platform is being carried out for a

customer.

During a magnetic survey

a Hughes 300c helicopter,

equipped with the Midas

system, flies over the

Kalahari Desert in

Botswana. The Midas

system is used to delineate

geological structures

during the search for

diamond fields.


Belgium

Brunei

Darussalam

China

France

Germany

Hong Kong

98

• Fugro België N.V.

• Fugro Engineers S.A.

• Fugro Sdn Bhd (Brunei)

• Fugro (Beijing)

Engineering

Consultants Ltd.

• Shanghai Fugro

Geotechnique Co., Ltd.

• Fugro France S.A.

• Fugro Geotechnique S.A.

• Fugro Consult GmbH

• Ingenieur Gesellschaft

Fugro GmbH

• Fugro (Hong Kong) Ltd.

• Fugro Geosciences

International Ltd.

Mechelen

Brussels

Bandar Seri Begawan

Beijing

Shanghai

Nanterre

Nanterre

Berlin

Konz

Wanchai

Wanchai

India

Japan

Kazakhstan,

Republic

Lebanon

Luxembourg

Macau

Malaysia

Mexico

• Fugro International

(Hong Kong) Ltd.

• Fugro SEA Ltd.

• Fugro Technical

Services Ltd.

• Geotechnical Instruments

(HK) Ltd.

• MateriaLab

Consultants Ltd.

• Terraform-FGS Ltd.

• Fugro India Pvt. Ltd.

• FugroGeotech Ltd.

• Fugro Geoscience Co., Ltd.

• Fugro Kazakhstan LLP

• Fugro-Levant S.A.R.L.

• Fugro Eco Consult S.a.r.l.

• Fugro (Macau) Limitada –

Engenharia Geotecnica

• Fugro Geosciences

(Malaysia) Sdn Bhd.

• Fugro-Chance de Mexico

S.A. de C.V.

• Geomundo S.A. de C.V.

Wanchai

Wanchai

Tuen Mun

Tuen Mun

Tuen Mun

Fo Tan, Shatin

New Mumbai

New Mumbai

Tokyo

Atyrau

Beirut

Munsbach

Macau

Selangor Darul Ehsan

Ciudad Del Carmen,

Campeche

Ciudad Del Carmen,

Campeche

F u g r o i n t e r n a t i o n a l d i r e c t o r y

G e o t e c h n i c a l

For complete up-to-date information, see www.fugro.com

The

Netherlands

• Fugro N.V. Leidschendam


99

The

Netherlands

Netherlands

Antilles

Nigeria

Norway

Oman

Qatar

Russia

Saudi Arabia

Singapore

Thailand

United Arab

Emirates

United

Kingdom

United States

Venezuela

• BSN Bodemsanering

Nederland B.V.

• Fugro C.I.S. B.V.

• Fugro Ecoplan B.V.

• Fugro Engineers B.V.

• Fugro Ingenieurs-

bureau B.V.

• Fugro Marine

Geotechnical N.V.

• Fugro-IGN Limited

• Prodec-Fugro Ltd.

• Fugro Geotechnics AS

• Fugro Middle East

& Partners LLC

• Fugro Middle East BV

• Fugro-Geostatika Co Ltd.

• Fugro-Suhaimi Ltd.

• Fugro Singapore Pte Ltd.

• Fugro Survey (Singapore)

Pte Ltd.

• Fugro-IGN (Thailand) Ltd.

• Fugro Middle East B.V.

• Alluvial Mining Ltd.

• Fugro Engineering

Services Limited

• Fugro Ltd.

• Fugro Geosciences, Inc.

• Fugro South, Inc.

• Fugro South,

NDT Services

• Fugro West, Inc.

• Fugro-McClelland Marine

Geosciences, Inc.

• Fugro-McClelland Marine

Geosciences, Inc.

Weert

Leidschendam

Leidschendam

Leidschendam

Leidschendam

Willemstad

Warri

Port Harcourt

Oslo

Muscat

Doha

St. Petersburg

Dammam

Singapore

Singapore

Suanluang

Dubai

Sudbury

Basingstoke

Hemel Hempstead

Houston

Houston

Pasadena

Ventura

Houston

Caracas

Angola

Australia

Azerbaijan

Brazil

Brunei

Darussalam

Canada

China

Denmark

Egypt

Equatorial

Guinea

France

Hong Kong

India

Indonesia

Italy

• Fugro Mauritius Ltd.

(Sucursal EM Angola)

• Fugro TGS Angola Ltd.

• Fugro Spatial

Solutions Pty Ltd.

• Fugro Survey Pty Ltd.

• Fugro TGS (Australia)

Pty Ltd.

• OmniSTAR Pty Ltd.

• Azeri-Fugro

• Fugro Caspian B.V.

• Fugro (TGS) Caspian) Ltd.

• Fugro do Brasil Ltda.

• Fugro Marsat Ltda.

• Fugro TGS (do Brasil) Ltda.

• Geodetic Surveys

(Brunei) Sdn Bhd.

• Fugro TGS

Brunei Sdn Bhd.

• Fugro Jacques

GeoSurveys Inc.

• Fugro SESL Geomatics Ltd.

• Fugro TGS (Canada) Ltd.

• China Offshore Fugro TGS

(Tijanjin) Co. Ltd.

• Fugro Offshore Survey

(Shenzhen) Co., Ltd.

• Fugro Denmark AS

• Fugro TGS Overseas Ltd.

• Fugro TGS Ltd. (Equatorial

Guinea)

• Fugro Geoid SAS

• Fugro Topnav S.A.S.

• Fugro FLI-MAP

International Ltd.

• Fugro Marine Survey

International Ltd.

• Fugro Survey

International Ltd.

• Fugro Survey Ltd.

• OmniSTAR (HK) Limited

• Fugro Geonics Pvt. Ltd.


• P.T. Kalvindo Raya

Semesta

• Fugro TGS Indonesia

• Fugro Oceansismica S.p.A.

• Fugro TGS (Italia) S.a.r.l.

Luanda

Luanda

Perth

Perth

Perth

Perth

Baku

Baku

Baku

Rio de Janeiro

Rio de Janeiro

Macaé

Kuala Belait

Kuala Belait

St. John’s

Calgary

St. John’s

Shenzhen

Shekou

Esbjerg

Cairo

Malabo

Clapiers

Paris (Massy)

Wanchai

Wanchai

Wanchai

Wanchai

Wanchai

New Mumbai

New Mumbai

Jakarta Selatan

Jakarta Selatan

Roma

Bologna

S u r v e y


100

Japan

Malaysia

Mexico

Namibia

The

Netherlands

Netherlands

Antilles

Nigeria

Norway

Pakistan

Poland

Russia

Singapore

South Africa

• Fugro Japan Co. Ltd.

• Fugro Geodetic

(Malaysia) Sdn Bhd.

• Fugro GEOS Sdn Bhd.

• Fugro TGS (Malaysia)

Sdn Bhd.

• Fugro TGS Mexicana

S.A. de C.V.

• Fugro TGS Namibia

(Pty) Ltd.

• Fugro Intersite B.V.

• Fugro Survey B.V.

• Fugro-Inpark B.V.

• OmniSTAR B.V.

• Fugro TGS B.V.

• GeoMETIUS B.V.

• Fugro Cable N.V.

• Fugro Jacques N.V.

• Fugro Satellite

Services N.V.

• Fugro Survey

Caribbean N.V.

• Global Environmental

Ocean Sciences N.V.

• Fugro Survey

(Nigeria) Ltd.

• Fugro TGS Nigeria

Limited

• Fugro SeaSTAR AS

• Fugro Survey AS

• Fugro Norway AS

• Fugro TGS (Norge) AS

• Oceanor ASA

• Fugro Geodetic Ltd.

• Oceanor Polska

• Fugro-Jacques NSTC

• Fugro GEOS Pte Ltd.

• Fugro Geosoft

Solutions Pte Ltd.

• Fugro OmniSTAR Pte Ltd.

• Fugro Survey Pte Ltd.

• Fugro TGS

(Singapore) Pte Ltd.

• Fugro Survey

Africa (Pty) Ltd.

• OmniSTAR (Pty) Ltd.

• Fugro TGS

(South Africa) Pty Ltd.

Tokyo



Kuala Lumpur

Ciudad Del Carmen

Walvis Bay

Leidschendam

Leidschendam

Leidschendam

Leidschendam

Rotterdam

Leiderdorp

Willemstad

Willemstad

Willemstad

Willemstad

Willemstad

Port Harcourt

Port Harcourt

Oslo

Oslo

Oslo

Bergen

Trondheim

Karachi

Warsaw

Moscow

Singapore

Singapore

Singapore

Singapore

Singapore

Cape Town

Midrand

Cape Town

Switzerland

Thailand

Trinidad and

Tobago

Turkmenistan

United Arab

Emirates

United

Kingdom

United States

Vietnam

• Fugro Survey GmbH

• Fugro Geodetic AG

• Fugro Survey Pte Ltd.

(Thailand Branch)

• Oceanor Thailand Co. Ltd.

• Fugro Survey

Caribbean Inc.

• Fugro TGS (Trinidad)

• Fugro Caspian B.V.

• Fugro GEOS UAE

• Fugro Survey

(Middle East) Ltd.

• Fugro TGS (Saudi Arabia)


• Fugro GEOS Limited

• Fugro GEOS Limited

• Fugro Survey Limited

• Fugro TGS North Sea Ltd.

• Fugro Chance Inc.

• John Chance Land

Surveys, Inc.

• Fugro GEOS, Inc.

• Fugro GeoServices, Inc.

• Fugro TGS, Inc.

• OmniSTAR, Inc.

• Fugro Pelagos, Inc.

• Fugro Seafloor

Surveys, Inc.

• Fugro TGS (Vietnam)

Zug

Zug

Bangkok

Bangkok

Chaguaramas

Chaguaramas

Ashgabat

Abu Dhabi

Abu Dhabi

Abu Dhabi

Abu Dhabi

Southampton

Swindon

Aberdeen

Aberdeen

Lafayette

Lafayette

Houston

Houston

Houston

Houston

San Diego

Seattle

Ho Chi Min City


101

Australia

Brazil

Canada

Ghana

Hong Kong

Indonesia

Italy

The

Netherlands

Netherlands

Antilles

Norway

Peru

Russia

Singapore

South Africa

Switzerland

• Fugro Airborne

Surveys Pty Ltd.

• Fugro Ground

Geophysics Pty Ltd.

• Fugro Multi Client

Services Pty Ltd.

• Fugro-Jason Australia

• Robertson Research

Australia Pty Ltd.

• Fugro-LASA-GeoMag

• Fugro Airborne

Surveys Corp.

• Fugro Aviation

Canada Ltd.

• Jason Geosystems

Americas, Inc.

• Fugro Airborne

Surveys (Pty) Ltd.

• Fugro Airborne Surveys

(Hong Kong) Ltd.

• Fugro Data Services Ltd.

• Fugro-Jason Netherlands

• Robertson Italia S.a.r.l.

• Fugro Robertson B.V.

• Fugro-Jason

Netherlands B.V.

• Fugro Airborne

Surveys N.V.

• Fugro Gravity N.V.


Services AS

• Fugro-Geoteam AS

• Fugro Sevoteam


(Peru) S.A.

• Fugro Geoscience GmbH

Moscow

• Sevoteam

• Fugro-Jason Asia

• Fugro Airborne

Surveys (Pty) Ltd.

• Fugro Data Services AG

• Fugro Geoscience GmbH

Perth

Perth

Perth

Perth

Perth

Rio de Janeiro

Ottawa

Ottawa

Calgary

Accra

Wanchai

Wanchai

Jakarta

Milan

Leiden

Rotterdam

Willemstad

Willemstad

Oslo

Oslo

Oslo

Lima

Moscow

St. Petersburg

Singapore

Johannesburg

Zug

Zug

United Arab

Emirates

United

Kingdom

United States


(Middle East)

• Fugro-Jason Middle

East B.V.


International Ltd.

• Energy Market

Consultants Ltd.

• Fugro Airborne

Surveys Ltd.

• Fugro-Jason (UK) Ltd.


Aberdeen Ltd.


International Ltd.

• Fugro Airborne

Surveys Inc.


Services, Inc.

• Fugro-Jason Geosystems

Americas, Inc.

• Fugro-LCT, Inc.

• Petcom, Inc.

Abu Dhabi

Dubai

Dubai

London

Hemel Hempstead

Aberdeen

Aberdeen

Llandudno

Houston

Houston

Houston

Houston

Richardson

G e o s c i e n c e


R e p o r t o f S t i c h t i n g

A d m i n i s t r a t i e k a n t o o r F u g r o

In accordance with Article 18 of the terms and

conditions for the administration of ordinary shares in

the name of Fugro N.V., last amended on 25 April 2003,

we issue the following report to holders of depository

receipts of shares.

During 2003 most of the Stichting’s activities were

related to the administration of ordinary shares against

which depository receipts of shares have been issued.

The Board met once; the issues discussed during the

meeting included preparations for the Annual General

Meeting of Shareholders in Fugro N.V. and corporate

governance within Fugro. The Board decided to support

all the items on the agenda.


in Fugro N.V. on 15 May 2003 the Stichting represented

82 percent of the votes cast.

On 25 April 2003 the Articles of Association deed was

amended. The Board now comprises four independent

Board Members B and one Board Member A.

In 2003 Messrs. Hooijkaas, Timmerman and Schreve

resigned as Board Members of the Stichting. They have

been replaced by Messrs. Van Duijne, Schatborn and

Van der Vlist.

The Board of the Stichting comprises Messrs.:

R. van der Vlist, Chairman Board Member B

J.V.M. Commandeur Board Member B

J.F. van Duijne Board Member B

W. Schatborn Board Member B

G-J Kramer Board Member A

In the scope of Best Practice stipulation IV 2.2 (no

Board members of the company as Board member of the

‘Stichting’) of the Corproate Governance Code,

Mr. G-J. Kramer will resign as a Board member of the

‘Stichting’ early 2004.

In 2003 the remuneration of the Board amounted

to E 6,116 and the costs of the Stichting amounted

to E 37,820.

The administrative conditions of the Stichting were

also amended by a deed dated 25 April 2003.

The administrative conditions now offer holders of

depository receipts of shares the possibility of voting

during a General Meeting of Shareholders, in accordance

with their own opinion, as authorised representatives of

the Stichting.

The Stichting sought advice regarding the above

mentioned changes to the Articles of Association and

administrative conditions.

On 31 December 2003, 13,015,289 registered ordinary

shares with a nominal value of E 0.20 were in

administration, against which 13,015,289 depositary

receipts of shares in denominations of 1, 10 and 100

shares with a nominal value of E 0.20 had been issued in

CF-form. During the financial year 10,148 certificates

were converted into ordinary shares and 3,120 ordinary

shares were converted into certificates.

The activities related to the administration of the

shares are carried out by the administrator of the

Stichting: Administratiekantoor van het Algemeen

Administratie en Trustkantoor B.V. in Amsterdam.

The address of the Stichting is Veurse Achterweg 10,

2264 SG Leidschendam, The Netherlands.

Leidschendam, 13 February 2004

The Board

D e c l a r a t i o n o f i n d e p e n d e n c e

The Board of Management of Fugro N.V. and the

Board of the Stichting Administratiekantoor Fugro

hereby declare that, in their joint opinion, with regard to

the independence of the management of the Stichting

Administratiekantoor Fugro they are in compliance with

the conditions as stipulated in Enclosure X of the

Fondsenreglement (Fund regulations) of Euronext N.V. in

Amsterdam.

Leidschendam, 13 February 2004

Fugro N.V.

The Board of Management

Stichting Administratiekantoor Fugro

The Board

102


R e p o r t N . V . A l g e m e e n N e d e r l a n d s T r u s t k a n t o o r

o v e r t h e y e a r 2 0 0 3

Regarding 4.75% in depository receipts of ordinary

shares convertible subordinated debenture bond 2000 per 2005 of

E 100,000,000.– at the cost of Fugro N.V.

In accordance with Article 10 sub 2 of the deed

of trust dated 29 March 2000 as executed by notary

F.K. Buijn, we issue the following report.

Unless already settled or converted in accordance

with the trust deed, the bonds will be settled at par on

3 April 2005. The bonds may be converted into depository

receipts of ordinary shares in Fugro N.V. with a nominal

value of E 0.20 at a conversion price of E 64.21 up to and

including the seventh day of trading on the stock

exchange before the settlement date.

During the year no bonds have been offered for

conversion. As a result the outstanding amount of the

bond on 31 December 2003 was E 100,000,000.–.

In accordance with Article 4 sub 11 of the deed of

trust, Fugro N.V. has reserved in the name of the trustee

as many ordinary shares as are required to enable the full

conversion of all outstanding bonds.

Early settlement of the bonds by Fugro N.V. is

possible at any time on condition that for a period of

30 subsequent days the closing price of the depository

receipts of ordinary shares in Fugro N.V. as quoted in the

Official Price List of Euronext Amsterdam is at least 130%

of the conversion price on each of these days.

In the case of a ‘Change of Control’ as referred to in

Article 3.4 of the trust deed, the holders of bonds will be

permitted to offer their bonds for early settlement on the

date specified by Fugro N.V. without prejudice to the

other Articles of the trust deed.

We have not found any cause for comment or action.

Amsterdam, 16 January 2004

N.V. Algemeen Nederlands Trustkantoor ANT

L.J.J.M. Lutz

103


104

G l o s s a r y

T e c h n i c a l

2 D Seismic: Acoustic measuring technology which uses single ship-towed

hydrophone streamers. This technique generates a 2D cross-section of the deep seabed

and is used primarily when initially reconnoitring for the presence of oil or gas.

3 D Seismic: Acoustic measuring technology which uses multiple ship-towed long

hydrophone streamers. This technique generates a 3D model of the deep seabed and is

used to analyse located oil and gas reservoirs.

3 DiQ (3D Integrated Quantitative): Technology for the development of

integrated (geology, geophysics, reservoir engineering) quantitative oil and gas

reservoir models; these models are used to optimise the risks, costs and efficiency of oil

and gas field development and production.

AM (asset management): A management system that ensures the efficient use of

business equipment such as ships, measuring equipment, etc.

Asset monitoring: Tracking the location and usage of business equipment such as

ships, measuring equipment, etc.

AUV (Autonomous Underwater Vehicle): An unmanned submersible launched

from a ‘mother ship’ but not connected to it via a cable. Propulsion and control are

autonomous and use pre-defined mission protocols.

Construction Support: Offshore services related to the installation and

construction of structures such as pipelines, drilling platforms and other oil and gas

related infrastructure, usually involving the use of ROVs.

D&P: Development & Production (of oil and gas fields).

DGPS (Differential Global Positioning System): A GPS based positioning

system using territorial reference points to enhance accuracy.

DP (dynamic positioning): An automatic pilot which controls a ship’s engines and

rudder, generally to ensure the vessels maintains station. Such systems require input

from an accurate positioning system as a reference.

EM: Electromagnetic.

FLI-MAP: A system that, with the help of a laser fan beam in a helicopter, generates

accurate relief maps.

Geophysics: The mapping of subterranean soil characteristics using non-invasive

techniques such as sound.

Geoscience: A range of scientific disciplines (geology, geophysics, petroleum

engineering, biostratification, geochemistry, etc.) related to the study of rocks, fossils

and fluids.

Geotechnics: The determination of subterranean soil characteristics using invasive

techniques such as probing, drilling and sampling.

GIS: Geographic Information System.

GPS: Global Positioning System.

Gravity: Precision gravity measurements to detect anomalies that could indicate the

presence of oil or gas.

HP (High Performance): Decimetre positioning accuracy.

Omnistar: DGPS positioning system specifically for use onshore. This system

differentiates itself through its compactness and ease of use.

Reservoir engineering: techniques for predicting the production behaviour of oil

and gas reservoirs and the optimisation of the eventual exploitation on the basis of a

reservoir model, rock and fluid characteristics and flow models.

ROV: Remotely Operated Vehicle. Unmanned submersible launched from a ship and

equipped with measuring and manipulation equipment. A cable to the mother-ship

provides power, video and data communication.

Seastar-dp: DGPS positioning system, specifically for use on board DP ships.

Seismic: Acoustic measurement of seabed characteristics and stratification with the

objective of detecting oil and gas. These measurements are conducted using

specialised ships equipped with powerful acoustic energy sources and long receiving

streamers (hydophones) to measure (sub) seabed acoustic echoes.

Skyfix: DGPS positioning system originating from Thales GeoSolutions.

Starfix: DGPS positioning system, specifically for use offshore. This system is

intended for the professional user and, in addition to a high degree of accuracy, is

equipped with a wide range of data analysis and quality-control possibilities.

Survey Services: Services related to the measurement, management and mapping

of locations, objects and operations, most of which involve a substantial navigation

and positioning component.

F i n a n c i a l

Debt (on ‘Private Placement’ covenants): Long-term loans including obligations

arising from leasing agreements.

Dividend yield: Dividend as a percentage of the (average) share price.

Impairment: Durable decrease in valuation of an asset other than regular

depreciation.

Interest cover: Operating result after goodwill (EBIT) compared with the net

interest charges.

Invested capital: The capital made available to the Company, i.e.: Group equity

plus the available loans and the balance of current account deposits/withdrawals.

Net profit margin: Profit as a percentage of turnover. Fugro calculates this

percentage on the profit before amortisation of goodwill.

Net return from own services (NROS): Turnover minus work contracted-out and

other external costs.

Private placement: Long-term financing (10 – 15 years), entered into in May 2002

via a private placement with twenty American and two British institutional

investors.

Return on invested capital: The profit (before profit appropriation) including

third party interests and interest charges as a percentage of the average invested

capital.

Solvency: Shareholders’ equity as a percentage of the balance sheet total, whereby

the subordinated convertible debenture bond is considered as equity.


C o l o p h o n

Fugro N.V.

Veurse Achterweg 10

2264 SG Leidschendam

The Netherlands

Telephone: +31 (0)70 3111422

Fax: +31 (0)70 3202703

Production:

C&F Report Amsterdam B.V.

Photography:

Fugro N.V.,

Picture Report, Amsterdam,

Vincent Boon, Werner Studio

and others.

This annual report is a

translation of the official

report published in the Dutch

language.

The annual report is also

available on our website

www.fugro.com.


fugro n.v. annual report 2003

Documents