Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
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 ’
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Net result before amortisation of goodwill
Net result after amortisation of goodwill
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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 )
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
%
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
Net result before amortisation of goodwill
Net result after amortisation of goodwill
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.
Brought to you by Global Reports
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 )
Brought to you by Global Reports
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.
O t h e r i n f o r m a t i o n
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).
Brought to you by Global Reports
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
Brought to you by Global Reports
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
During the Annual General Meeting of Shareholders
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
Brought to you by Global Reports
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
Brought to you by Global Reports
S u p e r v i s o r y B o a r d
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
F.H. Schreve, Chairman
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
Brought to you by Global Reports
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
employed by Fugro Since 1981
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
employed by Fugro Since 1993
appointed to current position 2001
name J.E. Kasparek (1942)
function Director North &
South America
nationality American
employed by Fugro since 1988
appointed to current position 1992
name J. Ruegg (1944)
function Director Offshore Survey and
Development & Production
nationality Swiss
employed by Fugro since 1965
appointed to current position 1999
name F.E. Toolan (1944)
function Director Offshore
Geotechnical and
Airborne Survey
nationality British
employed by Fugro since 1974
appointed to current position 1998
Brought to you by Global Reports
27
S u p e r v i s o r y B o a r d
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
first appointed 1991
current term up to May 2005
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
first appointed 1997
current term up to May 2005
other functions Supervisory Board member of
Crimsonwing Ltd. (Chairman),
and Avanti Capital plc.
(Chairman)
name Mr J.A. Colligan (1942)
nationality British
expertise operational management and
oil & gas industry
first appointed 2003
current term up to May 2007
other functions Former Director of Shell
Exploration and Production,
Director Society of Petroleum
Engineers Foundation
name Mr Th. Smith (1942)
nationality American
expertise operational management and
marketing
first appointed 2002
current term up to May 2006
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
first appointed 2000
current term up to May 2004
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Development & Production
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
Brought to you by Global Reports
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)
North and South America
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**
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
North and South America
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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-
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.
Leidschendam, 10 March 2004
G-J. Kramer, President and Chief Executive Officer
K.S. Wester, Director
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
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 . 2 . 5
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).
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 . 2 . 7
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).
Brought to you by Global Reports
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.
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 . 2
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.
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 . 3
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.
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 . 8
‘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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Depreciation of tangible fixed assets
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
54
I n v e s tmen t s
Onshore Geotechnical
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
(amounts x E 1 mln.)
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
Brought to you by Global Reports
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
Onshore Geotechnical
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
–
(amounts x E 1 mln.)
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
Brought to you by Global Reports
56
G o a l s a n d s t r a t e g y
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
(amounts x E 1 mln.)
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
Depreciation of tangible fixed assets
Investments
Ope r a t i ng r e su l t ( EB I TA )
as a % of turnover
as a % of invested capital
* 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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
(amounts x E 1 mln.)
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
Brought to you by Global Reports
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
*
–
(amounts x E 1 mln.)
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
Brought to you by Global Reports
60
G o a l s a n d s t r a t e g y
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
(amounts x E 1 mln.)
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
Depreciation of tangible fixed assets
Investments
Ope r a t i ng r e su l t ( EB I TA )
as a % of turnover
as a % of invested capital
* 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
Brought to you by Global Reports
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.
Brought to you by Global Reports
62
I n v e s tmen t s
Development & Production
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.)
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.’
Brought to you by Global Reports
A n n u a l
A c c o u n t s 2 0 0 3FUGRO N .V.
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Net result before amortisation of goodwill
(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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Accumulated depreciation
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
Brought to you by Global Reports
(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
Accumulated depreciation
Book value
C h a n g e s d u r i n g t h e y e a r
Additions regarding group companies
Additions
Disposals
Depreciation
Currency exchange differences
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
Accumulated depreciation
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
Brought to you by Global Reports
(3) F i n a n c i a l 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
Acquired capital interests
Disposal of capital interests
Currency exchange differences
Other
B a l a n c e a t 3 1 D e c e m b e r 2 0 0 3
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
B a l a n c e a t 3 1 D e c e m b e r
(5) R e c e i v a b l e s
Trade receivebles
Sundry receivables and prepayments
B a l a n c e a t 3 1 D e c e m b e r
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.
(6) C a p i t a l a n d r e s e r v e s
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
Brought to you by Global Reports
(7) P r o v i s i o n s
B a l a n c e a t 1 J a n u a r y
Additions
Increase from acquisitions
Withdrawals/Releases
B a l a n c e a t 3 1 D e c e m b e r
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
B a l a n c e a t 3 1 D e c e m b e r
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
Brought to you by Global Reports
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%).
(9) C u r r e n t l i a b i l i t i e s
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
B a l a n c e a t 3 1 D e c e m b e r
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
Brought to you by Global Reports
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
North and South America
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.
Brought to you by Global Reports
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
Development & Production
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
Brought to you by Global Reports
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:
F.H. Schreve, Chairman
M.W. Dekker, Vice Chairman
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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
(5) C a p i t a l a n d r e s e r v e s
Issued and paid-in share capital
Share premium reserve
Other reserves
Unappropriated retained profit
(6) P r o v i s i o n s
(7) L o n g - t e r m l i a b i l i t e s
(8) 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
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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
Accumulated depreciation
Book value
C h a n g e s d u r i n g t h e y e a r
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
Accumulated depreciation
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
Accumulated depreciation
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
Brought to you by Global Reports
F i n a n c i a l 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
Net result of group companies
Acquisition of subsidiaries
Loans subsidiaries
Goodwill on purchase of group companies
Paid out dividends
Currency exchange differences
Other
B a l a n c e a t 3 1 D e c e m b e r
* 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
B a l a n c e a t 3 1 D e c e m b e r
(5) C a p i t a l a n d r e s e r v e s
B a l a n c e a t 1 J a n u a r y
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
B a l a n c e a t 3 1 D e c e m b e r
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
Brought to you by Global Reports
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.
(6) P r o v i s i o n s
Pensions
Sundry
B a l a n c e a t 3 1 D e c e m b e r
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
B a l a n c e a t 3 1 D e c e m b e r
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%).
(8) C u r r e n t l i a b i l i t i e s
Banks, current accounts
Trade creditors
Interest Private Placement
Interest subordinated convertible debenture bond
Group companies
Other liabilities
B a l a n c e a t 3 1 D e c e m b e r
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
Brought to you by Global Reports
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
B a l a n c e a t 1 J a n u a r y 2 0 0 3
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
B a l a n c e a t 1 J a n u a r y 2 0 0 3
Purchased during 2003 (at an average cost of E 34.36)
Used in 2003 (at an average excersise price of E 25.30)
B a l a n c e a t 3 1 D e c e m b e r 2 0 0 3
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
Brought to you by Global Reports
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.
Leidschendam, 10 March 2004
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
S u p e r v i s o r y B o a r d
F.H. Schreve, Chairman
M.W. Dekker, Vice Chairman
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
Brought to you by Global Reports
O t h e r i n f o r m a t i o n
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Depreciation of tangible fixed assets
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
Of nominal ƒ 10.– at year-end
Of nominal ƒ 100.– at year-end
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
• Fugro TGS Overseas 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
Brought to you by Global Reports
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
Selangor Darul Ehsan
Selangor Darul Ehsan
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 TGS Overseas Ltd.
• 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
Brought to you by Global Reports
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.
• Fugro Multi Client
Services AS
• Fugro-Geoteam AS
• Fugro Sevoteam
• Fugro Airborne Surveys
(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
• Fugro Airborne Surveys
(Middle East)
• Fugro-Jason Middle
East B.V.
• Robertson Research
International Ltd.
• Energy Market
Consultants Ltd.
• Fugro Airborne
Surveys Ltd.
• Fugro-Jason (UK) Ltd.
• Robertson Research
Aberdeen Ltd.
• Robertson Research
International Ltd.
• Fugro Airborne
Surveys Inc.
• Fugro Multi Client
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
Brought to you by Global Reports
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.
During the Annual General Meeting of Shareholders
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
Brought to you by Global Reports
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
Brought to you by Global Reports
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.
Brought to you by Global Reports
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.
Brought to you by Global Reports