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W e m o v e t h e e a r t h t o a b e t t e r p l a c e W e m o v e t h e e a r t h t o a b e t t e r p l a c e Rosmolenweg 20 3356 LK Papendrecht The Netherlands P.O. Box 43 3350 AA Papendrecht The Netherlands Telephone +31 (0)78 69 69 000 Telefax +31 (0)78 69 69 555 E-mail royal@boskalis.nl Internet www.boskalis.com

Annual r

eport 2004

Annual r

eport 2004

Annual r eport 2004 Royal Boskalis W estminster nv

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Compiled and coordinated by Royal Boskalis Westminster nv

Design and realisation

Photography and illustration

Lithography and printing

Corporate Communications Department

Via > Handelskade, Rotterdam, the Netherlands Arjen Visser, Ben Wind, Fotostudio Honing, Niels Asjee, Norman Childs, One Degree North Photography, Patrick Lefebvre, Piet Mes, Roel Snoep and others PlantijnCasparie Capelle a/d IJssel, the Netherlands

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1 R o y a l B o s k a l i s We s t m i n s t e r n v

A n n u a l R e p o r t 2 0 0 4

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2

B o s k a l i s : w o r k i n g o n t h e g r o w i n g w o r l d

A n n u a l R e p o r t 2 0 0 4

Good infrastructure is essential to a growing world. Boskalis is a market leader in “wet” infrastructure, a perfect example of a sector driven by long-term growth factors and accompanied by long-term investments. The final chapter in the seven-year fleet expansion and renovation program was the maiden voyage of the trailing suction hopper dredger Oranje, launched in 2004.

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Table of contents

Ta b l e o f c o n t e n t s

3 R o y a l B o s k a l i s We s t m i n s t e r n v

Company profile 6

Mission, objectives and strategy 9

Corporate social responsibility 12

Basic principles of the corporate strategy 14

Corporate Governance 17

Management 24

Key figures 28

Investor Relations 29

Message to the shareholders 31

Report of the Board of Management on 2004 34

Report of the Supervisory Board 46

Financial statements 2004 52

Principles of financial reporting 52

Consolidated balance sheet before proposed profit appropriation 56

Consolidated profit and loss account 57

Consolidated cash flow statement 58

Explanatory notes to the consolidated balance sheet and profit and loss account 59

Company balance sheet before proposed profit appropriation 70

Company profit and loss account 71

Explanatory notes to the company balance sheet and profit and loss account 72

Other information 75

Provisions in the articles of association relating to profit appropriation 75

Proposed profit appropriation 76

Auditor’s report 76

Stichting Continuïteit KBW 77

Report 77

Declaration of Independence 77

Ten years Boskalis 78

‘Boskalis: working on the growing world’ 4

Driven by global population growth and climate change 10

Driven by growing world trade 22

Driven by increasing global energy consumption 44

Driven by growing global tourism 50

Driven by sustainability 80

Legal structure 79

The world of Boskalis 82

Organization 83

Offices around the world 85

Glossary 90

Equipment 95

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

Some of the projects referred to in this report were carried out in joint venture or in a sub-contractor role. This is a translation of the official Annual Report in the Dutch language.

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Because the world is expanding. From two billion in 1935, the global population has grown to more than six billion people in 2004. According to the United Nations, the earth will have eight billion inhabitants 25 years from now. As part of that population growth, people will increasingly migrate toward major urban areas, especially in coastal regions with rapid economic development.

Such economic development is driven by the glob-alization of world trade. Consumer goods destined for the Western world are manufactured in distant lands and shipped to their markets in containers; growing consumer markets in Asia import increasing amounts of products. Raw materials are shipped in bulk across great distances to major industrial areas; oil and gas are transported over the oceans to feed the world’s growing hunger for energy.

Dredging company Boskalis is a market leader in the world of “wet” infrastructure: harbor construction, land reclamation and beach replenishment, coastal defense, and riverbank protection. These are concrete products of a recognizable international sector that is driven most effectively by long-term economic growth factors. The products literally give room to a world experiencing sustainable growth.

‘Boskalis: working on the growing world’

Growing trade, more maritime transport: these are the drivers of harbor construction and maintenance.

More people, more need for sustainable room to grow, more work for Boskalis.

Without infrastructure, the world

We move the earth to a

4 A n n u a l R e p o r t 2 0 0 4 People/km2 < 2 2 – 10 11 – 40 41 – 100 101 – 500 > 500 -00162_JV1_TekstENG.indd 4 -00162_JV1_TekstENG.indd 4 06-04-2005 08:17:0006-04-2005 08:17:00

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Moreover, the growing prosperity boosts global tourism. According to the World Tourism Organization, some 1.6 billion international trips will be taken in 2020, more than twice the current annual number of 700 million.

The common bond in all these developments is infrastructure in all its forms. After all, it does not matter whether we are talking about virtual forms of infra-structure like telecommunications and internet markets, or more concrete forms like residential neighborhoods, airports, roads, and waterways; without infra-structure, the world cannot develop.

In addition, due to an increasingly critical approach to growth, it is evaluated in the context of its long-term quality of life. Boskalis responds to this trend by offering expertise and innovative solutions. So that the world can experience sustainable growth.

We move the earth to a better place

Meer toerisme betekent meer stranden, meer toeristische eilanden in zee en meer cruisehavens. En meer werk voor Boskalis.

cannot develop.

better place.

Growth for the economy, growth in the demand for energy, growth for Boskalis.

R o y a l B o s k a l i s We s t m i n s t e r n v The world is expanding. From two billion

in 1935, the global population has grown to more than six billion people in 2004.

More tourism means more beaches, more islands in the sea for tourists and more cruise harbors. And more work for Boskalis. (Source: U.S. Department of Agriculture)

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6 Company profile

C o m p a n y p r o f i l e

A n n u a l R e p o r t 2 0 0 4

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

Royal Boskalis Westminster nv is an international service provider in the area of maritime infrastructure. Its core activities include the construction and maintenance of harbors and waterways, the creation of land in water, coastal defense, and riverbank protection. The company also operates in numerous home markets in a wide range of related activities such as sand and gravel production, soil improve-ment, dry earth moveimprove-ment, environmental activities, marine offshore services, munitions clearance, tunnel building, and hydraulic engineering projects. Boskalis has a wide spread of operations world-wide, operating in more than 50 countries on five continents. The company has a unique market position with wholly owned home market positions in five major European markets and in joint ventures with local partners in Nigeria, the United States, and Mexico. In the Middle East, Boskalis plays an important role in the developments in the Persian Gulf via its 50% subsidiary Lamnalco (port services for oil and gas exports), its 40% participating interest in Archirodon (wet and dry infrastructure), and its own market position in harbor and land reclamation projects.

The company has grown significantly in the past decade. This growth was achieved both autonomously and through takeovers and participating interests in other companies. The company has a solid financial basis and a healthy cash flow.

Core activities

The global market for maritime infrastructure is driven by long-term economic factors such as increases in the global population, the growth of the world economy, and the growth of international trade volumes. The long-term prospects for these factors are favorable. Its global spread and operational flexibility mean that Boskalis can respond to changing opportunities in different markets.

Construction and maintenance of harbors and waterways. The growth in the volume of global trade has increased the demand for container ports on international shipping routes. Not only are the ports becoming larger and deeper as a result of the scaling up of container ships, the number of ports is also increasing as more and more countries get involved in the global production and exchange of goods. The established ports are competing with each other for regional leadership, as we can see in Asia (Singapore, Hong Kong, Pusan), Western Europe (Rotterdam, Antwerp, Hamburg, Felixstowe) and North America (New York, Halifax). Ports are also being built or scaled up in numerous industrially-developing countries such as India, Malaysia, and Mexico. The increasing demand for larger and deeper ports is accompanied by the need for keeping them at depth. This results in increases in maintenance volumes, particularly in areas with strong currents or tidal variations.

Creation of land in water. The global population continues to increase and economic centers are congested and overpopulated. Solutions for the increasing scarcity of available land are being sought in the creation of new land. Boskalis plays a prominent role here. It uses innovative, large trailing suction hopper dredgers to generate a favorable ratio of cost price to market price per square meter of new land.

Coastal defense and riverbank protection. Here also, Boskalis expects continuing market growth given the intensification in the global focus on environmental protection. The market will also benefit from the ongoing growth of tourism.

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Company profile

7 R o y a l B o s k a l i s We s t m i n s t e r n v Related activities

In addition to these core activities, Boskalis is involved in a range of related activities (the ‘dredging-plus’ activities) such as offshore services, gravel and sand trading, soil improvement, dry earth moving, environmental activities, munitions clearance, underwater rock fragmentation, pipeline construction and hydraulic engineering. These activities are an extension of the range of services, and the margins are generally attractive.

Markets

The global dredging market consists of numerous submarkets with individual development patterns. This means that the market as a whole is heterogeneous, with varied patterns of market dynamics. The annual volume of sales on the global dredging market for maritime infrastructure is approximately

€ 7 billion. Half of these sales (approximately € 3.5 billion) are made to reasonably open markets. Four large Western European dredging companies account for approximately 60% of operations in these open markets, with roughly 40% of the “free sales” going to many different smaller regional and local players. With a share of approximately 20%, Boskalis is an important player in the open market segment. In the less open markets, dredging work is generally done by local players or state companies and there are no openings for private international dredging companies like Boskalis.

The past decade has seen extensive deregulation of global trade and economic development in traditionally closed markets. As a result, the free market has expanded in favor of professional dredging companies, which can provide economies of scale and competitive cost levels. Major factors affecting access to the global dredging market are scale, professional staff, technical know-how, a flexible fleet, cost leadership, and financial strength.

However, the broad geographical spread means that a global player like Boskalis can achieve balanced growth. The main Boskalis clients are governments (national, regional, and local), harbor operators, international project developers, oil companies, mining companies, and other contractors. Boskalis offers its clients high-quality products and services at competitive prices.

Boskalis created an artificial temporary lagoon and extended the existing beach in Barcelona, Spain at the end of 2004, using the cutter suction dredger Para.

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8 Company profile

A n n u a l R e p o r t 2 0 0 4 Market positioning

Operating on the richly varied global market often requires an approach tailored to each situation. In response, Boskalis has both broader home market positions and (narrow) specialist niche markets. In addition, the company uses another approach for major international projects, as well as a multi-disciplinary, regional approach for areas like the Middle East. The Boskalis market approach is flexible, customer-oriented, and open to (local) partnerships.

Home markets. For many years now, Boskalis has had a home market strategy which distinguishes it from its competitors. A home market means that Boskalis has a permanent presence in countries where this presents commercial advantages. The strengths of this home market concept lie in the stable flow of projects and the opportunities for extending its range of activities. The home market organizations have a local commercial profile, as well as their own fleets and infrastructures. They also know that they can call on the support of the financial and technical resources of the global Boskalis organization. Particularly in the home markets, there are opportunities to generate additional margins with associated activities. Boskalis generates approximately 40% of its turnover on its home markets. It now has wholly owned home market positions on five major European markets, as well as home market positions in joint ventures with local partners in Nigeria, the United States, and Mexico.

A regional approach: the Middle East. Boskalis generates approximately 25% of its turnover in the Middle East. The company has a strong position in the area around the Persian Gulf, where countries invest their oil earnings in economic expansion of the trade and tourism sectors. Boskalis operates in the region across the full spectrum of maritime services, holding a strong market position in harbor and land reclamation projects, its 40% participating interest in Archirodon (wet and dry infrastructure), and its 50% subsidiary Lamnalco (harbor services for oil and gas exports).

International projects market, the rest of the world. Approximately 30% of turnover is generated in the international projects market, which focuses primarily on dredging and on coastal and riverbank projects. These are generally larger works involving investments in construction activities and/or extensions. In addition, there are projects which regularly involve cooperation with third parties. This makes it possible to provide clients with optimal services and to share risks.

Specialist niche markets. Approximately 5% of turnover comes from specialist niche markets like the offshore market and the market for underwater rock fragmentation.

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Mission, objectives and strategy

M i s s i o n , o b j e c t i v e s a n d s t r a t e g y

9 R o y a l B o s k a l i s We s t m i n s t e r n v Transparent, consistent and result-driven.

Mission

Boskalis is always aiming to maintain and strengthen its leading position in the global dredging market. The company is committed to giving its shareholders excellent profitability and value creation. Boskalis wants to be an attractive employer, the customer’s first choice and a responsible citizen in those countries where it operates.

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

Objectives

In the short term (one to two years) the key objectives will be to optimize the market position, streamline the organization, and achieve strong cash flow generation. The central objectives in the longer term (three to five years) are solid growth (both in the core activities and through broadening the activities) and the realization of above-average profitability.*)

Strategy

The core Boskalis activity is dredging. The company also engages in related – ‘dredging-plus’ – activities, particularly in the home markets. These activities fit in with the core activities and core competences of the company.

The corporate strategy consists of growth in the core activities and in the ‘dredging-plus’ activities, both autonomously and by means of acquisitions.

Strategy for the core activity of dredging

• maintain and, where possible, increase market share;

• broaden and extend home market positions;

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

Strategy for the ‘dredging-plus’ activities

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

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

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

In most markets where Boskalis is active, there will be even more emphasis in the future on the competitive position. The lead given by its competitive position therefore plays a major role in the Boskalis strategy. The key to this position is continued innovative investment in:

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

• fleet innovations and fleet rationalization;

• processing technology;

• improvements in business processes;

• the development and optimization of modern ICT systems.

*) We consider profitability to be above average if the annual return on capital employed exceeds the cost of capital (WACC) relevant for Boskalis.

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This growth will take place primarily in developing countries in Asia and Africa, mainly due to rising life expectancies as a result of increased prosperity and better health care.

The population growth will take place almost exclusively in urban areas. Cities will also grow due to migration from the rural areas. The earth currently has three billion urban inhabitants; by 2030, that number will have swelled to five billion, or 60% of the global population.

Since the very beginnings of history, urban areas have developed along rivers and coastlines, close to the regional and international flows of goods for trade and industry. A glance at a map of the world shows the current densely populated coastal regions in America, Europe, and Asia. Looking to the future and the expect-ed increase in population and urbanization, the congestion in coastal areas can be expected to become even more severe. Harbors are becoming congested, ground is growing scarcer and more expensive, coasts and riverbanks are becoming over-populated and the environment is threatened. People need new room to grow.

More people, more need for

Driven by global population growth and climate change

10 A n n u a l R e p o r t 2 0 0 4

Beach replenishment in Egmond aan Zee, the Netherlands. According to the report “World Urbanization Prospects: The 2003 Revision”

published by the United Nations (www.unpopulation.org), the global population will increase by more than 30% in the next 25 years, rising from six to eight billion people.

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sustainable room to grow, more work for Boskalis.

In addition, the global climate is changing, accompanied by more extreme weather conditions, changing precipitation patterns, and rising temperatures. Due to storms, flooding, and the rising seas, the pressure on beaches, coasts, and river-banks is increasing. Scientists agree that these phenomena are part of a longer-term trend and that countries need to invest in protecting their coasts and riverbanks.

And that is where Boskalis comes into play: the creation of new land in coastal regions, beach replenishment, coastal defense, riverbank protection, and dike construction. But also: innovation using environmentally-friendly solutions, project financing, and innovative contract forms. It often involves large-scale projects, technically complex and highly demanding, deploying the world’s biggest dredgers and the best people.

More people, more need for sustainable room to grow, more work for Boskalis.

R o y a l B o s k a l i s We s t m i n s t e r n v Land reclamation in Singapore, using a trailing suction

hopper dredger that pumps the sand through a pipeline to shore to the bulldozer on the dump site.

NASA photo of the city lights in the densely populated coastal regions in America, Europe and Asia.

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12 Corporate social responsibility

C o r p o r a t e s o c i a l r e s p o n s i b i l i t y

A n n u a l R e p o r t 2 0 0 4

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

Code of conduct

Boskalis has a Statement of General Business Principles that applies to all the relationships it maintains throughout the world. This document is the guide for the company in the area of social responsibility and is freely available from the company website. The basic idea behind corporate social responsibility is that Boskalis is a decent company where respect for people and the community is an accepted value. Boskalis accepts responsibility for matters that it can influence. However, the world is large and Boskalis is only one of many actors. Boskalis respects local rules and customs: ‘so many countries, so many customs’. How those rules and customs evolve is a matter for governments and people and Boskalis plays only a very minor role in that respect.

The responsibility of Boskalis

Boskalis has its own standards for its organization. Boskalis has a direct responsibility for, among other things, its own workforce, suppliers and sub-contractors, safety and the environment.

Boskalis acts like a responsible member of society: decently and properly. That means complying with local legislation, being a good employer for the workforce and working on enduring relationships with suppliers and sub-contractors.

Boskalis does its utmost to meet quality, safety and environmental standards covering dredging and other company activities. Initially, these standards are set by clients (often governments) but Boskalis also brings its professional know-how and commitment to their implementation. Boskalis also assumes responsibility for the proper disposal of the work spoils, such as waste and contaminated material.

Boskalis in the world

National laws and rules apply in countries where Boskalis works. The company does not make cultural judgements. Boskalis conducts itself like a responsible member of society or a good guest. National laws and rules are the guidelines for Boskalis activities, in combination with Dutch norms that cover international dealings.

Boskalis does not get involved in national politics, nor does it state opinions about political issues. These are the responsibility of national government. Boskalis also follows the guidelines of the United Nations, WHO and the Dutch government for travel to, or business dealings with, certain countries.

Contribution to sustainable development

The nature of the services supplied by Boskalis means that the company is closely involved in sustainable developments in society. Maritime infrastructure is for many countries a precondition for structural econo-mic development and increasing prosperity. Because Boskalis works on the basic infrastructure, the com-pany is involved directly and positively in the social benefits of its services.

Sometimes, economic interests can clash with other community interests. It is the responsibility of local governments to make the appropriate choices. It is up to Boskalis to work as professionally as possible within the resulting framework.

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Trailing suction hopper dredger Prins der Nederlanden at work on the Jubail King Fahd Industrial Port in Saudi Arabia. The work comprises dredging three berths, deepening the access channel and land reclamation to create a second wharf in the petrochemical port.

Corporate social responsibility

13 R o y a l B o s k a l i s We s t m i n s t e r n v

An important aspect of dredging is the impact it has on the ecology. Boskalis has the expertise to advise clients how to measure environmental impact and keep it to a minimum. Furthermore, Boskalis always makes its own assessment to determine the best working method for the environment. The company develops its own systems for precise monitoring of the dredging work. In that way, clients understand the environmental impact of the work; working methods can also be adapted if there is a possibility of tolerances being exceeded.

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Basic principles of the corporate strategy

A n n u a l R e p o r t 2 0 0 4 14

B a s i c p r i n c i p l e s o f t h e c o r p o r a t e s t r a t e g y

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

• enterprise and risk management;

• employee efficiency;

• transparency in corporate governance;

• professional expertise and skills;

• a large and versatile fleet;

• efficient organizational and communications structures.

Enterprise and risk management

Doing business means working on a daily basis with uncertainties, opportunities, and risks. Chapter “Corporate Governance” (pages 17 – 21) of this report discusses the risk management and internal monitoring systems used at Boskalis.

Employee efficiency

At Boskalis, the workforce is central. They are the critical success factor of the company. They are the people who, in day-to-day operations, deal with changing circumstances and challenging operational situations. The company works globally with high-grade technical production resources, dealing with a very wide range of physical and cultural conditions.

There are many other nationalities involved alongside the Dutch, both onshore and offshore. It is vitally important in a complex environment of this kind for people to collaborate and develop.

Boskalis aims to provide an attractive working environment in which employees can make the most of their abilities. To this end the company has an active human resources policy in which the personal development of employees takes priority. The policy is based on the continuous matching of the require-ments of the company and the quality of the workforce. This takes the shape of a coordinated program for Human Resources Development consisting of long-range forecasts, planning, development, training and rewards. An important HR tool in this context is the competence management program, which focuses specifically on the systematic development of employees on the basis of their talents and competences.

Transparency in corporate governance

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

Professional expertise and skills

Innovation. Every project is a source of creativity and innovation. Boskalis is one big innovative playground. The client’s needs and preferences are translated into a technical design, using the optimal working methods and utilization of equipment. Due consideration is given to local conditions, such as the weather, tidal movements, environmental factors, and safety and security issues. Special equipment is often developed; new techniques are regularly created on projects in practice. Clients increasingly look for innovative forms of tender, where the knowledge and creativity Boskalis offers can play a greater role. Examples include Design & Construct tenders, public-private partnerships, or even alliance contracts, in which Boskalis and its client are project partners.

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R o y a l B o s k a l i s We s t m i n s t e r n v 15

Research and development (often not project-specific). It is strategically crucial that constant work is done on new techniques and more in-depth knowledge. For many years now, Boskalis has also been conducting research not linked to specific projects, in part on its own and in part in joint projects with other sector operators, universities, and knowledge institutes. The Research & Development department at Boskalis has experienced staff, simulation and calculation models, and laboratory facilities. The R&D staff is regularly present on the projects and on board the ships, both at home and abroad, to take measurements. A steering group, representing the Board of Management, the operational units, and the technical staff departments, sets the priorities and evaluates the long-term planning of most of the non-project-specific R&D work.

Engineering capacity (usually project-specific). Major infrastructure projects such as Design & Construct projects are increasingly put out to tender. The engineering capacity Boskalis can offer and its own engineering consultancy Hydronamic are very important in this context. By taking working methods and options for available equipment into account in the design phase, efficient solutions for cost price and implementation timelines can be proposed. The Boskalis engineering capacity can also be deployed during the implementation phase of the projects.

A large and versatile fleet

Boskalis has a large and versatile fleet. It includes every variety of dredging equipment so that the right tool can be used at all times. Innovations in the fleet and modifications to existing units keep the fleet in line with modern requirements. Fleet automation is a highly-developed area, and this means that productivity during dredging work is high. Meticulous maintenance work is carried out on the fleet and auxiliary equipment, with modernization and improvements where necessary.

With the exception of the basic equipment in the home markets, all Boskalis equipment is managed centrally by the Central Technical Department in Papendrecht. The Central Technical Department makes its units available for operating companies in The Netherlands and abroad. A lot of attention is paid to the quality of the services provided by the department. The organization is ISM-certified. A Plant Management System creates the conditions for the optimal deployment and structured management of the ships. In fleet management, an important element is the safety of the ships and the crews.

Efficient organization and communications

Health, safety and environment. Boskalis’ policy is to provide the entire workforce with healthy, safe and environmentally-friendly working conditions. The prevention of hazardous and/or unhealthy working conditions applies to all workers, including those from sub-contractors and suppliers. This principle is expressed in the Boskalis slogan: ‘Safety matters’.

In order to raise safety awareness and increase the understanding of safety risks, Boskalis organizes training courses and information meetings, both at offices and on projects. In addition, safety audits are carried out as the first step towards reducing risks. Concern for environmental protection is a component of quality control, and of day-to-day thinking and working at Boskalis. The company is continuously looking at dredging processes in order to make them more environmentally-friendly. It develops tech-niques for reducing environmental loads during dredging work.

Basic principles of the corporate strategy

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To facilitate the arrival of the largest cruise ship in the world, the Queen Mary 2, in Rotterdam, the Netherlands, Boskalis dredged the harbor in front of the HAL wharf and provided a new waterbed protection. Basic principles of the corporate strategy

A n n u a l R e p o r t 2 0 0 4 16

These activities result in a structural, systematic and transparent approach in the area of safety, health and the environment. Healthy, safe and environmentally-acceptable working methods require cooperation and communications, not only within the company but also with third parties, partners and service pro-viders.

Quality assurance. One of the basic principles of quality assurance at Boskalis is the wish to meet customer requirements efficiently and as planned. Another involves the continued professionalization of the internal organization. A lot of work goes into continuous improvements in the quality of the preparation, execution and evaluation of the projects. The same applies to the availability of equipment, as well as staff planning and supervision: they are all critical success factors. The quality systems in place are structured around the Boskalis core business: contracting and executing dredging and dredging-related work. These systems are certified in accordance with ISO-9001.

Information and communications technology. Boskalis sees information and communications technology as an instrument for improving efficiency and management information. But ICT is also a way to make work easier and, above all, to operate more effectively in the market. Boskalis has an integrated ICT system which covers the entire business process worldwide, at all levels of the organization; from projects, through country organizations, to the head office in Papendrecht. The use of modern standardized software, hardware and communications technology is vital here.

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Corporate Governance

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

R o y a l B o s k a l i s We s t m i n s t e r n v 17

INTRODUCTION

Boskalis regards clarity and openness in supervision and accountability as the cornerstones of good governance and business practice. To this end, the company has adopted a sound system of corporate governance with a Board of Management charged with managing the company, a Supervisory Board that supervises the policies of the Board of Management, a General Meeting of Shareholders to which the Boards render account for their management or supervisory activities respectively, and a Works Council that gives shape to employee participation in the way Boskalis is managed.

BOSKALISANDTHE DUTCHCORPORATEGOVERNANCECODE

Boskalis has taken note of the Netherlands Corporate Governance Code drawn up by the Tabaksblat Commission (the “Code”), which came into force on 1 January 2004. In this context, the changed structural regulations (the 2004 amendment to Book 2 of the Dutch Civil Code) provide a legal basis for enforcing adherence to the Code.

The Code applies to Dutch companies listed on the stock exchange and comprises a code of conduct for good and responsible governance, as well as for proper supervision thereof, including accountability for such supervision. The guiding principle is that the company is a long-term partnership consisting of various parties involved in the company.

The stakeholders are those groups and individuals that influence or are influenced directly or indirectly by the achievement of the company’s objectives, such as employees, shareholders and other financiers, suppliers, customers, but also the government and groups in society.

The Board of Management and the Supervisory Board of the company bear integral responsibility for weighing these interests, always maintaining a focus on the continuity of the company and the creation of value for the shareholders in the long term.

The code of conduct in the Code consists of some twenty principles and a great many associated concrete best practice provisions. Most of the principles can be seen as modern and now widely supported general views on good corporate governance.

Companies listed on the stock exchange must include the general outlines of their corporate governance structure for the first time in their annual report for the 2004 fiscal year, and indicate the extent to which they deviate from the Code (i.e. the “Apply or Explain” rule).

Boskalis supports the concept that a solid and transparent system of checks and balances is an important tool for inspiring confidence in companies operating on the capital market. For Boskalis, the main guarantees of good corporate governance are provided by an open corporate culture based on enter-prise, professionalism, and normal standards of decency.

In 1998, the Board had an extensive exchange of ideas with shareholders on the topic, in the context of the report on “Corporate Governance in the Netherlands: The Forty Recommendations of the Peters Commission”. In addition, on 29 May 2001 Boskalis had already discontinued the system of issuing depositary receipts of shares, a system which was generally seen as shareholder-unfriendly.

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A n n u a l R e p o r t 2 0 0 4 18

Corporate Governance

In the case of a focused dredging company such as Boskalis, most of the principles and many of the best practice provisions in the Code are consistent with the principles and codes of conduct already applied in the company. In addition to the principles and conduct already applied in the company, best practice provisions from the Code were implemented at Boskalis during the past year. The text of the Code (the principles and best practice provisions) is enclosed as a whole in an appendix to this annual report. A note beside each best practice provision indicates whether or not Boskalis applies that provision. In those cases where Boskalis applies a best practice that differs from a provision in the Code, an explanation has been added setting out the company’s position.

Two such differences concern temporary deviations necessary for existing employment contracts with members of the Board of Management to be respected. As a result, we are able to state that Boskalis already applies or will apply all of the principles and 91 of the 92 best practice provisions. In one case, Boskalis considers that the specific nature and character of the company mean that it is in its best interests to apply a best practice that differs from the relevant provision in the Code. This concerns provision III.2.1. The motivation behind the Boskalis best practice is included in the relevant explanation for that best practice provision in the appendix to this annual report.

The General Meeting of Shareholders in 2005 will have the opportunity to express its views on the corporate governance policy that the company has chosen.

RISKFACTORS

1. Market and competition

The Boskalis markets are heterogeneous and often develop in different ways. In most cases, the clients are national, regional, and local governments or associated institutions and oil and gas companies. These markets are generally driven by long-term economic factors, such as increases in the global population, the growth of the global economy, and the growth of international trade volumes. The long-term prospects for these factors are favorable.

In the short term, factors such as limited government budgets and falling oil and gas prices may have a negative impact on the markets, despite the long-term growth trends. Boskalis is well placed to respond to both positive and negative developments in individual market segments because of its global spread of activities, its extensive, versatile, and internationally-based fleet, and its strong positions in the home markets. Moreover, the dredging industry is largely focused on the maintenance and development of infrastructure. This means that long-term developments will generally be more important than short-term economic fluctuations.

On its markets, Boskalis is facing both large, internationally operating competitors and more regional or local competitors that are limited to one or several submarkets. In most cases, projects are brought to the market using private or public tender procedures. Competition is mostly on the basis of price. The dredging industry is a capital-intensive industry with high entry and exit barriers, particularly for companies operating in the international arena. Prices are influenced greatly by the relation between the demand for dredging services and the available capacity and utilization of the equipment.

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R o y a l B o s k a l i s We s t m i n s t e r n v 19

Corporate Governance

The broad international spread of market positions and equipment and cost leadership are key success factors that receive a great deal of emphasis from Boskalis in terms of investment strategy and as a critical component of operational management.

2. Operational risks

On the markets where Boskalis operates, ‘fixed price/lump sum’ is still the most common type of contract. In this type of contract, the contractor must include nearly all the operating and price risks in the price. It is generally impossible to claim payment from the client for any unexpected costs that occur during the course of a project. Accordingly, such operating and price risks must be taken into account when calculating the cost price.

Operating risks mainly involve soil conditions, variable weather conditions, technical suitability of the equip-ment, wear and tear when it comes into contact with processed material, and damage to equipment and third-party property. Boskalis seeks to control risks by means of thorough project preparation and appropriate measures, such as conducting soil studies, maintaining easily accessible databases with information on past experiences, and using detailed risk analysis techniques. In addition, there is a strong focus on staff training, schooling, and refresher courses, a certified Quality Assurance program, and maintenance to keep equipment in optimal condition. Risks are also insured where possible. The key to Boskalis’ professionalism and skills lies in its ability to prepare for these operating risks effectively and responsibly.

Risks related to price developments on the purchasing side, such as increased wages, material costs, sub-contracting costs, fuel, etc. are also taken into account when preparing cost price calculations. Wherever possible, especially on projects that extend over a long period of time, price index clauses are included in client contracts. With regard to fuel, the contract sometimes stipulates delivery by the client; in a few cases, forward contracts or futures are arranged.

3. Financial risks

With regard to the projects, Boskalis encounters not only operating risks, but also financial risks. Financial risks primarily concern risks that projects are disrupted by political developments, violence, etc., or non-payment by clients. Boskalis has a strict risk acceptance and hedging policy for political and payment risks. Except in case of first-class, creditworthy clients, payment risks are covered by insurance, bank guarantees, advance payments, etc.

Many of the projects are contracted in foreign currency. Once positions in foreign currency have been committeded, they are in principle fully hedged, generally by forward currency contracts. The develop-ment of the US dollar exchange rate in relation to the euro is particularly relevant. A large proportion of the projects are contracted in US dollars or in currencies that are more or less directly linked to the US dollar. With regard to the competitiveness of Boskalis’ cost structure, a significant part of the cost structure of most of Boskalis’ major international competitors is also linked to the euro. The impact of currency developments is greater in markets where the competition comes primarily from parties whose cost structures are not linked to the euro. However, on balance, the fluctuations of the US dollar in relation to the euro have only a limited impact on the competitive position of the company.

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20 A n n u a l R e p o r t 2 0 0 4

The most important non-fully owned affiliated companies of Boskalis (Archirodon, Lamnalco, and Bean Stuyvesant) are fully or largely US dollar-based. However, the cost structures of these companies are also completely or largely US dollar-based. These investments are viewed from a long-term perspective. Translation risks in these affiliated companies are not hedged, under the assumption that currency fluctuations and interest and inflation developments will balance out in the long run. The profit and loss accounts of these affiliates are converted at average currency exchange rates. Currency translation differences are directly charged or credited to the shareholder’s equity.

Financial derivatives (forward contracts, options, interest swaps, futures, etc.) are only used if they are based on underlying real transactions.

As is common practice in the contracting business, Boskalis also has large amounts outstanding in the form of bank guarantees or surety bonds (guarantees issued by insurance companies, primarily the case in the United States), usually in favor of clients. Boskalis’ financing policy is conservative since adequate credit, and particularly bank guarantee facilities, are essential to an uninterrupted conduct of business. At the end of 2004, the company had extensive credit and bank guarantee facilities available.

INTERNALCONTROLSYSTEMS

Boskalis has a number of systems for internal risk management and control. These systems are based on the principles of effective management control and tailored to the day-to-day working environment in which Boskalis operates worldwide.

Three aspects are important for the evaluation and testing of the internal risk management and control practices and systems within Boskalis, due to the hands-on nature of and short lines of communication within the company.

1. With regard to daily operations, an extensive framework of quality assurance rules, procedures and systems that include clear guidelines for responsibilities, authorizations and risk control, forms the back-bone of operational risk management and control. In addition, besides audits by external agencies, Boskalis also performs regular internal audits under the auspices of a QA officer.

2. The daily management of the Boskalis organization takes place with clear responsibilities and short, clear lines of command that are defined unambiguously. Both competition and project implementation require speed, knowledge, and decisiveness. Daily management is hands-on. Progress and develop-ment of the operating results and the company’s financial position, as well as operational and financial risks, are monitored by means of structured periodic reporting, analysis of the financial results, and performance reviews. The performance reviews on senior management level include a clear manage-ment audit component.

Corporate Governance

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21 R o y a l B o s k a l i s We s t m i n s t e r n v From August 2003 to mid-2005,

Terramare worked to expand the Ajos port in Kemi, Finland. The work also included the construction of a 450-meter concrete embankment. The expansion will make the Ajos harbor the most important port in the Gulf of Bothnia.

3. Structure and quality of the financial accounting and control systems are assured by clear directives and periodic internal and external audits. All relevant aspects of the financial accounting and control systems are set out in manuals, guidelines, and procedures. Internal audits to monitor and improve quality and discipline are conducted on the basis of at-random and ad hoc investigations (financial audits) that also have elements of instruction and training. Moreover, the quality of the financial control systems is evaluated regularly in the context of the activities of the external auditors.

The QA, management, and financial audits are the cornerstones of the evaluation and monitoring of internal risk management and control at Boskalis. Although there is room to further improve the systems concerned, and this receives the required attention, Boskalis has no indication that these systems are inadequate or not effective.

The topic of internal risk management and control has been discussed with the Supervisory Board. No major changes have been introduced in the structure of the risk management and internal control systems during the course of the year under review.

Corporate Governance

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In the past decades, the global economy has experienced rapid growth. International trade relations and modern communication techniques have forged the world into a single marketplace.

Where goods were once produced close to the consumer markets, the rise of economies in Asia in particular has created a fast-growing global exchange of raw materials, capital, and consumer goods. All those goods being transported all over the place means that the world trade volume is growing almost twice as fast as the global economy (source: IMF, World Economic Outlook, 2004).

Worldwide Dry Bulk Throughput (x 1 million tons)

(Source: OneStone)

The growth of trade flows has caused the international shipping sector to increase significantly. The growing production (mainly in China) causes increasing volumes of raw materials to be ship-ped over the oceans.

Growing

Driven by growing world trade

22 A n n u a l R e p o r t 2 0 0 4

In Le Havre, France, Atlantique Dragage worked with the cutter suction dredger Cyrus on the ambitious expansion of the harbor. With this first phase, Le Havre wants to double its container transit in the coming four years. The six new berths are suitable for container ships of more than 7,000 TEU and drafts of up to 14.5 m. -00162_JV1_TekstENG.indd 22 -00162_JV1_TekstENG.indd 22 06-04-2005 08:17:5506-04-2005 08:17:55

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trade, more maritime transport: these are

the drivers of harbor construction and maintenance.

In addition, more and more consumer goods are shipped in containers, which are transported on increasingly huge container ships. These ships have greater drafts and longer hulls, and sail on fixed international routes along major seaports. There is also a growing flow of containers that are transferred to smaller ships that handle local deliveries.

Worldwide Container Throughputs(x 1 million TEUs)

(Source: OneStone)

Growing trade, more maritime transport. Bigger ships, and expanding, deeper harbors. Countries building more harbors. Regional competition between harbors. These are the drivers of harbor construction and maintenance.

Good for the global economy and work for Boskalis.

R o y a l B o s k a l i s We s t m i n s t e r n v The jumbo trailing suction hopper dredger Queen of the

Netherlands in Daya Bay, China, where Boskalis dredged the entrance channel to the harbor.

Jumbo trailing suction hopper dredger Queen of the Netherlands dredging in the Felixstowe container port, United Kingdom. -00162_JV1_TekstENG.indd 23 -00162_JV1_TekstENG.indd 23 06-04-2005 08:17:5906-04-2005 08:17:59

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24 A n n u a l R e p o r t 2 0 0 4 Supervisory Board

M.W. Dekker, chairman (1938)

• former general director of NPM Capital N.V.

• chairman of the Supervisory Board of Algemeen Trust Kantoor N.V., Amsterdam

• member of the Supervisory Board of Arklow Shipping Ltd, Ireland

• member of the Supervisory Board of Solvus N.V., Antwerp

• chairman of the Supervisory Board of Dutch Flower Group B.V.

• member of the Supervisory Board of FinAce B.V.

• member of the Supervisory Board of Fugro N.V.

• member of the Supervisory Board of IHC Holland N.V.

• member of the Supervisory Board of JSI N.V.

• member of the Supervisory Board of F. van Lanschot Bankiers N.V.

• member of the Supervisory Board of Van Wijnen Holding N.V.

• member of the Supervisory Board of Belron SA

• first appointment: 1989, current term: 2001-2005

J. Aalberts (1939)

• chairman of the Board of Management of Aalberts Industries N.V.

• member of the Supervisory Board of Stork N.V.

• member of the Supervisory Board of Van der Moolen Holding N.V.

• member of the Supervisory Board of Vado Beheer B.V.

• first appointment: 2001, current term: 2001-2005

H. Benjamins (1943)

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

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

• member of the Supervisory Board of CA F.N.Z. Holding B.V.

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

• member of the Supervisory Board of Grondexploitatiemaatschappij Californië B.V.

• first appointment: 2005, current term: 2005-2009

R.M.F. van Loon (1942)

• former vice-president of Shell Chemicals Ltd.

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

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

• first appointment: 2005, current term: 2005-2009

M a n a g e m e n t

Management

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25 R o y a l B o s k a l i s We s t m i n s t e r n v M. Minderhoud, vice-chairman (1946)

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

• chairman of the Supervisory Board of Blauwhoed B.V.

• chairman of the Supervisory Board of Getronics N.V.

• chairman of the Supervisory Board of De Hypothekers Associatie B.V.

• chairman of the Supervisory Board of Quion Groep B.V.

• member of the Supervisory Board of Heembouw Holding B.V.

• member of the Supervisory Board of N.V. Nuon

• member of the Supervisory Board of Eureko B.V./ Achmea Holding N.V.

• member of the Supervisory Board of Rabobank Nederland

• chairman of Vodafone International Holdings B.V.

• first appointment: 2005, current term: 2005-2009

M. van der Vorm (1958)

• chairman of the Board of Management of HAL Holding N.V.

• member of the Supervisory Board of Anthony Veder Group N.V.

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

• member of the Supervisory Board of Univar N.V.

• first appointment: 1993, current term: 2003-2007

A.A. Westerlaken (1955)

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

• member of the Supervisory Board of VU-Windesheim, VUmc

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

• first appointment: 1999, current term: 2003-2007

All members of the Supervisory Board are Dutch.

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

Management

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26 A n n u a l R e p o r t 2 0 0 4 R. van Gelder BA

and dr. P.A.M. Berdowski.

Board of Management

R. van Gelder BA, chairman (1945)

• member of the Board of Management since 1985

• chairman of the Board of Management since 1993

• member of the Supervisory Board of HES Beheer N.V.

• member of the Supervisory Board of Brunel International N.V.

• chairman of the Euronext Issuing Institutions’ Advisory Body

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

• chairman of the International Association of Dredging Contractors

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

• member of the Board of Management of Nederland Maritiem Land

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

• member of the Board of Management since 1997

• vice-chairman of the Board of Management since 2001

• chairman of the Supervisory Board of Amega Holding B.V.

• member of the Supervisory Board of Scope Publishing B.V.

• member of the Supervisory Board of N.V. Holding Nutsbedrijf Westland

• member of the Government Commission with regard to export -, import – and investment guarantees

• chairman of the Stichting Pensioenfonds Boskalis Westminster Nederland

• former Managing Partner of Krekel Van der Woerd Wouterse

All members of the Board of Management are Dutch.

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

Secretary

M.J. Kielstra (1972)

The above information is valid as at 14 March 2005.

Management

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27 R o y a l B o s k a l i s We s t m i n s t e r n v Maintenance on the cutter

suction dredger Taurus.

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Key figures

28

Turnover 1,001 1,046

Orderbook (work to be done) (2) 1,164 1,124

EBIT (3) 41.5 77.9 EBITDA (4) 130.7 157.2 Net result 30.2 70.9 Depreciation 89.2 79.3 Cash flow 119.4 150.2 Shareholders’ equity (2) 465.0 455.2

Average number of outstanding shares (x 1,000) (8) 27,769 26,630

Number of outstanding shares (x 1,000) (9) 28,174 27,256

Personnel (number of persons) (2) 2,654 3,186

Ratios ( in percentages)

Operating result as % of the turnover 3.7 6.7

Return on capital employed (5) 6.5 16.0

Return on equity (6) 6.6 16.3

Solvency (2/7) 43.4 42.5

Figures per share ( amounts x € 1.00 )

Profit (8/10) 1.09 2.66

Cash flow (8) 4.30 5.64

Shareholders’ equity (2/9) 16.50 16.70

Dividend 0.75 1.04

Share information Euronext Amsterdam

Ordinary shares ( amounts x € 1.00 )

• Price range 18.05/25.00 16.51/23.15 • Closing price at year-end 24.90 20.91 • Price/earnings ratio 22.8 7.9

(1) Figures taken from the respective financial statements. (2) As at 31 December.

(3) Consists of earnings before interest and taxation.

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

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

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

(7) Shareholders’ equity as % of the balance sheet total (fixed assets + current assets). (8) Weighted average number of outstanding ordinary shares less the number of shares owned

by the company.

(9) Number of outstanding ordinary shares less the number of shares owned by the company as at 31 December.

(10) The dilution effect was practically nil up to the financial year 2004.

K e y f i g u r e s

( 1 )

A n n u a l R e p o r t 2 0 0 4

( amounts x € 1 million, unless stated otherwise) 2004 2003

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R o y a l B o s k a l i s We s t m i n s t e r n v 29

Investor Relations

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

Boskalis values good communications with its existing and potential shareholders, institutional investors and financial analysts. The key objective is to provide transparency about value creation within the company, so that the valuation of Boskalis shares reflects as accurately as possible the developments and prospects in the markets and the company’s performance in those markets.

Intensive communications with media and investors

Boskalis has an active investor relations policy which involves open communications with analysts, share-holders, investors and media. A steady flow of information provides a picture of day-to-day matters and strategy, business drivers and the company’s critical success factors. Boskalis communications primarily target investors interested in the long-term potential of small cap stocks. New contacts are established regularly with investors in Europe, the United States and Canada. There is a strong emphasis on private investors as well as institutional investors. The Boskalis share is monitored with great interest in inter-national circles.

Boskalis has its own website (www.boskalis.com), providing financial information as well as general com-pany information, vacancies, fleet composition, projects and the latest press releases. Presentations for analysts are also published on the site. The website is maintained and improved continuously.

Increase in share price of more than 19%

Despite the uncertainties in the short term, there was still considerable interest in Boskalis shares from analysts and investors. This was primarily true of investors with a longer-term investment strategy. The share price went up in 2004 by more than 19%, from € 20.91 to € 24.90.

Share price in euros, closing prices (1 January 1999 through 31 December 2004).

In 2004, the price of the Boskalis share developed upward:

2004 2003 2002 2001 2000 1999-2004

Boskalis share price: +19% +8% -36% + 14% + 47% + 81%

AEX index: +3% +5% -36% -20% -5% - 35%

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

On the basis of the closing rate as at year-end 2004, the dividend yield for Boskalis shares in the past year was 4.2% (€ 1.04 per share).

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A n n u a l R e p o r t 2 0 0 4 30

Investor Relations

Large shareholders

As at 14 March 2005, the following shareholders are known to have a holding of at least 5% in Boskalis:

HAL Holding N.V. 31%

Delta Lloyd N.V. 5 %

In addition to the holdings of these ‘regular’ shareholders, most Boskalis shares are in foreign hands. An estimated 25% are held in the United States and Canada, with 25% being held in the United Kingdom and the remainder in some ten European countries.

Dividend policy

The main principle underlying the Boskalis dividend policy is to distribute 30% to 40% of the net result from normal operations in the form of a dividend. In contravention to this principle a proposal will be submitted to the General Meeting of Shareholders on 10 May 2005 for a dividend of € 0.75 per share. Shareholders may opt to take this dividend entirely in shares or entirely in cash. This dividend is payable as from 2 June 2005.

Euronext listing

Royal Boskalis Westminster nv shares are listed on the Euronext Exchange and are traded there continuously. The share is listed on the Next 150 Index. With effect from 2 March 2005 the Boskalis stock is no longer listed on the Amsterdam AMX index; it is now on the Euronext Amsterdam Small Cap Index (AScX).

Financial agenda Agenda in 2005

15 March Publication annual figures for 2004 mid-April Publication annual report 2004

10 May Annual General Meeting of Shareholders

12 May Shares go ex-dividend

12 to 27 May Option period stock dividend or cash dividend 30 May Fixation of stock dividend conversion ratio 2 June Dividend payment for 2004

17 August Publication of 2005 half-year results

Information Investor Relations R.T. Berends Telephone +31 (0) 78 69 69 822 Telefax +31 (0) 78 69 69 805 E-mail ir @ boskalis.nl Internet www.boskalis.com -00162_JV1_TekstENG.indd 30 -00162_JV1_TekstENG.indd 30 06-04-2005 08:18:0606-04-2005 08:18:06

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R o y a l B o s k a l i s We s t m i n s t e r n v 31

Message to the shareholders

M e s s a g e t o t h e s h a r e h o l d e r s

Dear shareholders,

For Royal Boskalis Westminster nv, 2004 was a year of modest expectations, and ultimately also a year of modest results. A chill wind blew over the international landscape of the dredging sector. In our European and American home markets, we saw low work volumes influenced by limited govern-ment budgets. The continuing decline of the US dollar in relation to the euro, high energy prices, and fierce competition in nearly all our markets were factors that contributed equally to the less favorable market conditions. On the international market for large projects, the stagnation of the land reclamation projects in Singapore continued throughout the year; conversely, the market in the Middle East experienced rapid and significant development. Large-scale land reclamation projects in Dubai, Qatar, and Bahrain shifted into high gear in the second half of the year, moving rapidly from the design table to the market, and will demand a great deal of our dredging equipment capa-city in the coming years. Although no great expectations can be cherished for the European home markets for the time being, we do see a renewed upward trend for 2005. We are counting on posi-tive developments in market volume, equipment utilization, and pricing, particularly in the markets outside Europe. The recent improvements in relations between the governments of Singapore and Malaysia have increased the chances of resuming the land reclamation projects in Singapore using sand from Malaysia.

Despite the difficult market conditions and as a result of the modest net result, good work was done in 2004. Group turnover lagged only a fraction behind 2003, in part due to the contribution from the “dredging-plus” activities. The operating margins were under pressure, but utilization of the large dredging equipment improved later in the year after getting off to a difficult start.

The operating cash flow (EBITDA before reorganization costs) stayed at a healthy level of € 139 million (2003: € 157 million).

An extensive program of streamlining the fleet, purchasing processes and organization entailed a one-time cost of € 12.8 million. Earnings per share ended up to € 1.09, as stated a modest result, but still better than the expectations announced in August 2004. € 1,041 million in new orders were acquired in 2004 (2003: € 897 million). As a result, the orderbook at year-end 2004 was the same as at year-end 2003. The flow of orders in the first months of 2005 has already surpassed the orders in early 2004.

On the international market for dredging services, the difference lies primarily in quality, innovation and cost leadership. When facing such uncertain market conditions as we encountered in 2003 and 2004, the main goal is to streamline cost effectiveness without affecting the level of quality and innovation. The streamlining program initiated in 2003 and implemented in 2004 not only improved the efficiency of purchasing and organization, it also resulted in the modernization of the fleet and the rationalization of the activities portfolio in a number of our home markets.

R. van Gelder, chairman Board of Management.

-00162_JV1_TekstENG.indd 31

References

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