A n n u a l R e p o r t 2 0 0 4F U G R O N . V.
MARINER
Fugro N.V.
Veurse Achterweg 10
P.O. Box 41
2260 AA Leidschendam
The Netherlands
Telephone: +31 (0)70 3111422
Fax: +31 (0)70 3202703
E-mail: [email protected]
www.fugro.com
Chamber of Commerce
’s-Gravenhage
number 120091
F o r c e f u l
U n b e a t a b l e
G r o w t h
R e s u l t s
O p e r a t i o n s
S o u r c e : ‘ a s e c r e t a d m i r e r ’
A n n u a l R e p o r t 2 0 0 4
C o n t e n t s
A n n u a l a c c o u n t s 2 0 0 4
1 Consolidated IFRS income statement 68
2 Consolidated IFRS statement of total result for the period 69
3 Consolidated IFRS balance sheet 70
4 Consolidated IFRS statement of cash flows 71
5 Notes to the consolidated IFRS financial statements 73
6 Subsidiaries and Associates of Fugro N.V. 119
7 Statements of reconciliation on first time adoption of IFRS 122
8 Dutch GAAP annual report 134
9 Consolidated Dutch GAAP balance sheet 137
10 Consolidated Dutch GAAP income statement 138
11 Consolidated Dutch GAAP statement of total income and expense 139
12 Consolidated Dutch GAAP statement of cash flows 140
13 Dutch GAAP equity movements 141
14 Notes to the consolidated Dutch GAAP financial statements 142
15 Dutch GAAP company balance sheet 145
16 Dutch GAAP company income statement 146
17 Notes to the Dutch GAAP company financial statements 147
18 Other information 150
Historic review 152
Report of Stichting Administratiekantoor Fugro 154
Declaration of independence 155
Report N.V. Algemeen Nederlands Trustkantoor over the year 2004 155
Glossary 156
Major developments in 2004 2
Preface from the President and Chief Executive Officer 3
Profile 4
Fugro’s activities and markets 5
Key figures 6
Mission, financial targets, strategy and policy 8
Theme: Fugro and its European foundation 11
Report of the Supervisory Board 15
Report of the Board of Management 21
General business development 21
Historic overview based on constant
average currency rates 21
Financial developments 25
Dividend proposal 27
Organisation and personnel 27
Sustainable business 29
Information and
Communication Technology (ICT) 32
Business Principles 33
Research and development 33
Market development and trends 34
Backlog 36
Post balance sheet date events 36
Prospects 37
Geotechnical services 40
Survey services 43
Geoscience services 46
Corporate Governance 49
IFRS 54
Risk management 56
Information for shareholders 60
Fugro’s contribution to society 64
• In the year under review turnover rose by 23% to
EUR 1,021.6 million (2003: EUR 830.1 million). Based on
the average 2003 dollar exchange rate (USD 1 = EUR 0.88),
turnover would have amounted to EUR 1,057.1 million.
The increase in turnover was, for the most part, due to the
acquisition of Thales GeoSolutions, which was included
in the consolidation as of 2003 (for six weeks since
19 November). Autonomous growth was 10%, in part
thanks to the market improving in the course of 2004.
Acquisitions and disposals in the year under review on
balance increased turnover by 16%.
• The net result before amortisation of goodwill rose by 48%
to EUR 66.7 million (2003: EUR 45.1 million). The net
profit margin rose to 6.5% (2003: 5.4%) and was in line
with forecasts made earlier. The net result after
amortisation of goodwill amounted to EUR 49.5 million
(2003: EUR 32.4 million); an increase of 53%.
• Earnings per share before amortisation of goodwill rose
by 44% to EUR 4.49 (2003: EUR 3.12). Earnings per share
after amortisation of goodwill amounted to EUR 3.33
(2003: EUR 2.24). Cash flow per share rose by 36% to
EUR 8.90 (2003: EUR 6.54).
• All the business units contributed towards the improved
net result. Although the results of the Survey division
were somewhat disappointing, the results of the Airborne
Survey activities – part of the Geoscience division – were
extremely good.
• Although investments in the oil and gas industry rose by
around 8% (in dollar terms) in 2004 compared with the
previous year, most suppliers to the oil and gas industry
have not felt proportional benefits from these increased
investments.
• It is proposed that the dividend in cash or (certificates of)
shares be increased to EUR 1.90 (2003: EUR 1.85).
• The activities of Fugro-TGS were successfully integrated
into the Survey division in the early part of 2004. The full
effects of the approximately EUR 40 million annual
savings in operating costs will become apparent in 2005.
Fugro’s position as a global supplier of services to the oil
and gas industry has been significantly reinforced.
• Mr. G-J. Kramer (1942), President and Chief Executive
Officer since early 1983, will step down as President and
Chief Executive Officer in October 2005 and will retire at
the end of December 2005. Mr. K.S. Wester (1946), who has
worked for Fugro since 1981 and been a member of the
Board since 1996, has been named as his successor.
Mr. A. Jonkman (1954) joined the Board as Chief Financial
Officer in May 2004.
• For a year Fugro has been in compliance with the Dutch
Corporate Governance code. The General Meeting of
Shareholders of 19 May 2004 approved the Company’s
Corporate Governance policy, including the explained
deviations from the Code.
• On 19 May 2004 the first meeting of holders of depository
receipts of shares (certificates) was held. The certificate
holders expressed their confidence in the management of
Stichting Administratiekantoor Fugro.
• Fugro’s financial reporting for 2004 complies fully with
both the Dutch accounting regulations and those of the
IFRS with comparable figures for the year 2003.
This means that Fugro is complying with this regulation
a year earlier than is legally required.
M a j o r d e v e l o p m e n t s i n 2 0 0 4
2
All figures mentioned in the Annual Report (page 2 to 65) refer to the Annual Accounts based on Dutch GAAP, which will be proposed for adoption to the
Annual General Meeting on 19 May 2005.
D e a r s h a r e h o l d e r
2004 was a very successful year for Fugro, in part thanks
to the speedy integration of Fugro-TGS. The turnover of
EUR 1,021.6 million means we have reached the one
billion euro milestone, never before achieved in Fugro’s
history. We also achieved a reasonably good result of
EUR 66.7 million before amortisation of goodwill, with
a cash flow of EUR 132.1 million. Mainly due to a difficult
first half year, we view 2004 as a transitional year.
The appropriateness of the strategic course has again
proven to be correct, but we must take a further step
forward in order to achieve our target net margin before
amortisation of goodwill of 7.5% – 8% again.
The world economy developed only moderately,
market conditions remained rather disappointing and
there was a further substantial drop in the dollar
exchange rate, yet we were once again able to improve the
organisation on many fronts. And that is something of
which we can rightfully be proud. This progress is partly
thanks to past investments and strategic acquisitions, for
example in the Geoscience division. Fugro’s transparent
and sustainable business operations are extremely
important for a good understanding of our focus on the
future and, therefore, for the confidence our stakeholders
have in Fugro.
We want to demonstrate our confidence in the
future to our shareholders in the amount of the dividend.
It is proposed that the dividend for 2004 be raised to
EUR 1.90 (2003: EUR 1.85).
We are gratified by the fact that already in 2004 our
shareholders approved our Corporate Governance, which
means we are in compliance with the Dutch Corporate
Governance code.
The implementation of the new IFRS accounting
principles kept Fugro busy in 2004. As you can see on
pages 68 to 133 our reporting over the past year is fully in
accordance with the IFRS standards with comparable
figures for 2003, as well as in accordance with Dutch
reporting regulations. This means that Fugro is
complying with the legal requirement a year ahead
of schedule.
The developments in the year under review have
resulted in an excellent strategic foundation and a good
financial framework. Organisationally Fugro is well
structured, ready for the future and in an excellent
position in all our markets. At the same time, economic
conditions are gradually improving globally and it is
anticipated that the investments of the oil and gas
industry, that have thus far not been forthcoming, will
finally materialise in 2005 and bring benefits to suppliers
such as Fugro. In a nutshell, the prospects for most of our
activities are good.
These developments mean that at this moment the
order book is well filled and healthy. Fugro is working
towards achieving the net profit margin of 7.5% – 8% in
the near future. Our sights are also set on an average
annual autonomous growth of around 5% – the growth
we achieved in the past. Expedient acquisition candidates
will be evaluated. During the last twenty years, Fugro has
worked consistently on building a unique global portfolio
of activities in niche markets. This means we face not only
the short-term but also the long-term future with
confidence.
Next year, my successor K.S. Wester will write this
preview. I want to personally thank the readers, share-
holders, employees and clients for the trust you have
placed in me since 1983 and I hope you feel that this trust
has been rewarded. Many thanks for all your support.
Yours 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
3
4
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 design and
construction materials.
Precise positioning services,
geological advice, topographic,
hydrographic and geological
mapping and support services
for construction projects and
data management.
Gathering and interpreting
geophysical and geological
data, quantitative and
qualitative estimation 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
Fugro collects and interprets data related to the earth’s
surface and the soils and rocks beneath. On the basis of
this 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 supported by advanced technologies and systems,
many of which have been developed in-house. Fugro has
28 vessels and owns 75 CPT trucks and 40 aircraft.
Fugro’s objective is to occupy a leading market position by
providing high- quality services supported by
technological developments. 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 March 2002. Fugro
has over 7,600 staff permanently stationed in over
50 countries.
For complete company information see www.fugro.com.
Organisationally Fugro comprises three divisions: Geotechnical, Survey and Geoscience.
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
Fugro has no competitors offering global services on the
same scale and of the same scope.
The offshore Geotechnical, offshore Survey, Development
& Production, Airborne Survey and Positioning business
units operate worldwide. In these markets Fugro holds
leading positions. The competition varies per segment
and geographical region. The oil and gas industry is the
major client in these markets. The British market
research agency Douglas-Westwood estimates that the
World Ocean Survey market (including offshore
Geotechnical and offshore Survey) in total is
USD 2.5 billion per annum.
The onshore activities revolve around local or regional
markets. Fugro has a presence in many countries and its
market positions vary per region. Most orders are carried
out within a hundred kilometres of the relevant office.
Market
Local/regional markets
Global market
Global market
Local/regional markets
Global market
Global market
Global market
Market position
Strong regional position,
varying by country/region
Strong leading position
Leading position
Strong regional position,
varying by country/region
Strong position in niche
markets
Leading position in niches
Leading position
G e o t e c h n i c a l
Onshore
Offshore
S u r v e y
Offshore
Onshore
Positioning
G e o s c i e n c e
Development & Production
Airborne Survey
Major clients
Government, industry and
construction contractors
Oil and gas companies,
contractors
Oil and gas companies
Government, industry and
construction contractors
Agriculture, mining and
survey services
Oil and gas companies
Mining and oil and gas
companies
R e s u l t (x EUR mln.)
Turnover
Turnover from own services
Operating result
Cash flow
Net result before amortisation of goodwill 5)
Net margin before amortisation of goodwill (%) 5)
Net result after amortisation of goodwill 5)
Interest cover (factor)
C a p i t a l (x EUR mln.)
Total assets
Group equity 1) 2)
Solvency (%) 1) 2)
Solvency (%) 1) 2) 3)
Return on shareholders’ equity (%) 1) 2) 4)
Return on invested capital (%) 1) 2)
A s s e t s (x EUR mln.)
Tangible fixed assets
Investments (including acquisitions)
Depreciation of tangible fixed assets
D a t a p e r s h a r e (x EUR 1.–)
Capital and reserves 1) 2)
Operating result
Cash flow
Net result before amortisation of goodwill 5)
Net result after amortisation of goodwill 5)
Dividend
Share price: year-end
Share price: highest
Share price: lowest
Average price/earnings ratio after amortisation of goodwill 5)
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
K e y f i g u r e sFor a reconciliation between IFRS and Dutch GAAP please refer to pages 54, 55 and 122 through 132.
6
For figures based on Dutch GAAP the following holds: 1) After providing for a cash dividend of 50% in 2001 and before.
2) Since 2002, no accrual for dividend has been included.
IFRS2004
1,008.0
643.4
104.2
125.8
56.4
5.6
49.3
3.7
983.4
228.2
22.8
32.9
25.9
14.5
233.0
71.0
66.1
14.40
7.02
8.48
3.80
3.32
1.90
61.40
65.65
40.20
15.9
3.6
15,548
15,137
14,840
7,615
IFRS2003
822.4
549.0
63.3
80.5
25.7
3.1
18.9
2.2
1,056.0
213.7
20.0
29.1
10.9
7.5
268.8
124.0
54.0
13.93
4.37
5.56
1.77
1.30
1.85
40.80
51.45
24.51
29.1
4.9
15,166
14,577
14,464
8,472
DutchGAAP2004
1,021.6
646.4
111.0
132.1
66.7
6.5
49.5
4.0
970.4
264.8
26.8
37.1
18.0
11.7
232.1
113.1
65.4
16.73
7.48
8.90
4.49
3.33
1.90
61.40
65.65
40.20
15.9
3.6
15,548
15,137
14,840
7,615
Change in %
23.1
18.9
45.5
39.6
47.9
20.4
52.8
17.6
(5.8)
8.7
14.5
12.1
2.3
30.0
(1.9)
(7.5)
32.1
5.4
41.9
36.1
43.9
48.7
2.7
50.5
27.6
64.0
(5.9)
(26.5)
Change in %
22.6
17.2
64.6
56.3
119.5
80.6
160.8
68.2
(6.9)
6.8
14.0
13.1
137.6
93.3
(13.3)
(42.7)
22.4
3.4
60.6
52.5
114.7
155.4
2.7
50.5
27.6
64.0
(45.4)
(26.5)
DutchGAAP2003
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
7
3) Subordinated convertible debenture bond treated as Group equity.
4) Before amortisation of goodwill.
5) For IFRS: before amortisation intangible fixed assets.
DutchGAAP2002
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
DutchGAAP2001
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
DutchGAAP2000
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
0
220
440
660
880
1,100
IFRS2003
2004 IFRS2004
2003200220012000
0
150
300
450
600
750
IFRS2003
2004 IFRS2004
2003200220012000
0
30
60
90
120
150
IFRS2003
2004 IFRS2004
2003200220012000
0
15
30
45
60
75
IFRS2003
2004 IFRS2004
2003200220012000
0
1
2
3
4
5
6
IFRS2003
2004 IFRS2004
2003200220012000
(x EUR 1 mln.)
T u r n o v e r
(x EUR 1 mln.)
N e t r e v e n u e
(x EUR 1 mln.)
C a s h f l o w
(x EUR 1 mln.)
N e t r e s u l t 4) 5)
(x EUR 1.–)
N e t r e s u l t p e r s h a r e 4) 5)
8
M i s s i o n
Fugro’s mission is to be the world’s leading company in
the offshore, onshore and airborne collection of,
interpretation of, and advising on data related to the
earth’s surface and the soils and rocks beneath, primarily
aimed at providing advice to the:
• oil and gas industry;
• mining industry and
• construction industry.
This mission is achieved through:
• providing a high-quality service;
• professional, highly-specialised staff and
• advanced, generally state-of-the-art, unique
technologies and systems.
F i n a n c i a l t a r g e t s
Fugro’s target is to achieve a structural increase in
earnings per share for its shareholders. Fugro’s long-term
policy is aimed at generating a steady growth in net profit
by both improving net margin and increasing turnover.
To achieve this a clear and consistently implemented
strategy for all stakeholders is vital. Fugro is aiming for
a net profit margin before amortisation of goodwill of
7.5 – 8% of turnover. This equates to an EBITA margin of
10 – 12%. The EBITA per division is included in the
developments per division (pages 40 – 48). Other
important financial targets are:
• maintaining a healthy balance sheet and solvency
(30 – 35%);
• a strong cash flow with an average annual growth per
share of 10%;
• a healthy interest cover (EBIT/Interest > 5) and
• a growth in earnings per share averaging 10% per
annum.
With the exception of the capitalisation of goodwill and
its amortisation over a maximum of twenty years,
introduced as of 2001, in the past few decades under
Dutch GAAP Fugro had not implemented any material
changes to its accounting system.
Fugro has incorporated the IFRS standards into its
financial reporting over 2004. Please see pages 54 and 55
for a summary of the way in which IFRS standards have
influenced Fugro’s annual accounts and pages 122 – 133
for a detailed explanation. The effects of the transition to
IFRS have no influence on Fugro’s strategy, operational
development and cash flow and does not materially alter
the historical picture of Fugro.
S t r a t e g y
Long-term (3 – 5 years)
In the long-term Fugro aims at achieving equilibrium
between its various activities in order to achieve its
targets. This is an essential component of its strategy.
Fugro strives for a good balance between services related
to exploration and production activities of the oil and gas
industry and those related to other markets and also
between offshore and onshore activities. This diverse
range of cohesive activities reduces Fugro’s vulnerability
to market fluctuations in one particular sector and the
broad spread of its activities, in terms of both products
and geography, ensures a good management of business
risks. Avoiding dependence on one market or single group
of clients is an essential component of the Company’s
strategy. The result is a company that is less cyclical than
it would be if Fugro did not operate globally and for more
than one group of clients.
Profit margins vary per activity depending on the specific
market circumstances. On average, the target profit
margin is higher for the more risky and capital intensive
offshore and airborne activities than for the onshore
activities. The aim is to achieve robust but controlled
profit growth through:
• a broad but cohesive activity portfolio;
• the manner in which Fugro is financed;
• the organisational structure;
• management based more on net result than on
turnover growth.
M i s s i o n , 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
– 60%
– 40%
– 20%
0%
20%
40%
60%
1994A
1995A
1996A
1997A
1998A
1999A
2000A
2001A
2002A
2003A
2004F
2005F
E&P spending
Oil price
A =
F =
Actual
Forecast
– 30%
– 20%
– 10%
0%
10%
20%
30%
C h a n g e i n o i l p r i c e a g a i n s t E & P s p e n d i n g
o f t h e o i l c o m p a n i e s (1994 – 2005)
One way a higher margin can be achieved is by having
significant large market shares for Fugro’s core activities
and in niche markets. The target margin can be achieved
through:
• increasing scale of operations;
• increasingly strong market positions;
• considerable research and development;
• being selective about the projects that are taken on
and
• the acquisition of 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 enables Fugro to offer
clients more and more added value.
Short-term (1 – 2 years)
Fugro’s short-term aim is to again achieve a target margin
(net profit margin before amortisation of goodwill) of
7.5% – 8% of turnover. After the successful integration of
Fugro-TGS in 2004 and the mediocre economic
development and market circumstances of recent years,
the focus is also on achieving at least the historical
average annual autonomous turnover growth of around
5%. Possible acquisitions will be evaluated as and when
they present themselves rather than being planned
systematically beforehand. After the acquisition of Thales
GeoSolutions the solvency declined due to the bankloan
that was taken out to finance the acquisition. In 2005
Fugro will focus on the further optimalisation of its
financing structure, also related to the expiration of the
EUR 100 million convertible subordinated notes and the
above mentioned bankloan of EUR 142 million
(outstanding EUR 127 million).
In the ICT area Fugro is developing an ICT security policy
that is in line with the ISO 17799 and BS 7799 standards.
A major portion of the operating companies are ISO
quality certified. Fugro aims to achieve ISO quality
certification for all relevant operating companies within
two years.
After several important acquisitions the organisation
structure of the business unit Development & Production
will be further optimised. In 2004 this process started by
the clustering of the ‘imaging’ activities in the new
company Fugro Seismic Imaging. The refocus of
Development & Production will be continued in the next
two years to further improve the decisiveness and
position in this promising market.
P o l i c y
Sustainability, transparency and reliability have been
core policy themes for Fugro for a very long time. Fugro’s
(financial) targets and the implementation of its strategy
will be achieved on the basis of the following elements:
Market positions and acquisitions
Fugro’s policy is based primarily on maintaining and,
wherever possible, expanding its existing market
positions. Complementing and broadening 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
good market positions or to obtain valuable technologies.
9Source: ABN AMRO
Brent Blend, scale left.
E&P spending, scale right.
Because acquisitions always involve a measure of risk, in
general an extremely thorough and extensive due
diligence is carried out before the decision to acquire a
company is taken. This limits the risks considerably.
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 management skills;
• risk profile.
Research and development
Research and development are of strategic importance for
Fugro. The search for ways to expand and improve its
services to clients is unceasing and cooperation with its
clients plays an important role in this. Many new ideas are
generated through joint development projects. Specific
measuring equipment, such as the ‘Georanger I’, an
unmanned aircraft for geophysical surveys that went into
operation in 2004 and analytical models play a major role.
Cooperation and scale advantages
Effective cooperation between the various business units
and critical mass are key factors for the successful
execution of large assignments. Capacity utilisation can
be improved by the exchange of equipment and
employees between the various activities and by
broadening staff training. Fugro stimulates cooperative
technological renewal, both within and outside the
Group, by clustering the available knowledge and
increasing its investment footprint. The integration of
information systems and the utilisation of scale
advantages enhance the service provided to clients.
10
S t r e n g t h s
• Excellent strategic basis
• Good market positions in many niche markets
• High quality services
• Sound financial and management systems
W e a k n e s s e s
• Solvency under desired level after acquisition of
Thales GeoSolutions in 2003
• Structure of Development & Production activities
• Vulnerability to rapid, strong changes in
the dollar rate
O p p o r t u n i t i e s
• Increase investment of oil and gas industry
• Growing demand for oil and gas
• Increasing number of infrastructural projects
• Growing demand from mining industry
• Demand for optimisation of oil and gas fields in
production
T h r e a t s
• Global negative economic developments
• Further downward development of dollar
exchange rate
• Collapse of oil price or demand for oil
With its birthplace and head office in Leidschendam,
the Netherlands, Fugro is firmly embedded in Europe.
Fugro was established in 1962 and immediately began
acquiring geotechnical assignments in various European
countries via its mother company Nederhorst. In Belgium
(foundation studies for a motorway) and Switzerland, and
in other countries as well, Fugro’s professionalism and
expertise in the technical arena quickly gained renown.
At the beginning of the seventies Fugro began acting as
a consultant to the oil and gas industry in the North Sea
– an activity that has expanded into the most important
cornerstone of Fugro’s business. In the ensuing period
Fugro offices were established in several European
countries; the United Kingdom (in part coupled with oil
and gas exploration) and Germany. In the ’90s the
Company expanded further, first into Russia and Belgium
and then into Norway, Italy, Luxembourg and France.
Very soon Fugro was also active, on a project basis, in
Southern Europe. Today Fugro is keeping a sharp eye open
for opportunities in eastern Europe.
Fugro carries out projects – from its home base in the
Netherlands, where many new (technological) initiatives
are developed, and through specialists at its international
operating companies – in far more countries than those
in which it has offices. In Europe this often involves
providing services related to infrastructure projects.
Fugro very quickly built up a good reputation with these
activities, and within the oil and gas industry. This is
essential when it comes to the larger, challenging
projects which are a clear target for Fugro.
Fugro’s good reputation was solidified by the Company’s
introduction on the stock exchange on 7 April 1992.
This meant Fugro was quoted on the former Amsterdamse
Effectenbeurs (Amsterdam Stock Exchange). Today Fugro
is one of the leading Midkap-funds of Euronext
Amsterdam, with a (partially determined by its history)
large group of international and, in particular, European
shareholders. Listing on the stock exchange was essential
for Fugro’s further growth as it enabled the financing of
its robust and systematic expansion.
Thanks to Fugro’s international expansion its turnover
has, in absolute terms, increased substantially not only in
Europe but also from outside Europe. Today around half
of Fugro’s total turnover (2004: EUR 480 million) is
achieved in Europe while around 9% of the total turnover
is invoiced from the Netherlands. In 1987, when the
Company had been in existence for 25 years, the
European turnover also amounted to approximately 50%
of the total turnover.
In the 42 years since its founding, Fugro has expanded
into a globally-operating company, offering a broad
package of services and active in many niche markets.
Today the Company is still managed from its head office
in Leidschendam by a multinational Board of
Management and primarily local management in the
over 50 countries in which Fugro has local offices.
This enables Fugro’s operating companies to reap
the benefits and opportunities of being part of a
multinational organisation while, at the same time,
retaining their own culture and identity. They can also
avail themselves of the professional expertise and
motivation afforded by the Fugro network. In the future
Europe will continue to form a firm foundation for Fugro
as an integral component of our global organisation.
F u g r o a n d i t s E u r o p e a n f o u n d a t i o n
11
1 9 6 2N L
1962
Countries in Europe where Fugro is active
Establishment Fugro
1 9 6 2N L
1 9 6 3B
1 9 6 8U K
1 9 7 5D
Fugro established Fugro’s sonar cone
becomes the global
standard
Geotechnical survey
using Fugro’s vessel
‘Greta’
1962 1963 1966 1970 1975 1976 1980
Fugro’s field
service
Fugro’s
1,000th order
In 1962, Fugro N.V. – a company for soil investigations and foundation technology – was founded.
Very soon Fugro began looking beyond the Dutch borders and received its first international order from
Belgium. Over the following decades the Company expanded into a worldwide service provider.
Currently Fugro employs 890 staff in the Netherlands.
N e d e r l a n dN L
Fugro N.V. quoted on the
Euronext Amsterdam stock
exchange; opening price
EUR 17.24
1 9 9 4N , I , C H
1 9 9 8F
1 9 9 2R U S
2 0 0 3D K
Turnover EUR 1 billion
3D laser scanning
1984 1985 1990 1992 1995 2000 20042003
First Managers’ Meeting
14
From left to right:
M.W. Dekker (Vice Chairman), F.H. Schreve (Chairman), Th. Smith,
J.A. Colligan, P.J. Crawford and P. Winsemius.
S u p e r v i s o r y B o a r d
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 published
on Fugro’s website.
name Mr. F.H. Schreve (1942) 1) 3)
function Chairman
nationality Dutch
first appointed 1984
current term up to May 2006
expertise general management, strategy, management
& organisation, HRM
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
first appointed 1991
current term up to May 2005
expertise finance and control
other functions former chairman of the Board of NPM Capital N.V.,
Supervisory Board memberships including Koninklijke
Boskalis Westminster N.V. (chairman), 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
first appointed 1997
current term up to May 2005
expertise operational management and information technology
other functions Supervisory Board member of Crimsonwing Ltd.
(chairman), and Avanti Capital plc. (chairman)
name Mr. J.A. Colligan (1942) 1)
nationality British
first appointed 2003
current term up to May 2007
expertise operational management and oil & gas industry
other functions former Director of Shell Exploration & Production,
Director Society of Petroleum Engineers Foundation
name Mr. Th. Smith (1942) 3)
nationality American
first appointed 2002
current term up to May 2006
expertise operational management and marketing
other functions Chairman of the Board of Smith Global Services L.P.,
member of the University of Houston Board of Regents
and University of Houston College of Business Dean’s
Executive Advisory Board and Director of Houston Area
Research
name Mr. P. Winsemius (1942) 2)
nationality Dutch
first appointed 2000
current term up to May 2008
expertise strategy, innovation and technology development
other functions former Minister of Housing, Physical Planning and
Environment, former partner of McKinsey & Company,
member of the Netherlands Scientific Council for
Government Policy, professor management of
sustainable development, University of Tilburg
(the Netherlands), member of the Supervisory Board
of Kempen & Co (chairman)
Secretary to the Supervisory Board
Ms. J.M.E. Feije (1964)
1) Member of Remuneration Committee2) Member of Audit Committee3) Member of Nomination Committee
15
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 Management
and the 2004 Annual Accounts of Fugro N.V.
At the end of 2004 Fugro was in a good position, in part
thanks to Thales GeoSolutions which was acquired in
2003 and successfully integrated into Fugro in 2004.
Various positive developments in 2004 justify our
confidence in Fugro’s future.
As far as the profit appropriation is concerned we endorse
the Board of Management’s proposal stated on page 27 to
increase the level of the dividend to EUR 1.90 per ordinary
(certificate of) share (2003: EUR 1.85). This dividend
comprises either a cash payment or a settlement in
(certificates of) shares, whichever the shareholder prefers.
The 2004 Annual Accounts are accompanied by an
unqualified auditor’s report. We propose that you
adopt the Annual Accounts and report during the
Annual General Meeting of Shareholders on 19 May 2005
and also discharge the Board of Management for its
management in 2004 and the Supervisory Board for
its supervision in 2004.
Since 1987, Fugro’s international character has been
clearly reflected in the composition of the Supervisory
Board. All the Supervisory Board members are
independent persons in the sense of the Dutch Corporate
Governance Code. A summary of the data, required and
relevant for the execution of the tasks of the Supervisory
Board, of each Supervisory Board member is included on
page 14 of this Annual Report. The profile of the
Supervisory Board describes the range of expertise that
should be represented in our Board. This relates to
strategy, finance, financial control, information
technology, management and organisation, HRM and
social policy, marketing, innovation and technology
development and the oil and gas industry. In our opinion
the Supervisory Board fulfils these requirements.
Considering the backgrounds and wide expertise and
experience of the current members in 2004 we did not
deem additional training to be expedient. An annual
component has been an extensive visit to one or more
Fugro companies. New Board members follow a tailor-
made introduction programme.
In the year under review the Supervisory Board met five
times with the Board of Management in accordance with
a fixed schedule. All the meetings were attended by all the
Supervisory Board members. During each meeting a topic
relevant to Fugro was discussed in depth. The major issues
discussed in these meetings were Fugro’s strategy,
financial results and the reports of each committee.
Developments in the oil and gas industry and the
integration of Fugro-TGS were other important topics.
The implications (for the financial reporting) of the
implementation of IFRS were also discussed. The way in
which Fugro is handling this issue is explained on pages
54 – 55. Regular items on the agenda, besides general
business development, were health, safety & environment
(HSE), the investments in rapidly advancing technological
developments, the filling of various management
positions, the risks inherent to the Company’s activities
and the outcome of the Board’s judgement on the set-up
and functioning of the risk management and control
systems.
Informal meetings between Board members took place on
several occasions. The functioning of the Board of
Management, the Supervisory Board and the individual
Board members were discussed in the absence of the
Board of Management. The findings of the external
auditors were discussed with the external auditor.
Individual Supervisory Board members were in contact
with the Board of Management on a number of occasions.
The Chairman of the Supervisory Board in particular was
in frequent contact with the Board of Management.
The Audit Committee met three times during 2004 in the
presence of the external auditor. During the relevant
meetings the annual accounts and half-yearly accounts
were discussed as was the external auditor’s draft report
to the Supervisory Board. Topics discussed during the
meetings were goodwill on acquisitions (including
reorganisations), impairment models and the results of
these models for several of the most important recent
acquisitions. The changing of the pension scheme in the
Netherlands from a final salary to an average salary
system was also discussed. Other general topics, such as
taxation, claims and disputes were also discussed in
depth and another important subject was the transition
to IFRS. The potential changes and their consequences, as
well as the progress of the conversion, were discussed as
was the Financial Handbook. Risk areas such as hedging,
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
fluctuations in foreign currency exchange rates and
insurance were also on the agenda as was the functioning
of the internal and external control mechanisms and the
internal audit group’s working plan. The Audit
Committee was informed of important findings from the
control visits. During every meeting the external auditor
was given the opportunity to discuss issues with members
of the Audit Committee in the absence of Fugro staff.
Limited use was made of this opportunity.
The Remuneration Committee met three times. Topics
discussed included the remuneration of the individual
directors, the remuneration policy and the share option
scheme. The remuneration of the individual Board of
Management members recommended by the
Remuneration Committee was approved by the
Supervisory Board, within the remuneration policy
approved by the Annual General Meeting of Shareholders
on 19 May 2004. For more information regarding the
remuneration of individual Board members see pages 116
– 118 of this Annual Report. The main lines of Fugro’s
remuneration policy are as follows; a) a fixed salary
component, b) a variable component, c) long-term
components (option plan), and d) secondary employment
benefits, including the pension scheme. As far as the fixed
salary component is concerned, in 2004 the
Remuneration Committee consulted an external research
bureau regarding the level and composition of the
remuneration of the members of the Board of
Management. The study involved looking at the
remuneration levels in comparable (Peer group)
companies. For Fugro this means internationally
operating, stock exchange listed companies listed in
either the Midkap index, the top end of the Small cap
index or the bottom end of the AEX. Fugro’s policy is to be
somewhere in the middle of this group. The conclusion of
the study was that the fixed salary component was not
completely in line with comparable companies. In the
light of this it was decided to make further inroads into
the shortfall. The variable component is determined
annually on the basis of three criteria: 1) the profitability
of the Company over the relevant financial year,
2) strategic developments in the relevant financial year,
3) the achievement of individual targets. The variable
component amounts to a maximum of 58% of the fixed
salary. Fugro has had an option scheme for many years
already (the long-term component) which is justified in
the Annual Accounts. The secondary employment
conditions are in conformance with the market.
The pension agreement structure is based on an available
premium system. The Nomination Committee met twice
and concentrated on preparations for the nomination of
members of the Supervisory Board and the Board of
Management. Proposals for appointment to the
Supervisory Board are presented to the Annual General
Meeting of Shareholders which decides on the
appointments.
During the Annual General Meeting of Shareholders on
19 May 2004, Mr. P. Winsemius was reappointed as
a member of the Supervisory Board for a term of four
years. In accordance with the roster, on 19 May 2005
Mr. M.W. Dekker will resign. Mr. Dekker has served the
Company as a member of the Supervisory Board for
fourteen years. The Supervisory Board of Fugro has
benefited from Mr. Dekker’s extensive experience from
his functions as chairman of NPM Capital N.V. and as
member of the Supervisory Board of Dutch and
international companies. As chairman of the audit
committee, Mr. Dekker was instrumental in advising the
Supervisory Board from this increasingly important body
with respect to changes in reporting, insight and
judgement. We are extremely grateful to him for his
endeavours and for making his very broad experience
available to Fugro. To fill the vacancy the Supervisory
Board will propose to the Annual General Meeting of
Shareholders on 19 May 2005 that Mr. F.J.G.M Cremers
be appointed as a member of the Supervisory Board.
The relevant information about Mr. Cremers is available
in full under the relevant agenda item. At this juncture
it was stated that between 1997 and the end of 2004,
Mr. Cremers was the Chief Financial Officer and a
member of the Board of Management of VNU N.V. Prior to
this he spent 21 years with the Royal Dutch/Shell group.
Mr. Cremers has wide ranging financial expertise and
experience in the oil and gas industry. It will be proposed
to the Annual General Meeting of Shareholders that
Mr. P.J. Crawford, who has been a member of Fugro’s
Supervisory Board since 1997 and who, in accordance
with the roster is due to resign, be reappointed as a
member of the Supervisory Board for a period of four
years. His details are also presented to the shareholders
under the relevant agenda item.
Also in relation to the changes in members we intend to
combine the Remuneration and Nomination Committee
in 2005. This will be proposed to the General Meeting of
Shareholders.
16
During the Annual General Meeting of Shareholders on
19 May 2004 Mr. A. Jonkman was appointed a member
of the Board of Management for a period of four years.
Mr. G-J. Kramer will step down from his position as
President and Chief Executive Officer in October 2005
– a position he has held for over 23 years – and will retire
at the end of December 2005. As was announced in 2004,
Mr. K.S. Wester, who joined Fugro in 1981 and has been a
member of the Board of Management since 1996, will
succeed Mr. Kramer as President and Chief Executive
Officer.
In a changeable (economic) climate, and despite an
adverse foreign currency exchange rate, in 2004 Fugro
achieved good results. From a long-term perspective
Fugro is in an excellent position in its markets thanks to
the efforts of the Board of Management, the management
team and Fugro’s international, professional and
supportive staff. We are full of admiration for all that
was achieved in 2004 thanks to their efforts.
Leidschendam, 10 March 2005
F.H. Schreve, Chairman
M.W. Dekker, Vice-chairman
J.A. Colligan
P.J. Crawford
Th. Smith
P. Winsemius
17
The German REO 26
at work
Fugro Geotechnik
GmbH established
1962 1975 1980 1981 1985
1 9 6 2N L
1 9 6 8U K
1 9 6 3B
In 1975 Fugro Geotechnik GmbH was established in Bremen. The Bremen office worked very closely
with the Fugro office in Groningen. In 1978 the German office purchased its first sounding van.
Further expansion in Germany took place in 1992 with the acquisition of the geological company
UWG in Berlin. Currently there are 102 employees in Germany.
D e u t s c h l a n dD
1 9 9 8F
Testing the composition of the ground water
as part of a feasibility study for
a metro station in Berlin
Gesellschaft für
Umwelt- und
Wirtschaftsgeologie
mbH (UWG) acquired
1990 1992 1995 2000 2001
1 9 9 4N , I , C H
1 9 9 2R U S
2 0 0 3D K
Sounding tests in the
port basin of
Mittelplate in the
North Sea
2004
20
From left to right:
A. Jonkman, G-J. Kramer, K.S. Wester, F.E. Toolan, Ms. J.M.E. Feije,
P. van Riel, J.E. Kasparek, J. Ruegg and O.M. Goodman.
E x e c u t i v e C o m m i t t e 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.
The management of the operating companies reports directly to
the Executive Committee.
B o a r d o f M a n a g e m e n t
The Board of Management of Fugro N.V. comprises three people:
name G-J. Kramer (1942)
function President and Chief Executive Officer
nationality Dutch
employed by Fugro since 1983
first appointed to current position 1983
subsidiary functions include membership of the Supervisory
Boards of Koninklijke BAM NBM N.V.
(chairman), Damen Shipyards Group N.V.,
Koninklijke Schelde Groep B.V. (chairman),
Waterleiding Doorn, member of the
Monitoring Committee Corporate
Governance Code, chairman of the board of
IRO, member of the advisory board of TNO,
various directorships
name K.S. Wester (1946)
function Director
nationality Dutch
employed by Fugro since 1981
first appointed to current position 1996
subsidiary functions include directorship of Nedeco
name A. Jonkman (1954)
function Chief Financial Officer
nationality Dutch
employed by Fugro since 1988
first appointed to current position 2004
current term up to May 2008
O t h e r m e m b e r s E x e c u t i v e C o m m i t t e e
name O.M. Goodman (1956)
function Director Positioning and Onshore Survey
nationality Irish
employed by Fugro since 1993
first appointed to current position 2001
name J.E. Kasparek (1942)
function Director North & South America
nationality American
employed by Fugro since 1988
first appointed to current position 1992
name P. van Riel (1956)
function Director Development & Production
nationality Dutch
employed by Fugro since 1986
first appointed to current position 2004
name J. Ruegg (1944)
function Director Offshore Survey
nationality Swiss
employed by Fugro since 1965
first appointed to current position 1999
name F.E. Toolan (1944)
function Director Offshore Geotechnical
and Airborne Survey
nationality British
employed by Fugro since 1974
first appointed to current position 1998
name Ms. J.M.E. Feije (1964)
function General Counsel & Company Secretary
nationality Dutch
employed by Fugro since 2004
first appointed to current position 2004
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
The 2004 reporting year can be categorised as a
transitional year for Fugro. Strategically Fugro is now in
a better position than ever before. Although a reasonable
result was achieved in 2004, it is clear that the Group
must take a further step forwards. Fugro’s management is
based on a target net margin of 7.5% – 8% (before
amortisation of goodwill) and there were several positive
developments in the year under review which justify
Fugro’s view that further improvements are possible in
the coming years:
• The successful integration of Fugro-TGS (see box on
page 22) demanded a great deal of time, effort and
energy from the Board and the management in 2004.
• More stringent cost consciousness was introduced in
the newly integrated companies as were the Fugro
Business Principles and (reporting) procedures.
• To allow the organisation to stabilise, in 2004 there
was a deliberate decision not to make any substantial
acquisitions.
• The market remained weak during the early months of
the year. The oil and gas industry’s decisions to
increase investment budgets were not made until 2004
was well underway, resulting in delayed orders to
service providers such as Fugro.
• The dollar to EUR exchange rate once again remained
under pressure throughout the year under review.
In 2004 the average dollar exchange rate was
EUR 0.81 (2003: EUR 0.88). This had a negative effect
of around EUR 4 million on the net result due to the
strong decline of the dollar. The effect is shown in the
table on this page.
• With the approval of the 2004 Annual General Meeting
of Shareholders, Fugro has complied with the Dutch
Corporate Governance Code a year earlier than
required.
• Similarly, the implementation of the IFRS standards
has put pressure on the organisation. Fugro’s reporting
over 2004 not only complies with Dutch accounting
principles but also with all the IFRS regulations, with
comparable figures for 2003. Fugro is fulfilling its
reporting obligations a year earlier than legally
required and at the end of 2005 a three-year period
reported on the basis of the IFRS standards will be
available for comparison. The 2004 result before
amortisation of intangible fixed assets according to
IFRS is EUR 10.3 million below the Dutch GAAP result.
The 2003 result was significantly lower than the result
which was reported according to Dutch GAAP.
R e p o r t o f t h e B o a r d o f M a n a g e m e n t
21
(Result x EUR 1 mln.)
H i s t o r i c o v e r v i e w
b a s e d o n c o n s t a n t a v e r a g e
c u r r e n c y r a t e s o v e r 2 0 0 0
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
Net margin after amortisation of goodwill
Interest cover (factor)
Change in %
30.0
26.1
51.7
46.8
54.2
18.2
61.8
25.0
23.1
2004
1,232.0
786.0
130.8
157.2
79.7
6.5%
61.5
5.0%
4.8
2003
947.8
623.5
86.2
107.1
51.7
5.5%
38.0
4.0%
3.9
2002
975.4
637.9
114.6
122.1
74.0
7.6%
61.7
6.3%
6.2
2001
906.1
574.8
97.7
104.5
61.1
6.7%
55.5
6.1%
7.7
2000
712.9
462.8
73.7
85.6
46.0
6.5%
46.0
6.5%
8.1
All figures mentioned in the Annual Report (pages 2 – 66) refer to the Annual Accounts based on Dutch GAAP, which will be proposed for
adoption to the Annual General Meeting on 19 May 2005. For a statement of the changes due to IFRS, refer to pages 54 – 55.
A detailed explanation is included in the Annual Accounts (pages 122 – 133).
22
Fugro’s acquisition of Thales GeoSolutions on
19 November 2003 and its subsequent integration
were successful. Not only did the integration run
according to plan, which meant that by the end of
2004 the commercial fruits of the acquisition were
already being harvested, and the one-time expenses
(around EUR 22 million) and the operational cost
savings (around EUR 40 million) annually from
2005 on were more favourable than anticipated (full
savings as from 2005).
Over the past decades Fugro has amassed
considerable experience and a long and successful
track record with the acquisition and decentralised
integration of companies. Since 1984 around
100 small and larger companies have been acquired.
This is one of the reasons behind Fugro’s growth
from a turnover of around EUR 50 million in 1984
to EUR 1,022 million in 2004. The net result before
amortisation of goodwill has relatively risen even
more steeply – from EUR 1.6 million in 1984 to
EUR 66.7 million in 2004.
When considering an acquisition Fugro works with
a checklist of around 35 company-specific criteria.
Thales GeoSolutions was also checked against this
list before being classed as a definite candidate for
acquisition. Subsequently a detailed action plan
was drawn-up together with Thales GeoSolutions so
the two companies could jointly arrive at the best
solution for the integration. To reduce uncertainty
and unrest within the organisation, the integration
of Thales GeoSolutions into the Fugro structure was
started immediately after the acquisition. By the
end of 2003 every Fugro-TGS office had been visited
by three members of the Executive Committee.
During these visits the integration plans for each
office were discussed and the implementation
process started.
Several charter agreements with ship owners were
cancelled immediately after the acquisition and
shortly after that the necessary redundancy
procedures were started.
Thales GeoSolutions had a centralised
organisational structure with highly-qualified,
talented and experienced staff. Cooperation with
Fugro-TGS staff is excellent, partly because the
Fugro-TGS staff are now working in a company for
which survey is a core activity and in which
emphasis is put on own, direct responsibility.
The financial reporting of the various Fugro-TGS
companies has followed the Fugro system since the
end of 2003. The integration of the different units
has been carried out at a local level under the
supervision of the integration team set up by Fugro.
The highly complementary nature of the two
companies is another major success factor. Fugro’s
position in the offshore Survey, Positioning and
offshore Geotechnical markets has been
strengthened significantly, as has its presence in
the Middle East, Latin America and China. As a
result Fugro has become an even more efficient
market player – one that is able to offer customers
competitive services. Fugro-TGS has added talented
and experienced staff to the organisation.
The acquisition has also led to higher than
anticipated savings on overheads in areas such as
marketing, administration and premises. This has
improved the efficiency of the available equipment,
such as the use of vessels, and avoided double R&D
costs. Combining Fugro-TGS with Fugro’s global
network has led to a substantial improvement in
efficiency and to synergy.
Fugro has submitted a claim against Thales S.A.
in relation to the conclusion of the purchase
agreement, regarding Thales GeoSolutions.
Currently, this claim has not been valued.
Successful integration of Thales GeoSolutions (Fugro-TGS)
Setting-up a static
axial-compression
load test
23
Fugro’s overall turnover rose by 23.1% to EUR 1,021.6
million. This increase was mainly due to the acquisition
of Thales GeoSolutions in 2003 and its consolidation as of
19 November (six weeks), and the growing number of
orders during 2004. Against this, exchange rate effects
caused by the drop in the rate of the dollar and dollar
related currencies compared to the euro put some
pressure on both the turnover and the result. Had the
exchange rate remained the same as in 2003, turnover
would have amounted to EUR 1,057.1 million and the net
result before amortisation of goodwill would have been
EUR 70.6 million. The net result before amortisation of
goodwill has now risen by 48% to EUR 66.7 million
(2003: EUR 45.1 million).
After amortisation of goodwill the net result was
EUR 49.5 million (2003: EUR 32.4 million). It is proposed
that the dividend for 2004 be increased to EUR 1.90 per
(certificate of) share (2003: EUR 1.85).
The flow of orders increased in the third quarter of 2004.
As a result, the overall performance of the Geotechnical
and Geoscience divisions was good. The Airborne Survey
business in particular gained ground after being rather
sluggish around the end of 2003 and showed excellent
results. By contrast, in 2004 the Survey segment’s
performance was still less than satisfactory.
To summarise, five of the seven business units achieved
good results in 2004 while two business units – offshore
Survey and onshore Survey still have room for
improvement.
In May 2004, Mr. P. van Riel (1956) – one of the founders of
Fugro-Jason – was appointed Chief Operating Officer of
Development & Production and joined the Executive
Committee of Fugro N.V. The acquisitions in recent years
and the formation of this separate business unit, which
now generates a substantial portion of the annual
turnover, led to this appointment.
During the year under review Fugro completed two small
acquisitions:
• the acquisition of the business and assets of C&M
Storage in the United States (activities include data
management for oil and gas companies);
• the acquisition of the remaining 50% ownership of the
seismic research vessels ‘Geo Baltic’ and ‘Geo Pacific’.
2003
1 9 9 2 ( y e a r o f e s t a b l i s h m e n t )R U S
(on 31 December, x EUR 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 d i v i s i o n
Geotechnical
Survey
Geoscience
Total
USD average
2000
281
314
118
713
1.09
2001
309
392
209
910
1.13
2002
323
371
252
946
1.06
2003*
280
346
204
830
0.88
2004
278
478
266
1,022
0.81
* 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.
Several divestments also took place including:
• the sale of the ROV activities in the United States,
Mexico and Canada;
• the sale of the 50% interest in BSN Bodemsanering
Nederland B.V.;
• the sale of Geometius B.V.;
• the sale of the environmental activities of
Fugro Ingenieursbureau B.V. in the Netherlands.
In 2004 Fugro was awarded a number of major
assignments:
• Fugro Geoteam carried out a 1,200 km2 3D seismic
survey in Qatar;
• Fugro Airborne Surveys was selected to carry out a
project in the Niger Republic financed by the EU
(662,000 linear kilometres);
• in Nigeria Fugro Airborne Surveys was awarded the
order to collect, process and interpret 556,000 linear
kilometres of magnetic and radiometric data and
21,000 linear kilometres of electromagnetic data.
• in Canada Fugro Airborne Surveys was awarded
the first commercial project for the ‘Georanger I’
(an unmanned airborne vehicle). The new technology
will be used for mineral exploration in Canada.
• Fugro’s office in California has carried out two LNG
projects for landing facilities. The ‘Fugro Explorer’
– a vessel specially equipped for geotechnical
investigations – and a floating crane for use in coastal
waters were employed in these projects.
24
(on 31 December, x EUR 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 subsidiary that executes the project.
** The turnover of Fugro-TGS has been consolidated as from its acquisition date (19 November 2003).
2004
95
385
302
141
99
1,022
2003
110
303
226
135
56
830
2002
136
307
278
150
75
946
2001
125
298
273
162
52
910
2000
101
205
227
143
37
713
(in percentages)
T u r n o v e r g r o w t h
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
Average (1995 – 2004)
Total
23.1
(12.2)
4.0
27.6
30.4
(5.4)
20.0
28.0
27.0
(1.2)
14.1
Exchangerate
differences
(2.7)
(9.4)
(3.4)
0.6
10.6
2.9
(1.7)
10.9
4.0
(7.1)
0.5
Divest-ments
(0.6)
(0.6)
(7.4)
(0.9)
Acquisi-tions
16.2
4.9
4.0
8.6
8.9
1.8
3.2
6.0
3.0
1.0
5.8
Auto-nomous
10.2
(7.7)
3.4
18.4
10.9
(9.5)
18.5
18.5
20.0
4.9
8.8
**
25
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 d e v e l o p m e n t
In 2004 turnover rose by 23.1% to EUR 1,021.6 million,
compared with EUR 830.1 million in 2003. A major
portion of this turnover increase was due to the
acquisition of Thales GeoSolutions. Against this there was
a negative currency exchange effect caused by the drop in
the dollar exchange rate. The increase in turnover is
depicted in the table on page 24.
The average dollar exchange rate in 2004 was EUR 0.81,
compared with an average of EUR 0.88 in 2003.
C o s t s
The costs of work contracted out and other external costs
rose by 31% to EUR 375.2 million.
Staff costs rose by 11% to EUR 333.7 million.
Depreciation of tangible fixed assets rose by 32% to
EUR 65.4 million.
Other operating costs rose by 16% to EUR 136.3 million.
I n t e r e s t a n d t a x e s
After balancing, interest liabilities amounted to
EUR 23.2 million (2003: EUR 18.5 million).
Tax charges on the net result before amortisation of
goodwill remained unchanged at 20.2% (2003: 20.2%).
Tax charges on the net result after amortisation of
goodwill amounted to 25.2% (2003: 25.9%).
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
The net result before amortisation of goodwill rose by
47.9% to EUR 66.7 million (2003: EUR 45.1 million), after
deducting third party interests in the profits of subsidiary
companies. This amounts to EUR 4.49 per share (2003:
EUR 3.12). In 2004 there was no extraordinary income
or expenses. Exchange rate effects reduced the net
result before amortisation of goodwill by around
EUR 4 million. The costs of the implementation of
IFRS and the Dutch Corporate Governance Code were
booked in 2004. These costs amount to approximately
EUR 3 million.
M a r g i n d e v e l o p m e n t
The net profit margin before amortisation of goodwill
over the financial year was 6.5% (2003: 5.4%) and is thus
in line with forecasts made earlier. 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
EUR 49.5 million, after deducting third party interests,
53% higher than in 2003 (EUR 32.4 million).
This amounts to EUR 3.33 per share (2003: EUR 2.24).
At EUR 93.8 million EBIT was 47% higher than in 2003
(EUR 63.6 million).
0
25
50
75
100
125
0
15
30
45
60
75
IFRS2003
2004 IFRS2004
2003200220012000IFRS2003
2004 IFRS2004
2003200220012000
(x EUR 1 mln.)
O p e r a t i n g r e s u l t *
(x EUR 1 mln.)
N e t r e s u l t *
* Before amortisation of goodwill (Dutch GAAP).* Before amortisation of goodwill (Dutch GAAP).
26
C a s h f l o w a n d i n v e s t m e n t s
In 2004 the total cash flow from operations amounted to
EUR 132.1 million (2003: EUR 94.6 million). This equates
to EUR 8.90 per share (2003: EUR 6.54) and is thus the
highest in the history of Fugro.
Investments in tangible fixed assets (including
acquisitions) against this cash flow amounted to
EUR 113.1 million (2003: EUR 122.3 million). This included
considerable investment in an office in Wallingford
(United Kingdom) where several companies added to the
Group over the years have been clustered together.
The overall level of investments in the year under review
was, in Fugro terms, higher also due to the investment in
the aforementioned building in Wallingford.
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 was 67 days
(2003: 75 days).
G o o d w i l l
In 2004 the addition to goodwill on acquisitions
amounted to EUR 29.2 million (2003: EUR 91.5 million).
This 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. The final allocation of the costs of the business
combination with regard to Thales GeoSolutions to the
assets acquired and liabilities and contigent liabilities
assumed was made, resulting in an adjustment to
goodwill of EUR 26.6 million. The final goodwill of
Thales GeoSolutions amounted to EUR 90.3 million.
EUR 1.3 million is related to the acquisition of
C&M Storage. As Fugro acquires companies as long-term
investments, the goodwill on most acquisitions is
amortised over a period of up to twenty years. At the end
of 2004 the book value of the goodwill was EUR 302
million (2003: EUR 292 million). The total amount of
goodwill in the period 1984 – 2004 was EUR 559 million.
Amortisation of goodwill in 2004 amounted to
EUR 17.2 million.
B a l a n c e s h e e t r a t i o s
Solvency at the end of 2004 was 37.1% (end of 2003: 33.1%).
Shareholders’ equity, excluding the subordinated
convertible bond, amounted to EUR 264.8 million. At the
end of 2004 the current ratio amounted to 1.4 (end of
2003: 1.4). Working capital decreased by EUR 5.4 million
to EUR 132.3 million (2003: EUR 137.6 million).
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 surveys and contains valuable
information that is offered and sold to various interested
parties. Virtually no data acquired before 2002 is included
Preparing for
pile-driving
1 9 9 2 ( y e a r o f e s t a b l i s h m e n t )R U S
2003
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
2004
Total
IFRS Book valueas of
31 -12
190.9
253.1
274.4
Book valueas of
31 -12
–
0
0
0
0
0
0
0
0
0
0
0
0
0
0
237.9
218.0
291.9
302.1
Goodwill(EURmln.)
–
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
29.2
558.6
* Up until 2000 goodwill was deducted directly from the
shareholders’ equity; the goodwill under IFRS has been
recalculated as of 1 January 2003.
IFRSGoodwill
(EURmln.)
68.2
22.9
27
on the balance sheet and the capitalised book value,
on the basis of cost price less depreciation, amounts to
EUR 40 million (2003: EUR 22 million).
D I V I D E N D P R O P O S A L
It is proposed that the dividend for 2004 be increased to
EUR 1.90 per ordinary share (2003: EUR 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 43% of the net result before amortisation of
goodwill. After amortisation of goodwill this amounts to
58%.
Shareholders and certificate holders have until 10 June
2005 to indicate their dividend preference. The number of
(certificates of) ordinary shares that entitle the
shareholder to one new (certificate of) share will be
determined on 14 June 2005 based on the average share
price at the close of business on the 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 2005.
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 segments: Geotechnical,
Survey and Geoscience. The Board of Management is
responsible for Group policy, strategy, acquisitions and
internal coordination. The Holding Company also
handles matters which, for reasons of efficiency, (high-
value) specialisation or financing are best handled
centrally. Fugro’s philosophy is that the segments’
operating companies should be able to operate as
autonomously as possible within the framework of the
Group’s policy, business principles and internal risk
management systems. This enhances the quality of the
operating companies’ management. Delegation is firmly
interwoven in the Company’s culture. Where appropriate
for the client, cooperative links are forged between or
within the segments. This results in synergy developing
naturally, particularly when complex and integrated
projects are involved, and increases 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
Fugro’s personnel policy is aimed at attracting and
employing professional and skilled people. The advice
and services provided by Fugro must be state-of-the-art
and reliable. Fugro’s personnel policy is also aimed at
offering its staff 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 management and staff indicates
the Company’s success in this respect.
The successful integration of Fugro-TGS has raised the
number of professionals significantly and also increased
the personal development opportunities available to staff.
A proper internal career development policy ensures the
optimum utilisation of highly-qualified staff and specific
skills throughout the organisation. The policy is aimed at
developing staff who are flexible and experienced enough
to be promoted to management positions or to become
technical specialists. To this end Fugro has built-up 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
28
companies’ training schemes. Fugro also has at its
disposal a worldwide pool of experienced freelance
professionals who are employed regularly by Fugro on a
project basis.
Staff pension schemes and other such benefits are
maintained and take local customs and regulations into
account. Absence due to sickness is also monitored at the
level of individual operating companies. Fugro does not
consider it constructive to give a total picture of all the
Human Resources policies within the Group due to the
diversity in the many countries in which Fugro operates.
Flexibility through exchangeability is an important
aspect of Fugro’s policy. To this end, the same systems are
used throughout the Group whenever possible and both
short and long-term staff exchange programmes have
been developed. Once again, during 2004 a number of
staff were asked to work in fields other than those for
which they were primarily employed. This policy
contributes towards maintaining a high level of capacity
utilisation and allowing (valuable) employees to be
retained. As a result of the integration of Fugro-TGS,
redundancy was unavoidable for 426 of the combined
staff. These redundancies have resulted in considerable
savings in (double) overhead. The total number of
employees at the end of the year fell by 857 to 7,615 (2003:
8,472). The average number of employees over the year
was 7,864 (2003: 7,160). This increase was almost entirely
the result of the acquisition of Fugro-TGS, which was
consolidated for only six weeks of 2003 and for the whole
of 2004.
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 EUR 1,000)
Turnover own services per employee (x EUR 1,000)
Geographical distribution at year-end
The Netherlands
Europe excluding the Netherlands
North and South America
Asia and Australia
Near East, Middle East and Africa
Total at year-end
A GPS survey in Lisbon,
Portugal
2 0 0 3P O R
2003
2000
5,492
129.9
84.3
1,041
1,122
1,440
1,202
951
5,756
2001
6,523
139.5
88.6
1,164
1,749
1,658
1,449
933
6,953
2002
7,003
135.1
88.2
1,121
1,717
1,663
1,444
978
6,923
2003
7,160
115.9
75.9
993
2,238
2,333
1,776
1,132
8,472
2004
7,864
129.9
82.2
890
1,954
2,268
1,391
1,112
7,615
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 and rewards effort and
results. Flexible salary systems and an option scheme
have been in operation for many years and the
management and staff are encouraged to own Fugro
shares; 8.5% of Fugro’s issued shares, excluding share
options yet to be exercised, is held by the management
and staff. In 2004 493 staff have been granted options.
For more information please see page 60 – 63
(Information for Shareholders) and page 88 – 91 of the
Annual Accounts.
S U S T A I N A B L E B U S I N E S S
G e n e r a l
Fugro is very aware of its social role and obligations.
A concern for people, the environment and society is,
therefore, at the heart of its policy. Fugro also follows
codes of behaviour for quality control, integrity and the
maintaining of Fugro’s good reputation.
H e a l t h , S a f e t y a n d t h e E n v i r o n m e n t
( H S E )
Fugro is active in over 50 countries and complies with the
various laws and regulations related to Health, Safety and
the Environment. In 2004 Fugro tightened its internal
regulations in the area of Health, Safety and the
Environment. Every operating company is responsible for
operating an HSE management system suited to its
activities. The principle is that the operating company
should not only comply with the specifically relevant laws
and regulations but should also take a proactive and
preventative position. In general this means that,
if possible and applicable, higher standards than those
demanded by the applicable legislation should be set.
In the year under review a great deal of effort was
dedicated to making Fugro’s Airborne activities even
safer. These activities now comply fully with or exceed the
stipulated standards, which were drawn-up primarily for
the oil and gas industry. Health and safety in the
workplace and while carrying out projects is a primary
concern and safeguarding health and safety is an
important component 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 Survey
activities the norm within the industry.
Acoustic measuring
of vibration rods for a
wind turbine project
in Nieuwpoort,
Belgium
2004
29
In general Fugro’s activities have little or no effect on the
environment. Even so, Fugro pays due attention to 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.
Q u a l i t y
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 deepwater, 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 only apply 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 a customer
satisfaction survey in the offshore Survey sector became
available. Clients are, in general, positive and have
indicated that, among other things, they consider Fugro
a reliable partner. Fugro’s broad package of services and
activities are highly valued. The recommendations
resulting from this survey have now been incorporated
into the business processes.
1 9 9 4 ( y e a r o f e s t a b l i s h m e n t )B
1 9 6 8U K
1 9 7 5D
Fugro’s first
soundings at sea
over the Leman Bank,
the United Kingdom
Fugro Ltd. established
1962 1968 1980197519741970
1 9 6 2N L
1 9 6 3B
1985
Fugro carried out its first project in the United Kingdom in 1968. In 1974 Fugro Ltd. was established.
This was Fugro’s first foreign office. Between 1993 and 2002 Fugro made several large acquisitions,
including the survey activities of Marconi-UDI, the onshore company FES and Robertson Research
International Ltd. The acquisition of Thales GeoSolutions in 2003 increased Fugro’s scale of operations
in the UK considerably. Currently Fugro employs 1,214 staff in the UK.
U K U n i t e d K i n g d o m
A Fugro jack-up platform in front of the Houses of Parliament
Thales GeoSolutions acquired
1 9 9 4N , I , C H
1 9 9 2R U S
1 9 9 8F
2 0 0 3D K
A seabed survey to detect WWII mines: a shipwreck was also located during this project
200420041995 2000 20031990
32
S o c i e t y
Fugro is a company that aims to be at the heart of society
and involvement in the community is an important
aspect of Fugro’s operations. This applies not only to the
Company as a whole but also to its staff. As a socially
responsible business Fugro provides active support to a
large number of social initiatives. Sometimes Fugro’s
support is in the form of a financial donation, at other
times its contribution is in the form of knowledge,
experience or something else. Fugro’s sponsorship
embraces many different social fields – education, music,
art, culture, sport and general social goals.
Operating company managers are encouraged to become
actively involved in their local community and to support
charitable and cultural events.
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 ( I C T )
Once again 2004 was a year in which substantial efforts
were invested in Fugro’s ICT organisation. ICT security
policies are been introduced in line with the standards as
set by ISO 17799 and BS 7799. In 2004 the Fugro-TGS
operating companies were linked to the secure 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, file transfer and internet access.
Fugro pays a great deal of attention to security aspects
related to the use of ICT infrastructure in general and the
Internet in particular. In 2004 the emphasis was on
internal security. The ICT security organisation has been
formalised with four regional security officers managed
by a global security officer who reports directly to the
Executive Committee. Most of the data communications
between the operating companies is transmitted cost
efficiently and effectively secured via the internet.
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, seven days a week. External
communications are routed via a limited number of
internet gateways which are constantly monitored for
viruses or hacking attempts. Staff can only access the
network from locations outside the company via a token
based authentication system.
To guarantee the stringent demands stipulated for the
safety and security of ICT systems, Fugro consults external
companies for advice regarding its ICT policy and for
monitoring the security of the Company’s ICT
infrastructure. Once again, in the year under review ICT
audits were carried out so that potential problems in ICT
systems would be signalled early and could be solved and
to raise the level of ICT security awareness of the entire
Company.
ICT systems are playing an increasingly important role in
Fugro’s global activities. This is being driven by the need
to improve communications and efficiency in order to
maintain, and where possible extend, the Company’s
current competitive position. ICT facilitates the
improvement to the Group’s productivity and helps to
create new commercial activities within every segment.
Contribution to culture and society
• Hermitage-Amsterdam, Amsterdam
• Museum Beelden aan Zee, Scheveningen
• The Concertgebouw in Amsterdam as well as the
sponsorship of several concerts
• Residential orchestra, The Hague
• Delft Chamber Music Festival, Delft
• Zonnebloem Foundation, Breda
• Ski 8000; ski expedition to the Himalaya
• University fund, Delft
• International Liszt Concours
Fugro carried out an
assignment in Switzer-
land using the REO 3 as
early as May 1964.
1 9 9 4 ( y e a r o f e s t a b l i s h m e n t )C H
1964
1 9 9 4 ( y e a r o f e s t a b l i s h m e n t )I
A cable route survey
along the
Mediterranean coast
with the ‘M/V Hamour’
1999
33
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 from them
is permitted if this can be justified. The ‘Golden Rules’ 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 Group standards. When
a Group company takes these rules to heart it has grasped
the essence of the Fugro culture.
The other rules are the result of experience and relate to
Group relationships, such as the use of resources within
the Group and the sharing of technology, or concern the
control of risks and provide guidelines 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 them can, however, involve a great deal
of work and can result in decisions being overturned or a
business opportunity not being acted upon. But applying
the ‘Golden Rules’ not only protects managers – and
Fugro as a whole – against a great many risks, it also
stimulates fellowship within the Group.
R E S E A R C H A N D D E V E L O P M E N T
In 2004 new technologies were developed and innovative
R&D-projects were executed. Technological research and
development has played a key role for Fugro right from
the beginning. Fugro’s current market position and its
services and software rely, to a great extent, on state-of-
the-art equipment that enables data to be acquired more
and more precisely and interpreted more and more
accurately. Technological developments often take place
in close cooperation with the client as the client is
interested in solving a specific problem. In 2004 Fugro
once again invested heavily in a number of major
technologies, the most important of which are listed
below:
• Inertial navigation; a new system on which
development started in 2003 and that is aimed at
significantly improving (acoustic) positioning in
(deep)water. This system went into operation in 2004
and during 2005 it will be further improved and
expanded.
• The improvement of the drilling system on board
the ‘Bucentaur’. The ‘Fugro Explorer’ also underwent
an adaptation to improve its ability to operate in bad
weather.
• The digital video that will replace analogue video tapes
in the Remotely Operated Vehicles (ROV). Thanks to the
digital technology the quality of the video is excellent.
Digital storage has provided considerable
improvements in both the reporting of and the access
to the information. In 2004 the prototypes of these
developments were tested. The new system will go into
operation in 2005.
• Many software developments related to the improved
processing of data.
• The use of the Autonomous Underwater Vehicle (AUV)
in deepwater, which has led to excellent, high-value
data being collected more efficiently.
• The further development of the Volumetrix
(Fasttracker) software, which thanks to its unique
‘UpdateAbility’ concept enables users to construct and
maintain reservoir models with exceptional efficiency.
• The optimisation of airborne measuring through the
use of so-called UAVs (unmanned airborne vehicles).
These are remotely controlled unmanned airborne
vehicles equipped with a range of sensors.
• Further development and adaptation of the cone for
geotechnical applications.
• An offshore frame with which soil surveys can be
carried out on seabed slopes with a gradient of up to
30 degrees has been designed, built and put into use.
Monitoring related to
a bridge and tunnel
project in the Grote Belt,
Denmark
2 0 0 3 ( y e a r o f e s t a b l i s h m e n t )D K
1989
Detailed image of Cap de
Greus (Golfe du Lion)
generated on the basis of
data gathered using a
multi-beam echo sounder
2004
M A R K E T D E V E L O P M E N T 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
69% of Fugro’s turnover is related to the oil and gas
industry (2003: 67%). Strategically Fugro’s activities in this
market are aimed at two different money streams:
the exploration and development of new fields and the
production of oil and gas in existing fields. This means
that Fugro’s involvement with an oil or gas field spans
twenty to thirty years – almost its entire life cycle (see
illustration). During 2004, many oil and gas companies
took the decision to increase their investment budgets.
Unfortunately, by the end of the year this had still not
resulted in more than a trickle of additional orders for
suppliers to the sector, such as Fugro. The less than
expected contribution of oil and gas related orders in
the year under review was also, to some extent, a
consequence of share buy-back programmes right across
the sector – programmes from which Fugro and kindred
suppliers reaped no benefit.
The prospects are, however, positive. In 2005 Fugro
expects to be able to benefit from the increase of the E&P
budgets. On the one hand the ’majors’ increasingly need
to locate and exploit new fields just to maintain their
production levels. On the other hand it is vital for the
development of the global economy that the
international oil companies, including state-owned oil
companies, can meet the growing demand for oil and gas
products. Although much of the increased demand comes
from countries such as China and India, the upturn of its
economy is also resulting in a clear increase in demand
from the United States. Many of the anticipated
exploration and development activities, especially
deepwater projects, will be in the Gulf of Mexico, West
Africa and Brazil. The Middle East, the Caspian Sea,
Mexico and parts of Asia and Australia will also become
interesting regions once again.
The worldwide demand for gas is also continuing to
increase. Gas is considered a strong growth market.
The supply of liquefied natural gas (LNG) answers some of
this demand. The increasing number of LNG terminals
under development, for which Fugro is also providing
services, and the high oil prices 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 have been exporting gas
for many years. The use of LNG also makes complying
with the stipulations of the Kyoto Agreement easier for
the purchasing countries. It will also accelerate the shift
to the development of a global gas market and ensure that
gas prices remain attractive compared to the alternatives.
The oil and gas companies will invest in both deepwater
fields and onshore fields. Fugro is in an excellent position
to offer this sector a wide package of services all over the
world, because in 2004 it once again invested selectively
to ensure it could answer the market’s needs. According
to market research, in 2005 the level of investment by oil
and gas companies (in dollars) will increase by at least
6% compared with the growth of nearly 8% in 2004.
Taking into account an increase of the oil price, the
34
Geophysical Survey
Geotechnical investigation & consultancy
ROV survey and construction support
Structural instrumentation
Metocean
Positioning
Data management
Reservoir engineering
Fugro Services
Exploration Design Instal-lation
Operation Abandon-ment
Exploration and development budget Production budget
L i f e o f f i e l d s e r v i c e s (20 – 30 years)
35
surveys expect a 10% growth compared to the year before.
It is expected that most of the growth will be in the Far
East, Africa and the Middle East. The forecast is that in the
coming period over USD 10 billion per annum will be
spent on the development of oil and gas fields in regions
where the sea is more than 500 metres deep remains
unchanged. In general, deepwater oilfields are larger and
more productive, which makes them attractive despite
the fact that they require higher investments.
The global economic growth (demand side) and the
relatively limited production and logistics capacity that
cannot be increased quickly (supply side), coupled with
global political uncertainty, meant that oil prices
remained at well over USD 25 a barrel during the year
under review. The average price per barrel of Brent in
2004 was USD 38.22 (2003: USD 28.48). Oil prices are
expected to remain elevated for the time being, partly
because the production from some existing fields is
decreasing rapidly (depletion effect) and quickly
increasing production elsewhere is not possible for many
oil companies. Nonetheless, this depletion effect offers
further opportunities for Fugro in general and the
Geoscience division in particular, because there will be an
increasing interest in detailed reservoir information,
aimed at maintaining production levels for as long as
possible and to produce as much as possible from the
existing oil and gas fields.
An oil price of USD 20 or more is sufficient to ensure the
stability of Fugro’s services. Various publications have
indicated that, because demand is outstripping supply,
oil companies are basing their investment viability
calculations on a, yet again, increased price of at least
USD 20 – 22 per barrel instead of the historical USD 15 per
barrel, or the USD 20 that was applicable in 2003. This will
make more projects appear economically viable. Taking
into account the development time of projects Fugro
expects to be able to profit from this situation in 2005 and
the ensuing years.
O t h e r m a r k e t s e g m e n t s
During the 2004 financial year Fugro’s non oil and gas
related activities showed a marked improvement
compared with 2003. This positive development was due
to both cost savings by Fugro and a steady improvement
in the global economy, which resulted in an increase in
construction-related investment in several countries.
This sector, which is very regionally-oriented, accounts
for around 30% of Fugro’s activities (2003: 33%). Although
in relative terms activities in this sector have decreased,
partly due to the good opportunities offered by the oil and
gas industry in the near future, in terms of turnover
Fugro’s construction and infrastructure related activities
will continue to increase structurally. The longer-term
requirement for the development of construction and
infrastructure works will also remain high. Fugro carries
out large assignments for airports, land reclamation,
harbour extension, railways, tunnels, large buildings and
other initiatives in various places around the world.
Over the years Fugro has steadily and constantly
strengthened its market position. This is partly due to the
fact that clients prefer to assign an increasingly broad
spectrum of tasks to a single supplier. 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. There is increasing cooperation between the
Group’s business units, this clustering of activities is
particularly apparent for large infrastructure projects.
It is not only the oil and gas prices that are high, so too are
mineral prices and this is resulting for the first time since
1996 in substantially increased spending for exploration
by the mining industry. In 2004 this had a favourable
influence on the Airborne Survey activities and Fugro has
seen a substantial increase in the demand for projects.
B A C K L O G
At the beginning of 2005 the backlog amounted to
EUR 589.2 million – higher than a year earlier (2004:
EUR 573.1 million). The backlog is calculated using year-
end exchange rates. The figures for 2003 and earlier have
been adjusted for comparison purposes.
The backlog of work in EUR rose by 2.8% compared with
2004, despite the dollar falling from EUR 0.79 to EUR 0.73
for USD 1. Had the exchange rate remained the same
the backlog would have increased by 6.6% compared
with 2004.
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
During the first months of 2005 the conversion of the
convertible notes has started. Up to the end of February
2005, 409 notes have been offered for conversion. Fugro
36
(x EUR 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 )
Geotechnical
Onshore definite
Onshore probable
Offshore definite
Offshore probable
Survey
Offshore definite
Offshore probable
Onshore definite
Onshore probable
Positioning definite
Positioning probable
Geoscience
Development & Production definite
Development & Production probable
Airborne Survey definite
Airborne Survey probable
Total
Applicable USD-rate
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
EUR 1.08
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
EUR 1.13
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
EUR 0.95
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
EUR 0.79
2005
49.8
25.0
37.9
24.0
136.7
131.5
121.8
10.0
13.1
15.8
3.2
295.4
72.1
51.0
25.1
8.9
157.1
589.2
EUR 0.73
Recalculated at the exchange rates of 31 December 2003, the backlog at the start of 2005 would have been EUR 21.8 million more
(EUR 611.0 million).
Backlog comprises turnover for the coming twelve months and includes:
– awarded projects not yet started, and unfinished elements of on-going projects (definite);
– projects that are highly likely to be awarded (probable).
37
has entered into an arrangement to refinance the
remaining balance of the convertible subordinated notes
and the bankloan used for the acquisition of Thales
GeoSolutions. The final funding mix will be determined
shortly.
Fugro reached an agreement to sell the standard diving
activities in Mexico. Also Fugro reached an agreement to
sell its 40% interest in Chartco, located in the United
Kingdom. The company acquired assets and business of
BTW Ltd. in New Zealand. Fugro has been rewarded two
orders to execute geophysical and geotechnical surveys
for LNG projects. The Board of Euronext Amsterdam N.V.
has confirmed that Fugro has correctly applied the Listing
and Issuing Rules when issuing the profit warning on
2 December 2003.
P R O S P E C T S
Due to the successful integration of Fugro-TGS, which
offers Fugro considerable cost advantages, Fugro is now,
more than ever before, the leading market player when
it comes to answering the needs of clients in the oil and
gas industry. The Company’s global presence has been
strengthened, especially in Latin America and China and
in the offshore Survey, Positioning and offshore
Geotechnical market sectors. Fugro can, therefore,
operate more efficiently and offer increasingly high-value
services.
Investments in the oil and gas sector (expressed in USD)
are expected to be at least 6% higher in 2005 than in the
previous year. It is estimated that 5% of this will end up
with the suppliers. Positive developments are expected
from deepwater projects, especially in the Gulf of Mexico,
West Africa and Brazil. Good capacity utilisation is once
again anticipated in the Middle East, the Caspian Sea and
Asia. Developments in the North Sea and Canada are
expected to remain stagnant. The fact that several large
oil companies are now using an average price of USD 22 or
higher when calculating the economic feasibility for the
Prospects summarised
• Excellent strategic foundation of Fugro
• A well structured (financial) organisation
• Synergy and cost advantages through the
successful integration of Fugro-TGS
• Leading market position improved still further
• Investments in the oil and gas sector rising by 6%
• Positive developments in many regions and
market sectors
• A steadily improving global economy
• Forecasts for the whole of 2005 to be included in
the interim report
development of new fields and improving existing fields
is also positive.
With its Geoscience activities, and especially the
Development & Production business unit, Fugro is
reaping the benefits of its focus on improving production
from (existing) oil and gas sources. The Airborne Survey
activities, in addition to the traditional markets such as
mining, will increasingly profit from the developments in
the oil and gas market and the demand for the
identification of fresh water reserves.
The focus on land usage remains high worldwide and the
market is growing. In this sector Fugro is in a good
position to increase its share of large infrastructure
projects in 2005.
Further growth is expected for the positioning activities.
There is a structural increase in demand for extremely
accurate systems, such as those offered by Fugro.
Fugro has an excellent strategic foundation, a good
financial framework and a good organisational structure
and is, therefore, in a very good position in the various
markets in which it operates. At the same time the global
economy is gradually improving. Most of Fugro’s
activities are developing well, a statement supported by
the size of the order book/backlog at the start of 2005. As
in the past, it is still too early to make a reliable forecast
regarding turnover and profit development for the whole
of 2005. Our forecast for the entire year will be included
in the interim report to be published in August 2005.
Leidschendam, 10 March 2005
G-J. Kramer, President and Chief Executive Officer
K.S. Wester, Director
A. Jonkman, Chief Financial Officer
1 9 6 2N L
1 9 7 5D
1 9 6 8U K
1 9 6 3B
Setting-up a seismic
snow streamer in
Spitsbergen
Geoteam AS acquired
1962 1991 19951994
1 9 9 2R U S
1 9 9 4N , I , C H
Fugro’s acquisition of Geoteam AS in 1994 established the Company in Norway since 1994. In 2003
Oceanor, a company specialising in amongst others meteorology, was acquired. Over the years Norway
has grown into a major base of operations for Fugro’s seismic services. In 2004 Fugro employed 257 staff
in Norway.
N o r g eN
The first 3D survey in
the North Sea
Projects in the
United States
and Brazil The gathering of 2D seismic data in the North Sea with the ‘Polar Princess’
2004200320001998 1999
1 9 9 8F
2 0 0 3D K
Oceanor acquired
The ‘Geo Pacific’, a vessel used for 2D and 3D seismic surveys,
has been fully owned by Fugro since 2004
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 investigates and advises
on materials used in construction.
The onshore geotechnical services are oriented primarily
towards infrastructure, land reclamation and
construction activities. Fugro is active in many countries
and generally occupies strong local positions. To a great
extent the results of the division are dependent on
developments in the local economies. In addition to its
regular work, the business unit concentrates primarily on
larger and technically challenging projects with better
margins.
The offshore activities focus mainly on the oil and gas
industry but also on larger projects in coastal waters.
The size of the oil and gas companies’ investment budgets
influences the results. Due to its strong leading position
and scale advantages, Fugro can maintain its
technological lead and focus on new markets, or niche
markets such as deepwater projects. The division’s longer-
term target is an improvement of the result through a
better margin on an increasing turnover. Where it is
worthwhile the geographical spread will be broadened.
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 showed a good
performance compared with 2003 thanks to internal cost
savings and as a result of the steadily improving global
economy, which meant an increase in construction-
related projects in a number of regions. Business also
improved for the offshore Geotechnical services,
particularly with regard to the development of new oil
and gas fields and coastal infrastructure projects. On
balance turnover, amounting to EUR 278 million, hardly
changed (2003: EUR 280 million), despite the reduced
dollar exchange rate.
The operational result before amortisation of goodwill
(EBITA) increased by 6.7% to EUR 32 million
(2003: EUR 30 million). This equates to a margin on
turnover of 12% (2003: 11%). Expressed as a percentage of
the invested capital the operating result was 20%
(2003: 19%).
G e o t e c h n i c a l s e r v i c e s
40
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.
K.S. Wester F.E. Toolan
0
70
140
210
280
350
20042003200220012000
(x EUR 1 mln.)
T u r n o v e r
O n s h o r e G e o t e c h n i c a l s e r v i c e s
The onshore activities are characterised by local or
regional markets and competition. Fugro has a presence
in many countries and its market position varies per
region or country. In most countries there are many
competitors who do not have the expertise and global
support enjoyed by the Fugro offices. The Company’s size
puts Fugro in a strong market position when it comes to
large infrastructure projects.
The development of the European activities remained
somewhat hesitant due to the rather sluggish
development of the economy. Nevertheless business
developed better than in 2003. In the United Kingdom
business once again developed extremely well. In the
Netherlands the volume of work stabilised but prices
came under pressure. The 50% interest in BSN
Bodemsanering Nederland was sold as were the Dutch
environmental activities of Fugro Ingenieursbureau B.V.
The environmental activities are now restricted to the
collection of environmental data. In Germany business
remained difficult while in France there was a clear
improvement compared with 2003.
In the United States, activities developed well and the
results were better than for 2003. In California the
activities improved dramatically, partly thanks to several
follow-on orders for large infrastructure projects in San
Francisco Bay awarded by the authorities at the end of
2003. Fugro was also involved with several LNG projects.
In the south (Texas) progress was once again good as
a result of the relationship with the oil and gas sector
which was doing well.
In the Far East it was a difficult year in Hong Kong.
The volume of work fell still further because of cutbacks
in government investment. This led Fugro to adjust its
Hong Kong organisation in line with the volume of work.
Despite the margins being under pressure a positive
result was achieved. The activities in China, although only
modest in size, increased and produced a good return.
Business continued to develop well in the Middle East.
When the war in Iraq ended at the beginning of 2003 the
flow of orders picked up. This resulted in a good volume
of work, especially in Qatar, Oman, the United Arab
Emirates and Saudi Arabia. After the attacks in 2004
additional security measures were put in place for the
staff without this causing undue hindrance to our
activities.
O f f s h o r e G e o t e c h n i c a l s e r v i c e s
Fugro occupies a leading position in the offshore
Geotechnical services niche market in part thanks to its
worldwide presence and specialist equipment. Most of the
competitors are smaller players active in local markets.
In 2004 business developed better for the offshore
Geotechnical services business unit than in 2003,
especially in the area of new oil and gas field development
and projects related to coastal infrastructure. Fugro’s
coastal infrastructure project activities included
investigations relating to LNG landing facilities.
Nevertheless, in several regions margins came under
some pressure as a result of increasing (regional)
competition. Substantial investments in 2004 and earlier
years, plus the successful integration of Thales
GeoSolutions, do, however, mean that when it comes to
deepwater projects, which are increasing in number and
size, Fugro is extremely well equipped and uniquely
41
(amounts x EUR 1 mln.)
K e y f i g u r e s G e o t e c h n i c a l
Revenue
Operating result before amortisation of goodwill (EBITA)
Invested capital
Depreciation of tangible fixed assets
Investments
Operating result (EBITA)
as a % of turnover
as a % of invested capital
2000
281
30
90
10
11
11
33
2001
309
26
109
10
14
8
24
2002
323
35
153
11
63
11
23
2003
280
30
160
13
13
11
19
2004
278
32
163
12
21
12
20
positioned worldwide. Fugro’s considerable expertise
often plays a deciding role when it comes to the
acquisition of orders for investigations in deepwater.
In 2004 this expertise resulted in the acquisition of,
among other projects, several deepwater projects in West
Africa, Norway and Egypt. Another project was carried out
in the Mediterranean Sea, off the coast of Croatia. In the
United States off the California coast, a great deal of work,
which included the use of the ‘Fugro Explorer’, was
carried out in connection with the development of vast
harbour facilities for several LNG projects. In the Gulf of
Mexico substantial activities were carried out for PEMEX.
To the west of Australia Fugro was involved with several
projects for the oil sector and in South East Asia Fugro was
active near Indonesia, Vietnam, Thailand and India. Most
of these activities were related to potential oil projects in
areas where ‘shallow’ gas hazards were expected to be
located. During the year the ‘Markab’ carried out a project
near New Zealand before sailing to the Caspian Sea to
carry out work on behalf of a Western oil company.
In 2004 Fugro also reaped the first benefits of a number of
new initiatives aimed at the changing activities in the
North Sea. The services are targeted at the larger,
independent companies and are related to oil fields in the
final phase of their life cycle. The North Sea is in a
transitional phase – the big international oil companies
are partly moving out of the region and the larger
independents are moving in. Very few new projects are
being carried out in this interim period although Norway
is the positive exception to this rule.
42
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 precise
positioning.
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 provides opportunities to
capture a large share of the growing market for the
development of deepwater fields. The results of this
business unit are closely linked to the level of investment
by the oil companies.
Onshore services focus on local/regional markets in the
government, utility, industry and construction sectors.
Unlike traditional land survey service providers, Fugro
focuses on technologically advanced solutions and new
applications. This opens up possibilities for further
growth for this business unit.
The positioning unit offers precise satellite positioning
services throughout the world to onshore markets such as
agriculture and mining and to specific offshore niche
markets. These services are also frequently used by other
Fugro business units in conjunction with other Fugro
activities. With the introduction of the advanced HP (High
Performance) system with sub-decimetre accuracy, Fugro
has differentiated itself from the increasing number of
freely available GPS systems. The HP system is also
generating opportunities in new markets, such as
automated guidance systems.
High reliability, excellent service and clustering with
other Fugro services increase the competitive advantage.
The objective is to achieve both growth and a further
margin improvement.
S u r v e y s e r v i c e s
43
J. Ruegg O.M. Goodman
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 dynamically positioned (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;
• fixed wing and helicopter based LiDAR mapping
services.
P o s i t i o n i n g
• development and operation of accurate positioning
services such as OmniSTAR, Starfix, 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.
0
100
200
300
400
500
20042003200220012000
(x EUR 1 mln.)
T u r n o v e r
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 EUR 478 million compared with EUR 346
million in 2003, an increase of 38.2%. This was partly
thanks to the integration of Fugro-TGS. The operating
result before amortisation of goodwill (EBITA) rose to
EUR 49 million (2003: EUR 33 million). This equates to 10%
of the turnover (2003: 10%). Expressed as a percentage of
the invested capital the operating result amounted to 21%
(2003: 18%).
O f f s h o r e S u r v e y
Since the integration of Fugro-TGS, Fugro has occupied
a leading position in the global market for offshore survey
services. The international oil and gas industry seeks
service providers who can provide a wide range of services
worldwide. A great many smaller players are active in this
market at a local level.
Although turnover and result were higher than in 2003,
2004 was an eventful and somewhat disappointing year
for this business unit. Regrettably the integration of
Fugro-TGS resulted in over 400 employees having to be
made redundant. The process was completed on schedule,
during the first months of the year under review, but did,
however, involve a considerable part of the organisation,
which to a degree diverted the focus away from the
normal (commercial) business activities. In the current
financial year the focus will again be firmly fixed on the
normal business activities.
On a regional level, the unit profited from positive
developments in the Gulf of Mexico and the companies
working in the Caspian Sea, India and the Middle East,
where markets are growing, can look back on a very good
year. By contrast, 2004 was a disappointing year in Latin
America due to several bad contracts in Brazil and
Mexico, inherited from Thales S.A. Developments in
Africa and Europe were somewhat affected by the
integration of Fugro-TGS. In South-East Asia and the
Pacific the year began badly due to adverse market
conditions but in the course of the year underwent a
noticeable recovery, so much so that at the end of the year
business was developing well. The joint venture in China
is progressing well. The contract to carry out a pre-
construction survey along the eastern coast of Russia as
part of the Sakhalin II project was extended by a year.
The Autonomous Underwater Vehicle (AUV) was used in
West Africa to carry out an extensive (4,700 km) survey in
1,500 metre deep water. During 2004 we have also
invested in a second AUV system and Fugro will expand
the hydrographic mapping capability with an airborne
LiDAR system in 2005. If possibilities are there, in the
upcoming period Fugro will more often use AUV’s which
further optimise Fugro’s services. In October 2004 12
ROVs in North America have been sold.
A worldwide survey was carried out in mid-year to verify
customers’ perception of Fugro’s performance, following
the acquisition of Fugro-TGS. The reaction of customers
was found to be very positive overall but also assisted in
identifying improvements.
44
(amounts x EUR 1 mln.)
K e y f i g u r e s S u r v e y *
Revenue
Operating result before amortisation of goodwill (EBITA)**
Invested capital
Depreciation of tangible fixed assets
Investments
Operating result (EBITA)
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 EUR 4.5 million negative from Fugro-TGS.
2000
314
41
87
17
28
13
47
2001
392
65
110
22
50
17
59
2002
371
50
111
22
19
13
45
2003
346
33
182
23
94
10
18
2004
478
49
233
36
34
10
21
O n s h o r e S u r v e y
The onshore survey activities take place in a market
sector, and against competition, that is locally or
regionally oriented. Fugro has a presence in many
countries and focuses on the provision of high-value
measurement technologies and specialist data
interpretation. Market positions vary per region or
country.
The business faced a difficult year in the key markets of
Australia and the Netherlands. In part, this is due to a
trend towards outsourcing of data management and
conversion projects to low-salary countries. To improve
competitiveness of the business Fugro is following a two-
track policy. On the one hand Fugro is concentrating
increasingly on operating as a service provider with ‘back
offices’ in low salary countries. On the other hand the
focus for these services is on generating greater added-
value through better utilisation and coordination of the
combined (international) Group activities.
In contrast, the onshore field survey activities for the oil
and gas industry once again developed very positively in
2004, especially in the Middle East, the United States and
Canada.
2004 was a reasonably good and profitable year for the
FLI-MAP activities although competition is increasing as
a result of the emergence of alternative systems. Fugro
invested in a fixed wing LiDAR system which will enable a
further expansion of the activities in this growth market.
Both technologically and procedurally the onshore survey
companies must meet increasingly stringent demands
for their products and services. At the same time,
the opportunities and (international) market potential
are increasing. In many ways Fugro is in a unique position
to benefit from the opportunities arising from this
development.
P o s i t i o n i n g
Although there are other companies active around the
world in the market for positioning services, Fugro
occupies a strong market position in the high accuracy
GPS augmentation positioning sector.
2004 was a good year for the positioning activities.
The agriculture sector made a strong recovery, especially
in Australia where the drought ended at the end of 2003.
Offshore, the dynamic positioning activities continued to
grow in turnover and result. However, subscriber growth
for the OmniSTAR-HP was slower than expected in 2004,
constrained partly by the availability of third party
hardware and by operational issues. Geometius B.V.,
a company specialising in the sale of GPS equipment in
the Netherlands, was sold.
The integration of the Fugro-TGS activities not only led to
a substantial strengthening of the market position but,
simultaneously, to the possibility for significant
(infrastructure) cost savings. The services which are
functionally very similar (OmniSTAR/Landstar and
Starfix/Skyfix) have been merged, while services such as
Skyfix-XP have enabled Fugro’s service portfolio to be
expanded.
In the market for high-precision positioning Fugro has
established itself as a leading player. Fugro concentrates
on the professional user who needs high-performance
global services. Thanks to its development of innovative
products and systems, often in cooperation with strategic
business partners, Fugro can offer services that are more
accurate (sub-decimetre) than those offered by the
competing commercial service providers and ‘free
services’. Fugro also focuses, successfully, on new,
developing markets without ‘free services’, such as Africa
and the Middle East. Services are also offered in the area
of asset monitoring (OmniSTAR AM) for vehicle tracking
and pipeline monitoring.
45
G o a l s a n d s t r a t e g y
The Geoscience division concentrates on the gathering
and interpretation of geophysical data and the
quantitative and qualitative evaluation of resources
including oil, gas and minerals plus 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,
Development & Production focusses primarily on
reducing the costs of and improving the efficiency of oil
field exploitation, development and production through,
amongst other things, the application of advanced data
processing, interpretation and modelling technology
developed in-house. These services are for an important
part funded out of the less cyclical production budgets.
Development & Production is active worldwide and
occupies a strong position as a supplier of high-value
services in the field of integrated geophysics and geology
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 producers/owners in the sector.
Airborne Survey gathers geophysical data around the
world, primarily for the mining industry but also
increasingly for the oil and gas companies.
The increasingly stringent safety requirements and better
technology provided by Fugro offer growth opportunities
in other markets, such as the oil and gas industry, and for
organisations such as the Worldbank.
A further expansion and development of the Geoscience
division must, in the future, lead to improved margins
and increased turnover.
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
The Geoscience division achieved a turnover of
EUR 266 million (2003: EUR 204 million). The operating
result before amortisation of goodwill (EBITA) amounted
to EUR 29 million (2003: EUR 13 million). This corresponds
with a margin on turnover of 11% (2003: 6%). Expressed as
a percentage of the invested capital the operating result
amounted to 11% (2003: 6%).
G e o s c i e n c e s e r v i c e s
46
D e v e l o p m e n t & P r o d u c t i o n
• seismic and gravity data acquisition;
• seismic and gravity data processing and interpretation;
• reservoir modelling and 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.
P. van Riel F.E. Toolan
0
60
120
180
240
300
20042003200220012000
(x EUR 1 mln.)
T u r n o v e r
D e v e l o p m e n t & P r o d u c t i o n
Development & Production offers a broad spectrum of
related services worldwide. Its competitors are primarily
companies focussing specifically on offering only one or
a limited set of these services. For example, the seismic
market has five, larger (of which two are very large),
international players including Fugro plus a number of
smaller, local players.
The Development & Production activities developed
better in 2004 than in the previous year. The focus
remained firmly fixed on a further improvement of the
results. The benefits of cooperation and synergy between
the various companies became increasingly apparent.
During the first half of 2004 the seismic activities still had
to cope with a market that, due to a combination of
overcapacity and a reticent investment policy, remained
difficult. In the second half of the year the situation did,
however, improve as far as the investments in exploration
activities were concerned. This trend is expected to
continue during the current year. The sale of seismic
multi-client data accelerated in the second half of 2004.
This market is highly volatile as a result of changes to the
legislation and regulations governing the oil and gas
sector, which differ greatly from one country to another.
During the year under review the processing of seismic
data within Fugro’s different operating companies was, to
a great extent, centralised into one group. This offers
good opportunities for further growth because it means
the needs of the market can be answered properly.
The (pre)processing of seismic data is, on the one hand,
an almost automatic follow-up to the acquisition of the
data and, on the other hand, extremely important for the
subsequent phase – reservoir interpretation and
modelling – where Fugro plays a leading role.
The activities in the field of reservoir modelling did not
develop entirely satisfactorily during the year under
review, although the results did show a slight growth.
In this sector Fugro plays a leading role worldwide in
terms of both technology and expertise and, therefore,
supplies a large measure of added-value. To further
improve the results, Fugro streamlined the organisation
during the year under review. This streamlining has also
improved the geographical focus. In the coming years the
current firm foundation of this core activity will form the
basis for substantial further development with new
technologies and services.
The Geoscience activities showed robust growth in 2004
with a good result. The classic, technical services in
support of exploration activities were widely used in both
geographic and product terms. The sale of multi-client
data went well. The activities in the field of Data Solutions
(data management, storage and manipulation), a fast
growing market, were expanded further in 2004.
The acquisition of the business and assets of C&M Storage
in Texas, the United States, which works for over sixty oil
and gas companies, has reinforced our position and offers
good opportunities for further growth.
47
(amounts x EUR 1 mln.)
K e y f i g u r e s G e o s c i e n c e *
Revenue
Operating result before amortisation of goodwill (EBITA)
Invested capital
Depreciation of tangible fixed assets
Investments
Operating result (EBITA)
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.
2000
118
3
74
13
10
3
4
2001
209
7
250
8
25
3
3
2002
252
27
251
14
18
11
11
2003
204
13
233
13
15
6
6
2004
266
29
261
17
13
11
11
A i r b o r n e S u r v e y
In the regions where Fugro operates its Airborne Survey
activities the Company’s worldwide presence puts it in
a leading position. For the most part the competition
operates in the regional markets or in niche markets for
specific applications.
The growth of the Airborne Survey activities in Canada,
Australia and Africa was excellent and produced a good
result. Not only were new orders received at the end of
2003, including orders from organisations such as the
Worldbank, the Islamic Bank and the EU (in Nigeria,
Mauritania, Angola, Madagascar and Mozambique), but
the substantial improvement of the mining industry also
played a role as they benefited from the explosive global
growth in the demand for minerals.
Once again a substantial investment was made in new
technologies during the year under review. Airborne data
acquisition can now be optimised by using the ‘Georanger
I’ (Unmanned Airborne Vehicle). This is a small, remotely
controlled aircraft equipped with a variety of sensors.
In 2005 it is expected that the UAV will be regularly used
for airborne data acquisition. In addition, several
conventional aircraft were replaced by newer models.
Fugro occupies a leading position in this global market.
Traditionally the mining industry is the most important
market for the Airborne activities although water
resource mapping (primarily in the Middle East) and
projects on behalf of oil and gas companies are growth
markets.
Airborne surveying is cheaper than conventional
methods. Using Airborne surveying, Fugro can carry out
high-quality geophysical investigations usually at a far
lower cost and also in places where it would otherwise be
impossible. In combination with other Fugro companies
this business unit utilises the growth opportunities
created by synergy and (technological) cooperation within
and outside the Geoscience segment. This is guaranteed
by a focussed structure and constantly improving health
& safety systems, for which Fugro wishes to set the
standards.
48
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
endeavours to treat social interests with respect.
A p p r o v a l b y t h e 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
After having received a detailed explanation of the
Company’s Corporate Governance structure and policy,
on 19 May 2004, the Annual General Meeting of
Shareholders approved Fugro’s Corporate Governance.
As a consequence, Fugro complies with the Dutch
Corporate Governance Code.
The Company’s Articles of Association were amended
accordingly on 3 September 2004. The underlying
documentation, amongst which are the relevant rules
and regulations as well as the Articles of Association and
the Administrative Conditions of Stichting Administratie-
kantoor Fugro, are published on the Company’s website:
www.fugro.com under corporate area/corporate
governance
T h e m a i n p o i n t s o f t h e 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
Fugro applies the major part of the Principles and
Provisions of the Code, in so far as they are applicable,
with the following exceptions.
Best practice provision II.1.1
The duration of the existing employment contracts with
Mr. G-J. Kramer and Mr. K.S. Wester is at variance with this
provision. These contracts were signed before the Code
came into force; rights that have been agreed cannot be
rescinded.
Best practice provision II.2.6
It has been decided to apply the notification obligation to
stocks in listed companies which operate in the same area
as the company or are related thereto. On the one hand
this is a restriction, but on the other hand it is an
extension such that international listed companies or
clients are brought within the scope of the provision.
Best practice provision II.2.7
The employment agreements between Fugro and
Mr. G-J. Kramer and Mr. K.S. Wester do not include
agreements regarding termination recompense.
This means that general labour law provisions are
applicable. Fugro will not amend the existing
employment agreements. The agreements were signed
before the Code came into force; rights that have been
agreed cannot be rescinded.
Best practice provision III.3.5
Mr F.H. Schreve and Mr M.W. Dekker do not fulfil the
condition contained in this provision. They were
reappointed as members of the Supervisory Board
by the Annual General Meeting of Shareholders before
the Code came into force.
Principle IV.2
Maintaining its operational independence is crucial for
Fugro (see page 50 for the reasons for this). One of the
ways to safeguard this independence is to issue
certificates (depository receipts) of shares. The issuing of
share certificates is, therefore, considered by Fugro to be
a necessary protective measure. According, when
Stichting Administratiekantoor Fugro is executing its
voting rights the criterion used is that the interests of the
company and its associated enterprise and all others
involved will be ensured in the best possible way.
Best practice provision IV.2.1
In variance with this provision, the Administrative
Conditions of Stichting Administratiekantoor Fugro do
not stipulate in which instances and under what
conditions the certificate holders may ask the
Administrative Office to convene a meeting.
Best practice provision IV.2.2
As a consequence of Best Practice provision IV.2.2 the
Board has decided that certificate holders representing at
least 15% of the issued share capital in the form of
certificates are allowed to convene a meeting to indicate a
nominated person as a member of the Stichting’s Board.
C o r p o r a t e G o v e r n a n c e
49
Best practice provision IV.2.8
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.
This is in accordance with the legal regulation which
came into force on 1 October 2004.
C o m p l i a n c e w i t h a n d o b s e r v a t i o n
o f t h e C o d e
In the 2004 financial year Fugro complied with its
Corporate Governance Code. In particular the Board of
Management deems that the Company has complied with
the best practice provisions II.3.2 to II.3.4 inclusive and
III.6.1 to III.6.3 inclusive. No transactions have taken place
in which (potentially) conflicting interests of material
substance related to Board members or Supervisory Board
members have played a part. No transactions in the
context of best practice provision III.6.4 have taken place.
Fugro will present every substantial amendment in its
Corporate Governance to the Annual General Meeting of
Shareholders for discussion.
P r o t e c t i v e m e a s u r e s
When carrying out assignments Fugro can have access to
clients’ extremely confidential information. For this
reason Fugro can only carry out its activities if it can
safeguard its independence in relation to its clients.
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 150).
The protective measures are primarily intended to
safeguard Fugro’s independence in relation to its clients.
Only share certificates not entitled to voting rights are
listed and traded on Euronext Amsterdam N.V.
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 Administratiekantoor
Fugro see page 150.
Certificate holders:
• may, after the timely deposition of their certificates,
attend and speak at shareholders’ meetings;
• are entitled to request from the Administratiekantoor
a proxy to exercise the right to vote for the shares that
underlie their certificates. The Board of the
Administratiekantoor 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) 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;
• may, as long as they are natural persons, not having a
mutual arrangement to co-operate, exchange their
certificates for ordinary shares up to a maximum of 1%
of the share capital per shareholder.
Any issuing of protective preference shares will be carried
out by Stichting Beschermingspreferente aandelen Fugro.
On 19 May 2004 the Annual General Meeting of
Shareholders designated (for the most recent time) the
Board of Management of Fugro as the body which, for the
period until 19 May 2007 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. Now that no option agreement
between Fugro and Stichting Beschermingspreferente
aandelen Fugro has been signed, the Board of
Management should, on the basis of its appointment as
the body authorised to issue shares, when a threat of an
50
unwanted take-over is such that an immediate issue of
preference shares by Stichting Beschermingspreferente
aandelen Fugro is advisable, decide to issue shares with
the approval of the Supervisory Board.
The objective of Stichting Beschermingspreferente
aandelen Fugro is the promotion of the interests of Fugro
and the companies maintained by Fugro and the
companies in the Fugro Group, in such a way that the
interests of Fugro and 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 those interests are prevented as far as
possible, as is the execution of anything that is related to
or could 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 Annual 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 clients’
data, safeguarding Fugro’s independence and defining
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 Board
of Management’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.
51
In France the accent is on the geotechnical services. A specialist office of the offshore survey division is
also located in France. At the end of 2004 there were 262 staff.
Fugro France SA
founded
1962 1998 1999
1 9 6 2N L
1 9 7 5D
1 9 6 8U K
1 9 6 3B
1 9 9 2R U S
1 9 9 4N, I, C H
1 9 9 8F
F
Four French
geotechnical
companies
acquired
2000
F r a n c e
2 0 0 3D K
2004
Activities at the
Nimes Arena
Positioning of a
hoisting crane during
the extension of
Monaco harbour
200320022001
As of 2005, Fugro being a listed company on the stock
exchange, has to report its financial statements in
accordance with International Financial Reporting
Standards (IFRS). Fugro has decided to early adopt IFRS
and reports over the financial year 2004 in accordance
with IFRS (and Dutch GAAP as required under Dutch law),
with comparative figures for 2003. The 2003 results under
IFRS are significantly lower compared to the 2003 Dutch
GAAP results. The most significant decrease in the income
statement related to the accounting of the reorganisation
costs related to the Fugro-TGS acquisition. When the
buyer forms a provision for reorganisation costs at the
moment of acquisition, under IFRS these costs have to be
recorded through the profit and loss account. These costs
are therefore no longer part of the goodwill, as under
Dutch GAAP.
The impact of the transition to IFRS will not, however,
influence Fugro’s strategy, operational development and
cash flow in any way and will not result in any material
changes to the historical picture of Fugro.
The items in Fugro’s annual accounts that are subject to
more material changes in valuation and/or presentation
due to the transition to IFRS are:
• Goodwill in so far as this application results in a
different valuation of assets and liabilities at the
moment of acquisition (whether or not these assets
and liabilities were previously identified separately);
Under IFRS goodwill is no longer amortised but is
tested annually for impairment;
• Taxation through a different (earlier) timing of
recognition of unused tax losses carried forward in so
far as it is probable these will be realised;
• Provisions for major repairs and maintenance which are not
allowed under IFRS. Under IFRS costs for major repairs
and maintenance are capitalised as a separate
component of property, plant and equipment and
depreciated over their usefull life;
• Pension liabilities because liabilities that qualify as
‘defined benefit plans’ under IFRS must be recognised
in the balance sheet.
• Other provisions in so far as these are not allowed under
IFRS;
• Certain specific long-term financial lease agreements
relating to two vessels under shared ownership, which
under IFRS qualify as financial leases and therefore no
longer can be treated off-balance sheet (these vessels
were acquired in full ownership by Fugro in 2004);
• Financial instruments which will be recognised at fair
value.
In the table on the left the statements of reconciliation
between Dutch GAAP and IFRS for the relevant periods
(equity as of 1 January 2003, 31 December 2003 and
31 December 2004). The table on page 55 shows the
reconciliation of the 2003 and 2004 results. It has to be
said that it is expected under IFRS the net result will be
structurally EUR 4 – 7 million below the Dutch GAAP
result before amortisation of goodwill, mainly due to the
different accounting treatment for issued options and
differences in tax charges. As historical data are not yet
available, the estimates cannot be benchmarked.
The shareholders’ equity compared to Dutch GAAP has
been corrected by EUR 11.8 million as at 1 January 2003
and will develop as from this starting position.
Explanation
• According to IAS 19 a pension liability is recognised for
defined benefit plans being the total of the net present
value of the defined benefit obligation at balance sheet
date, plus any actuarial gains (less actuarial losses)
I F R S
54
(in EUR x 1 mln.)
S h a r e h o l d e r s ’ e q u i t y
Dutch GAAP
Defined benefit
pension obligations
Recognition of unused
tax losses carried forward
Taxation effect of corrections
in equity
Release of provisions
Reallocation of
goodwill/introduction of
capitalised software
Restructuring costs
Lapsed amortisation of
goodwill
Equity component
convertible notes
Revaluation assets under
financial lease
Valuation of hedges
Other
IFRS
31-12-2004
260.1
(42.8)
6.8
15.5
3.2
(15.1)
(22.7)
29.9
0.7
4.3
(15.0)
(1.0)
223.9
31-12-2003
240.8
(38.7)
8.3
12.4
5.6
(12.5)
(17.5)
12.7
3.2
4.3
(6.3)
(1.1)
211.2
01-01-2003
271.7
(41.5)
6.4
12.8
4.2
(6.4)
–
–
5.7
5.8
2.1
(0.9)
259.9
minus any past service cost not yet recognised minus
the fair value at balance sheet date of assets out of
which the obligations are to be settled.
• According to IAS 12 deferred taxes are recognised for
unused tax losses carried forward to the extent that it
is probable that future taxable profit will be available
against which the unused tax losses can be utilised.
• According to IAS 16 and 37 maintenance provisions
are no longer allowed. Furthermore, a reorganisation
provision has been released to equity as of 1 January
2003 because this is no longer allowed under IFRS.
• According to IFRS items in ‘intangible assets‘ in the
opening balance sheet have been reassessed which
resulted in the recognition of intangible assets (mainly
software) which are amortised over their useful life.
Furthermore, the Dutch GAAP amortisation of
goodwill has been reversed. Impairment tests have not
resulted in impairment losses.
• A special adjustment is the reversal of the
restructuring provision of EUR 22.7 million relating to
the acquisition of Thales GeoSolutions which was
recorded against goodwill under Dutch GAAP which is
not allowed under IFRS 3. EUR 17.5 million of this
amount is attributable to 2003 and EUR 5.2 million
to 2004.
• The capitalisation of two financial leases regarding
two vessels according to IAS 17 and the applied
revaluation to fair value, resulting in an increase of the
carrying value by EUR 5.8 million;
• In accordance with IAS 32 and 39 the equity
component of the convertible notes has been
recognised separately. The difference in the fair value
of the hedging instruments with regard to the future
interest-bearing payments from the Private placement
has been recorded in the equity.
The differences in the income statement are mainly
explained in the disclosure on the differences in equity.
Another, almost neutral in result, item is the reallocation
of some 50% shareholdings (third party costs, other costs,
depreciation of property, plant and equipment and
interest costs).
The box shows the main standards of IFRS and IAS, as used
for the preparation of this Annual Report.
The Annual Accounts (pages 68 – 133) contains
explanation on IFRS.
55
(in EUR x 1 mln.)
I n c o m e
s t a t e m e n t
Dutch GAAP
Capitalisation of software
Software depreciation
Reversal of goodwill
amortisation
Reversal restructuring
provision
Costs option plan
Interest convertible notes
Other
IFRS
2003
32.4
4.6
(6.8)
12.7
(17.5)
(1.9)
(2.5)
(2.1)
18.9
2004
49.5
4.4
(7.1)
17.2
(5.2)
(3.5)
(2.6)
(3.4)
49.3
Applied standards of IFRS and IAS
IFRS1: first-time adoption of IFRS
IFRS2: share-based payment
IFRS3: business combinations
IAS 1: presentation financial
statements
IAS 2: inventories
IAS 7: cash flow statements
IAS 8: accounting policies, changes
in accounting estimates and
errors
IAS 10: post balance sheet date
events
IAS 11: construction contracts
IAS 12: income taxes
IAS 14: segment reporting
IAS 16: property, plant and
equipment
IAS 17: leases
IAS 18: revenue recognition
IAS 19: employee benefits
IAS 21: effects of changes in foreign
exchange rates
IAS 23: borrowing costs
IAS 24: related party disclosures
IAS 27: consolidated and separate
financial statements
IAS 28: investments in associates
IAS 31: interests in joint ventures
IAS 32: financial instruments:
disclosure and presentation
IAS 33: earnings per share
IAS 34: interim reporting
IAS 36: impairment of assets
IAS 37: provisions, contingent
liabilities and contingent
assets
IAS 38: intangible assets
IAS 39: financial instruments:
recognition and
measurement
56
O P E R A T I O N A L
A c t i v i t y p o r t f o l i o
While the core activities show a high 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 market. Fugro’s dependence on
the cyclic investment in oil and gas exploration has been
reduced in favour of the more stable investments in oil
and gas production. The other activities are dependent on
developments in markets that include 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;
• strong 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
Fugro’s orders are partly awarded on the basis of long-
term preferred supplier agreements. Having a large
number of clients supports Fugro’s independence and
improves its stability. In the course of a year Fugro
executes many projects for clients. The projects carried
out for any individual client do not, however, account for
more than 4% 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, to a degree, sensitive
to price changes and sudden changes in exchange rates,
to which the Company can adapt quickly. Fugro’s budgets
are, to a great extent, based on the expected investments
by the oil and gas companies. Substantial fluctuations in
oil prices (up or down) do not lead to rapid changes in
these investments, unless there is a structural drop in
prices to less than USD 20 per barrel.
R i s k m a n a g e m e n t
Fugro’s long-term risks are limited due to:
• The wide diversity of highly cohesive activities
• No client or assignment accounting for more than 4% of Fugro’s total turnover
• Mostly state-of-the-art owned and in-house developed technologies and professional staff
• Due to mainly short contracts: capability to adjust quickly to exchange rates and price changes
• Not being structurally vulnerable unless oil prices fall below USD 20 per barrel
• A balanced and flexible vessel fleet (owned by Fugro and chartered)
• Short-term loans (EUR 295 million) amounting to only 30% of the balance sheet total
• Hardly any or no risks related to pension obligations
• Good internal risk management and control systems
Fugro’s risk management policy is aimed at the long-term sustainable management of its business activities and the
limitation or, where possible, the appropriate hedging of the risks. Due to Fugro’s wide diversity of markets, clients and
regions and its broad portfolio of activities, quantifying all possible existing risks which are relevant for the Group as a
whole is virtually impossible. Risks are, however, quantified wherever this is possible and useful. Examples of these risks
are the influence of the US dollar.
7%
69%
5%
19%
Oil & gas
Construction/infrastructure
Mining
Other
(For the year 2004)
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
C a p a c i t y p l a n n i n g
Fugro is 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. This means Fugro’s activities can be 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.
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 in which Fugro is active. As far as vessels are
concerned, Fugro’s objective is to build-up a fleet in which
around 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 manpower
and equipment between the various business units
results in increased capacity utilisation.
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 maintain
the Company’s long-term financial solvency. Being
quoted on the stock exchange provides a very worthwhile
contribution towards achieving the Company’s (financial)
targets and enables Fugro 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
and the bank loan regarding the acquisition of Thales
GeoSolutions (outstanding EUR 127 million), which has
a variable interest rate. The Company’s objective is to
limit the effect of interest rate changes on the results.
At the moment of closing, the interest rate risk as well as
the currency risk of the Private Placement nominated in
USD was fully hedged till maturity.
Fugro applies prudent accounting principles based on the
Dutch reporting regulations. Leasing and off-balance
sheet constructions are avoided as far as possible and the
policy is to depreciate relatively quickly. Software,
whether purchased or developed in-house, is not
capitalised on the balance sheet with the exception of
substantial external expenditure for software packages
57
E x c h a n g e
r a t e s
( i n E U R )
31 December 2004
30 June 2004
31 December 2003
30 June 2003
31 December 2002
30 June 2002
31 December 2001
30 June 2001
31 December 2000
30 June 2000
GBPaverage
1.47
1.49
1.45
1.46
1.59
1.61
1.62
1.62
1.65
1.65
GBPend ofperiod
1.42
1.49
1.42
1.45
1.53
1.54
1.64
1.66
1.61
1.58
USDaverage
0.81
0.82
0.88
0.90
1.06
1.11
1.13
1.13
1.09
1.06
USDend ofperiod
0.73
0.82
0.79
0.88
0.95
1.00
1.13
1.18
1.08
1.05
USD
GBP
50%
14%
28%
8%
USD related
EUR and other
(For the year 2004)
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 c u r r e n c y
with regard to administrative and technical applications.
The seismic and geological database is depreciated
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.
Under IFRS Fugro continues to value the balance sheet
and profit and loss account as prudently as possible
within the framework of the regulations. Goodwill is
no longer amortised. An impairment account will be
drawn-up each year. Off-balance sheet constructions
continue to be avoided in the future. IFRS does demand
specific valuation methodologies and presentations.
Fugro complies with these requirements and explains
them if appropriate.
F o r e i g n e x c h a n g e r a t e s
Fugro limits its sensitivity to changes in foreign currency
rates, but is not immune to exchange rate differences
caused by rapid changes in the rates and to exchange rate
differences. As most of Fugro’s income in local currencies
is used for local payments, the effect of negative or
positive currency changes 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 forward exchange contracts
are signed (at a local level). The major factor with which
Fugro has to cope is translation effects. A change of
USD 0.05 in the dollar to euro exchange rate has an effect
of around EUR 2.5 million on the net result. In addition,
rapid and radical changes in exchange rates can influence
the balance sheet and profit and loss account, partly due
to the duration between submitting quotes and the
(delayed) award of orders, during which period forward
exchange contracts would not be appropriate. This
creates an additional foreign currency risk which cannot
be quantified in advance. The optimisation of the use
of forward exchange contracts is under continuous
attention of the organisation.
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 accordance
with the regulations and customs in each of the countries
in which the Company operates. As of 31 December 2004
the final salary scheme in the Netherlands has been
replaced by an average salary scheme. This scheme is
classified as a ‘defined contribution’ scheme.
This classification is, however, still seen as a defined
benefit scheme under IFRS similar to all schemes in the
Netherlands. However, hardly any future risks are
involved in this scheme.
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.
In the UK Fugro operates a defined contribution scheme
for eligible staff. Measures have been taken to ensure that
the reserves needed to honour past defined benefit
scheme agreements are available when required.
In the other countries where Fugro has organised
retirement provisions for its staff, obligations arising
from these provisions are covered by items included in
the balance sheet of the relevant operating companies.
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 and general liability are covered
at a global and Group level. Locally, risks related to
equipment are covered. 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 either as the claimant or the
defendant. Based on developments thus far, Fugro’s
financial position is not expected to be materially
influenced by any of these actions.
58
I N T E R N A L S Y S T E M S
G e n e r a l
Constant monitoring of its markets and its operational
and financial results is intrinsic to Fugro’s modus
operandi due to the generally short-term nature of its
assignments. Clarity and transparency are an absolute
must for assessing and evaluating risks. These are
fundamental characteristics of the Fugro culture. Due to
the wide variety of markets, clients and regions and
Fugro’s extensive activity portfolio the operating
company management is responsible for the application,
fulfilment and monitoring of the internal systems.
The monitoring systems are embedded within the
internal control framework described below.
C o r p o r a t e H a n d b o o k
Fugro’s Corporate Handbook contains precise
instructions for, among other aspects, risk management.
F i n a n c i a l H a n d b o o k
This contains detailed guidelines for the financial
reporting. The IFRS standard has now been incorporated
into this handbook.
P l a n n i n g
The business plans of every unit are translated into
budgets. Adherence to the budgets is checked on a
quarterly basis. The operating company managements
must report immediately any unforeseen circumstances
that arise or any substantial deviation from the budgets
to the responsible member of the Executive Committee
and the Board. The monthly reports the operational
management submits to the Holding Company include
an analysis of the achievement of the approved plans.
A u t h o r i s a t i o n l e v e l
Managers are bound to clear restrictions regarding
representative authorisation. Projects and contracts with
value or risks that exceed specified amounts must be
approved by Regional Managers or by the responsible
member of the Executive Committee or the Board as
appropriate.
L e t t e r o f r e p r e s e n t a t i o n
Every six months all regional managers and controllers of
operating companies and the responsible member of the
Executive Committee sign a detailed statement related to
the financial reporting/internal control.
I n t e r n a l A u d i t
Internal audits are carried out by the Holding Company
regularly and frequently. The findings are reported
directly to the President and Chief Executive Officer.
P e e r r e v i e w s
Regular so-called peer reviews are also carried out
whereby an operating company is investigated by a team
of employees from other operating companies.
The results are reported directly to the Board.
A u d i t C o m m i t t e e
The Audit Committee, which comprises three members of
the Supervisory Board, ensures an independent
monitoring of the risk management process from the
perspective of its supervisory role. The Audit Committee
focuses on the quality of the internal and external
reporting, the effectiveness of the internal controls and
on the functioning of the external accountants and
auditors.
E x t e r n a l a u d i t s
The annual accounts of Fugro N.V. and subsidiaries are
checked regularly by external auditors on the basis of
‘International Standards on Auditing’.
A d v i s o r y r o l e s
The external auditor fulfils no advisory roles (except for
due diligence projects and activities related to the annual
accounts). These roles are fulfilled by using third party
experts in fields such as tax and insurance.
W h i s t l e - b l o w e r ’ s r e g u l a t i o n s
Whistle-blower’s regulations have been in operation since
March 2004. The objective is to ensure that a possible
infringement of the existing policies and procedures can
be notified without this notification having any adverse
consequences for the ‘whistle-blower’.
D e c l a r a t i o n
The Board deems that in the current situation the
internal risk management and control systems as
described above are adequate and effective.
No substantial changes were introduced during the 2004
financial year. Various matters have been discussed with
the Audit Committee and the Supervisory Board.
59
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 (depository receipts of shares) are
listed on Euronext N.V. in Amsterdam. Since 4 March 2002
Fugro has been included in Euronext’s Amsterdam
Midkap-index (AMX), with an estimated weighting factor
on 1 March 2005 of 3.5% of the index. The market
capitalisation of the Company amounts to over EUR 1
billion. Since 8 July 2002 Fugro share (certificate) options
have also been traded on Euronext Amsterdam Derivative
Markets and since May 2000 the convertible subordinated
debenture bond, which expires on 3 April 2005, has been
traded on Euronext N.V.
As was the case in 2003, in 2004 trading in Fugro
(certificates of) shares was stimulated by four liquidity
providers.
As far as is known, 77.5% 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 62 and 152 – 153.
D i v i d e n d p o l i c y
Fugro strives for a dividend pay-out ratio of 30 to 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 2004 around 65% of the shareholders opted to
receive the dividend for 2003 in (certificates of) shares (in
2003: 45%). 381,977 shares have been issued for this
purpose.
S h a r e / c e r t i f i c a t e h o l d i n g s o f
5 % o r m o r e
In February 2005 the following share/certificate holders
with a holding of 5% or more were known to Fugro:
ING Verzekeringen N.V. (incl. certificates) 10.79%
Fortis Utrecht N.V. (certificates) 6.75%
Woestduin Holding N.V. (shares) 6.99%
Stichting Administratiekantoor Fugro (shares) 88.14%
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
60
11 March 2005
19 May 2005, 14.00 hrs
23 May 2005
14 June 2005 (after trading hours)
16 June 2005
24 June 2005
12 August 2005
25 November 2005
10 March 2006
I m p o r t a n t d a t e s
Publication of the 2004 Annual Report, press conference with webcast,
analysts’ meeting with conference call facility and webcast
Annual General Meeting of Shareholders in Leidschendam, Green Park Hotel,
dual language webcast (Dutch and English)
Ex-dividend date
Determination and publication of the optional dividend in (certificates of)
shares
Payment of the 2004 dividend
Press release regarding developments in the first half of 2005
Publication of 2005 half-yearly report and announcement of profit forecast for
2005, press conference with webcast, analysts’ meeting with conference call
facility and webcast
Press release regarding developments in the second half of 2005
Publication of the 2005 Annual Report, press conference with webcast,
analysts’ meeting with conference call facility and webcast
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
2004
15,165,912
381,977
15,547,889
410,401
15,137,488
14,839,730
1,557,390
R e m o t e l y v o t i n g b y p r o x y n o t p o s s i b l e
Within the limits as set in the Articles of Association,
Fugro allows proxy voting for shareholders and holders of
certificates at an Annual General Meeting. Fugro is
following with interest the developments with regard to
proxy voting and electronic voting. As soon as new
legislation comes into force, Fugro will consider if it will
make use of the given possibilities.
S a f e g u a r d i n g F u g r o ’ s i n d e p e n d e n c e
When carrying out 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
shareholders have, in the past, approved several
safeguards. Please see page 50 with regard to Corporate
Governance.
61
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
A t t e n d a n c e
a t A G M s
AGM 15 May 2004*
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 154).
0
16
32
48
64
80
0
600
1,200
1,800
2,400
3,000
2002 2003 2004 20052000 200119991998199719961995199419931992
(Since introduction in April 1992 to February 2005)
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).
2004
588,862
15,219
(193,680)
410,401
1,240,600
2003
466,882
150,000
(28,020)
588,862
1,196,450
Shares (incl, SAF)
14,506,664
13,749,493
13,836,939
12,020,618
11,757,075
11,892,593
Certificates
1,882,628
439,486
191,814
5,546
35,190
711,959
% ofsubscribed
capital
99.4%
99.6%
96.8%
95.0%
93.2%
92.6%
62
%year-end
2004
15.4
0.9
0.2
1.4
9.0
2.9
21.6
26.1
22.5
100.0
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, around 8.5% of Fugro’s shareholders’
equity (and an unknown number of certificates) and
1,240,600 options are held by directors, management
and staff.
Of all the options issued from 1999 upto 2004, 89.6% were
still outstanding on 31 December 2004. These options give
rights to 1,240,600 (certificates of) shares. As of
31 December 2004 266,200 new options (exercise price
EUR 61.40, commencing date 1 January 2005) have been
granted to 493 people. Of these options 29.8% have been
granted to directors of Fugro. See also pages 89 – 91.
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 of
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.
The granted staff options have an exercise price that is
equal to the share price 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
(x EUR 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*
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 ’04
The Netherlands
United Kingdom
United States
France
Germany
Luxembourg
Belgium
Switzerland
Other
End ’03
(x 1,000)
D i s t r i b u t i o n o f s h a r e h o l d e r s
IFRS 2004
8.48
3.80
3.32
1.90
47%
54%
IFRS 2003
5.56
1.77
1.30
1.85
101%
136%
2004
8.90
4.49
3.33
1.90
42%
57%
2002
8.30
5.03
4.19
1.85
37%
44%
2001
7.93
4.65
4.24
1.60
34%
38%
2000
6.87
3.69
3.69
1.36
37%
37%
2003
6.54
3.12
2.24
1.85
59%
83%
* For IFRS: intangible fixed assets.
63
residents of the Netherlands and not permitted for
foreign option holders.
In 2004, the number of shares re-purchased by the
Company amounted to 15,219 at an average price of
EUR 50.00. These shares are held for the purpose of the
option scheme and are not entitled to dividend.
The exercise of options outstanding at the end of 2004,
including the options issued in December, could – after
using the re-purchased shares – lead to the issued share
capital being increased, in phases, by a maximum of 5.3%.
Since the beginning of 2005, 3,220 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 and activities are explained in detail by members
of the Board. In 2004 investors in many financial centres
around the world were visited. Individual and collective
personal contact with investors and analysts is also
maintained via one-on-one meetings (in 2004 around 300),
presentations and telephone conferences. Fugro also
offers information via its website: www.fugro.com.
For the third year in succession, Fugro’s Annual Report
was nominated for the Sijthoff-Prijs and in November
Fugro was nominated for the prize for the best investor
relations amongst the Dutch Midkap funds. This prize is
awarded by Rematch on the basis of a survey involving
over 360 analysts, journalists, fund managers and
investors. In December the Scenter research company
presented Fugro with a transparency certificate for its
2003 Annual Report.
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 r
i n f o r m a t i o n
Fugro considers the prevention of misuse of inside
information for trading in its stock to be essential to its
relationship with the outside world. Regulations to
prevent the misuse of inside information, based on
article 46 and in accordance with the Supervision of the
Stock Transactions Act 1995, are in force and widely
applied within Fugro. In addition to these regulations,
several hundred employees are bound by internal
regulations – ‘the Model code to prevent the misuse of
inside information’. Fugro has appointed a Compliance
Officer for many years.
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 in spreadsheets.
More information about Fugro shares 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).
0
50
100
150
200
250
AMX
Fugro
20012000 2002 2003 2004
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 (January 2000 = 100)
The Greek Gold
February 2004 – August 2004
The Hermitage Amsterdam opened
with an exhibition of jewellery from
the Greek settlements around the
Black Sea loaned by the Russian
Hermitage. These golden bracelets,
torques and laurel wreaths date from
the sixth to the second centuries BC.
The exhibition also included finds
from the famous tombs of
Nympheum and Olbia. In addition to
the jewellery the exhibition included
articles that placed the jewellery in
context, such as Greek vases
decorated with female figures
bedecked with an array of jewellery,
silver articles with decorative
engraving, and moulds that gave
an insight into the way the jewellery
was made.
F u g r o ’s c o n t r i b u t i o n t o s o c i e t y
64
The Amstelhof which will house the Hermitage from the end of 2007.
Photo bottom right: The Hermitage in Saint Petersburg.
Photos: Hermitage State Museum, Saint Petersburg
In this context, in 2004 Fugro N.V. signed a multi-year contract
with the Hermitage Amsterdam and from 2005 Fugro will act as
main sponsor of the International Franz Liszt Piano Competition.
Contributions towards the upkeep of items of cultural importance
is one of the principles of Fugro’s sponsorship policy.
The sponsoring of major international musical events also plays
a prominent role in this policy.
T h e h i s t o r y o f t h e H e r m i t a g e
In 1852 Tsar Nicolas I opened the State Hermitage Museum in the former
imperial palace in Saint Petersburg. The collection comprised over three million
items including old masters, (post) impressionist works and classical antiquities.
The establishment of the Amsterdam Hermitage was inspired by the historical
links between Amsterdam and Saint Petersburg and the Russian Hermitage’s
desire to open satellites. In the first phase of the Hermitage Amsterdam several
different small exhibitions of works from the collection of the Hermitage in
Saint Petersburg have been organised. It is anticipated that the Hermitage
Amsterdam will begin exhibiting in the renovated Amstelhof at the end of 2007.
Hermitage Amsterdam
Nicolas & Alexandra,
the last tsar and tsarina
September 2004 – February 2005
This exhibition presents the life of
Russia’s last imperial family. The tsar
and tsarina – Nicolas II (1868 – 1918)
and Alexandra (1872 – 1918) had four
daughters and one son. After the
abdication of the tsar the entire
family was murdered by the
Bolsheviks in 1918. The numerous
personal effects, state documents,
paintings, photographs and ‘objets
d’art’ on display in the Hermitage
Amsterdam tell an impressive,
personal and poignant story about
the last tsar and tsarina and their
children.
Venice
March 2005 – September 2005
Both Saint Petersburg and
Amsterdam are often called
‘the Venice of the North’. The Venice
exhibition brings eighteenth-century
Venetian art from Russia to the
Netherlands. In this century Venice
was a blossoming cultural centre with
numerous artists. City views by
Canaletto and Bellotto, caprices by
Guardi and works by Tiepolo and
Longhi can be seen in the Amsterdam
Hermitage. Marvellous examples of
the renowned Venetian glass enhance
the exhibition.
April 2005
The International Liszt Piano
Competition for young pianists is held
once every three years in
Muziekcentrum Vredenburg in
Utrecht. For the Competition the key
values for the global promotion of
young talent are ambition, excellence
and commitment. Several preliminary
rounds, involving over fifty candidates
from around the world, will culminate
in a final Gala Evening on 16 April
2005. Three finalists will play for the
prize which will be presented on that
evening. The winner will then begin an
international tour.
International Liszt Piano Competition
65
66
A n n u a l A c c o u n t s 2 0 0 4
F U G R O N . V .
1 Consolidated IFRS income statement 68
2 Consolidated IFRS statement of
total result for the period 69
3 Consolidated IFRS balance sheet 70
4 Consolidated IFRS statement of cash flows 71
5 Notes to the consolidated IFRS financial
statements 73
6 Subsidiaries and Associates of Fugro N.V. 119
7 Statements of reconciliation on first time
adoption of IFRS 122
8 Dutch GAAP annual report 134
9 Consolidated Dutch GAAP balance sheet 137
10 Consolidated Dutch GAAP income statement 138
11 Consolidated Dutch GAAP statement of
total income and expense 139
12 Consolidated Dutch GAAP statement of
cash flows 140
13 Dutch GAAP equity movements 141
14 Notes to the consolidated Dutch GAAP
financial statements 142
15 Dutch GAAP company balance sheet 145
16 Dutch GAAP company income statement 146
17 Notes to the Dutch GAAP company
financial statements 147
18 Other information 150
(EUR x 1,000)
(5.25) Revenue
(5.25) Third party costs
Net revenue own services
(5.29) Other income
(5.30) Personnel expenses
(5.35) Depreciation
(5.36) Amortisation
(5.31) Other operating expenses
Operating profit before financing costs
(5.32) Financing income
(5.32) Financing expenses
Net financing costs
Share of profit of non-consolidated subsidiaries
Profit before tax
(5.33) Income tax expense
Profit for the period
Profit for the period attributable to:
Equity holders of the parent
Minority interest
Profit for the period
(5.45) Basic earnings per share (EUR)
(5.45) Diluted earnings per share (EUR)
1 C o n s o l i d a t e d I F R S i n c o m e s t a t e m e n tFor the year ended 31 December
2003
822,372
(273,372)
549,000
16,889
(297,829)
(54,004)
(6,780)
(144,004)
63,272
237
(32,558)
(32,321)
181
31,132
(11,436)
19,696
18,872
824
19,696
1.30
1.47
2004
1,008,008
(364,644)
643,364
16,540
(331,623)
(66,139)
(7,078)
(150,828)
104,236
2,391
(34,237)
(31,846)
139
72,529
(19,944)
52,585
49,317
3,268
52,585
3.32
3.29
68
2003
(43,695)
1,283
805
(5,527)
(1,569)
(48,703)
19.696
(29,007)
(29,831)
824
(29,007)
2004
(23,770)
2,330
(2,153)
(6,339)
(2,167)
(32,099)
52,585
20,486
17,218
3,268
20,486
(EUR x 1,000)
Foreign exchange translation differences
Option costs (net of tax)
Actuarial gains and losses on pensions (net of tax)
Cash flow hedges:
Effective portion of changes in fair value
Other movements
Net loss recognised directly in equity
Net profit for the period
Total result for the period
Attributable to:
Equity holders of the parent
Minority interest
Total recognised income and expenses for the period
2 C o n s o l i d a t e d I F R S s t a t e m e n t o f t o t a l r e s u l t f o r t h e p e r i o dFor the year ended 31 December
69
(EUR x 1,000)
A s s e t s
(5.35) Property, plant and equipment
(5.36) Intangible assets
(5.38) Financial fixed assets
(5.40) Deferred tax assets
Total non-current assets
(5.41) Inventories
(5.42) Trade and other receivables
Income tax receivables
(5.43) Cash and cash equivalents
Total current assets
Total assets
E q u i t y
Issued and paid-in capital
Share premium
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Minority interests
(5.44) Total equity
L i a b i l i t i e s
(5.46) Interest-bearing loans and borrowings
(5.47) Employee benefits
(5.48) Provisions
(5.40) Deferred tax liabilities
Total non-current liabilities
Bank overdraft
(5.46) Interest-bearing loans and borrowings
(5.49) Trade and other payables
(5.48) Provisions
Other taxes and social securities
Income tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
3 C o n s o l i d a t e d I F R S b a l a n c e s h e e tAs at 31 December
2003
268,801
273,951
14,663
20,403
577,818
37,001
370,773
5,174
65,237
478,185
1,056,003
3,033
207,159
(17,868)
18,872
211,196
2,468
213,664
431,895
45,044
584
1,483
479,006
44,436
2,263
269,443
22,448
15,286
9,457
363,333
842,339
1,056,003
2004
232,956
293,991
9,287
24,627
560,861
51,802
336,124
8,233
26,330
422,489
983,350
3,110
207,159
(35,673)
49,317
223,913
4,327
228,240
184,268
48,208
1,075
3,722
237,273
41,018
227,887
219,594
963
16,812
11,563
517,837
755,110
983,350
70
2003
63,272
54,004
6,780
(17,224)
(1,551)
181
3,542
1,944
110,948
18,033
24,737
(20,706)
14,928
147,940
(22,678)
(6,902)
118,360
4,222
310
113
124
(63,037)
(44,067)
(4,557)
(2,353)
(109,245)
2004
104,236
66,139
7,078
(19,411)
(1,409)
139
723
3,531
161,026
29,363
(18,583)
(49,858)
(19,731)
102,217
(25,668)
(19,498)
57,051
27,101
6,943
2,114
277
(4,638)
(80,963)
(4,436)
(1,560)
(55,162)
(EUR x 1,000)
C a s h f l o w s f r o m o p e r a t i n g a c t i v i t i e s
Operating profit before financing costs (EBIT)
Adjustments for:
Depreciation
Amortisation
Foreign exchange losses
Differences in third party interests
Share of profit of associates
Gain on sale of property, plant and equipment
Cost of granted option rights
Operating profit before changes in working capital and provisions
Increase in trade and other receivables
In(de)crease in inventories
Increase in trade and other payables
Increase in provisions and employee benefits
Cash generated from the operations
Interest paid
Income taxes paid
Net cash from operating activities
C a s h f l o w s f r o m i n v e s t i n g a c t i v i t i e s
Proceeds from sale of plant and equipment
Proceeds from sale of investments
Interest received
Dividends received
Acquisition of subsidiary, net of cash acquired
Acquisition of property, plant and equipment
Development intangible fixed assets
Acquisition of other investments
Net cash from investing activities
4 C o n s o l i d a t e d I F R S s t a t e m e n t o f c a s h f l o w sFor the year ended 31 December
71
(EUR x 1,000)
C a s h f l o w s f r o m f i n a n c i n g a c t i v i t i e s
Proceeds from the issue of share capital
Proceeds from other non-current borrowings
Repurchase of own shares
Repayment of borrowings
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 31 December
Presentation in the balance sheet
Cash and cash equivalents
Bank overdrafts
4 C o n s o l i d a t e d I F R S s t a t e m e n t o f c a s h f l o w s ( c o n t i n u e d )For the year ended 31 December
2003
886
37,950
(5,139)
(12,089)
(14,616)
6,992
16,107
5,879
(1,185)
20,801
65,237
(44,436)
20,801
2004
8,016
–
(761)
(33,822)
(9,426)
(35,993)
(34,104)
20,801
(1,385)
(14,688)
26,330
(41,018)
(14,688)
72
5.1 G e n e r a l
Fugro N.V. is a company domiciled in Leidschendam, the Netherlands. The consolidated IFRS financial
statements of the Company for the year ended 31 December 2004 comprise the Company and its subsidiaries
(together referred to as the ‘Group’) and the Group’s interest in associates and jointly controlled entities.
A summary of the main subsidiaries is included in chapter 6. The financial statements have been prepared
by the Board of Management and released for publication on 11 March 2005. The financial statements 2004
have been adopted by the Supervisory Board on 10 March 2005 and will be submitted for approval to the
Annual General Meeting of Shareholders on 19 May 2005.
5.2 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB). These
are the Group’s first consolidated financial statements in accordance with IFRS. The Group has applied IFRS 1.
An explanation of how the transition to IFRS has affected the reported financial position, financial
performance and cash flows of the Group is provided in chapter 7.
S i g n i f i c a n t a c c o u n t i n g p o l i c i e s
5.3 B a s i s o f p r e p a r a t i o n
The financial statements are presented in EUR x 1,000, unless mentioned otherwise. The euro is the functional
and presentation currency of Fugro. The financial statements are prepared on the historical cost basis except
that the following assets and liabilities are stated at their fair value: (derivative) financial instruments, and
employee benefits resulting from Defined Benefit plans. Recognised assets and liabilities that are hedged are
stated at fair value in respect of the risk that is hedged.
The preparation of the financial statements in accordance with IFRS requires management to make
judgements, estimates and assumptions that effect the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the result of
which form the basis of making the judgements about the carrying values of the assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period or
in the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have significant effect on the financial
statements and estimates with a significant risk of material misstatement in the next year are disclosed in
note 5.62.
The accounting policies have been consistently applied consistently by Group entities to all periods presented
in these consolidated financial statements and in preparing an opening IFRS balance sheet at 1 January 2003 for
the purposes of transition to IFRS.
5.4 B a s i s o f c o n s o l i d a t i o n
5.4.1 Subsidiaries
Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power,
directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. The financial statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases.
5.4.2 Associates
Associates are those entities in which the Group has significant influence, but no control, over the financial and
operating policies. The consolidated financial statements include the Group’s share of the total recognised gains
and losses of associates on an equity accounted basis, from the date that significant influence commences until
73
5 N o t e s t o t h e c o n s o l i d a t e d I F R S f i n a n c i a l s t a t e m e n t s
the date that significant influence ceases. When the Group’s share of losses exceeds the carrying amount of the
associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the
extent that the Group has incurred obligations in respect of the associate.
5.4.3 Other investments
Other investments are those entities in whose activities the Group holds a minority interest and has no control.
These investments are carried at cost and dividends received are accounted for in the income statement when
these become due.
5.4.4 Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with
associates and jointly controlled entities are eliminated to the extent of the Group’s interest in the enterprise.
Unrealised gains arising from transactions with associates are eliminated against the investment in the
associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there
is no evidence of impairment.
5.5 F o r e i g n c u r r e n c y
5.5.1 Foreign currency transactions and translation
Transactions in foreign currencies are translated to EUR at the average foreign exchange rate for the month in
which the transaction takes place. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated to EUR at the foreign exchange rate effective at that date. Foreign exchange
differences arising on translation are recognised in the income statement. Non- monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the
date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at
fair value are translated to EUR at foreign exchange rates effective at the date the values were determined.
A summary of the main currency exchange rates applied in the year under review and the preceding years
reads as follows:
2004
2003
2002
5.5.2 Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
consolidation, are translated to EUR at foreign exchange rates effective at the balance sheet date. The revenues
and expenses of foreign operations are translated to EUR at rates approximating to the foreign currency
exchange rates effective at the dates of the transactions. These are not considered an integral part of the
Company’s operations. Foreign exchange differences arising on translation are recognised directly in equity.
5.5.3 Net investment in foreign operations
Exchange differences arising from the translation of the net investment in foreign operations, and related
hedges are taken to the translation reserve. They are released into the income statement upon disposal.
In respect of all foreign currency operations, any differences that have arisen since 1 January 2003, the date of
transition to IFRS, are presented as a separate component of equity. Translation differences that arose before
that date of transition to IFRS in respect of all foreign entities are not presented as a separate component.
74
GBP average
1.47
1.45
1.59
GBP at year-end
1.42
1.42
1.53
USD average
0.81
0.88
1.06
USD atyear-end
0.73
0.79
0.95
5.6 D e r i v a t i v e f i n a n c i a l i n s t r u m e n t s
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate
risks arising from operational, financing and investment activities. In accordance with its treasury policy,
the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives
that do not qualify for hedge accounting are accounted for as trading instruments.
Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative
financial instruments are stated at fair value. Recognition of any resultant gain or loss depends on the nature of
the item being hedged (refer accounting policy 5.7).
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to
terminate the swap at the balance sheet date, taking into account current interest rates and the current
creditworthiness of the swap counterparties. The fair value of forward exchange contracts is their quoted
market price (forward price) at the balance sheet date.
5.7 H e d g i n g
5.7.1 Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised
asset or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the
derivative financial instrument is recognised directly in equity. When the forecasted transaction subsequently
results in the recognition of a non-financial asset or a non financial liability, or the forecasted transaction for a
non-financial asset or a non-financial liability, the associated cumulative gain or loss is removed from equity and
included in the initial cost or other carrying amount of the non-financial asset or liability.
If the hedge of a forecasted transaction subsequently results in the recognition of a financial asset or a
financial liability, the associated gains and losses that were recognised directly in equity are classified into profit
or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss.
For cash flow hedges, other than those covered by the preceding two policy statements, the associated
cumulative gain or loss is removed from equity and recognised in the income statement in the same period
or periods during which the hedged forecast transaction affects profit or loss. The ineffective part of any
gain or loss is recognised in the income statement immediately.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of
the hedge relationship but the hedge forecast transaction is still expected to occur, the cumulative gain or loss at
that point remains in equity and is recognised in accordance with the above policy when the transaction occurs.
If the hedges transaction is no longer expected to take place, the cumulative gain or loss recognised in equity is
recognised in the income statement immediately.
5.7.2 Hedge of monetary assets and liabilities
Where a derivative financial instrument is used to hedge economically the foreign exchange exposure of a
recognised monetary asset or liability any gain or loss on the hedging instrument is recognised in the income
statement.
5.7.3 Hedge of net investment in foreign operation
The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is
determined to be an effective hedge is recognised directly in equity. The ineffective portion is recognised
immediately in income statement.
5.8 P r o p e r t y , p l a n t a n d e q u i p m e n t
5.8.1 Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (refer
accounting policy 5.14). The cost of self-constructed assets includes the cost of materials, direct labour and
an appropriate proportion of directly allocated overheads.
The Group has elected under IFRS 1 to use the previous GAAP value of property, plant and equipment as
deemed cost under IFRS as at 1 January 2003, with the exception of two vessels that were revalued to fair market
75
value leading to an increase in book value of EUR 10.9 million. Fugro has acquired full ownership of these two
vessels in 2004.
Property that is being constructed or developed for future use is classified as property, plant and equipment
and stated at cost until construction or development is complete, at which time it is reclassified as property,
plant or equipment.
Where an item of property, plant and equipment comprises major components having different useful lifes,
these components are accounted for as separate items of property, plant and equipment.
5.8.2 Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as
finance leases. Plant and equipment acquired by way of finance lease is stated at an amount equal to the lower of
its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated
depreciation (refer accounting policy 5.8.4) and impairment losses (refer accounting policy 5.14). Lease payments
are accounted for as described in accounting policy 5.22.3 and 5.22.4.
5.8.3 Subsequent cost
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing
part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with
the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised
in the income statement as an expense as incurred.
5.8.4 Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each
part of an item of property, plant and equipment. Land is not depreciated.
The useful economical life various among the different items of the tangible fixed assets are:
Category
Buildings
Plant and equipment
Vessels and platforms
Survey equipment
Aircraft
ROV’s
Oceanographic equipment
Computers and office equipment
Transport equipment
Fixtures and fittings
Maintenance
Used plant and machinery
5.9 I n t a n g i b l e a s s e t s
5.9.1 Goodwill
All business combinations are accounted for by applying the ‘purchase accounting method’. Goodwill represents
amounts arising on acquisition of subsidiaries, associates and joint ventures. In respect of business acquisitions
that have occurred since 1 January 2003, goodwill represents the difference between the cost of the acquisition
and the fair value of the net identifiable assets acquired.
In respect of acquisitions prior to 1 January 2003, goodwill is included on the basis of its deemed cost, which
represents the amount recorded under previous GAAP. The accounting treatment of business combinations that
occurred prior to 1 January 2003 has, with the exception of intangible fixed assets, not been reconsidered in
76
Years
20 – 40
4
2 – 10
3 – 5
5 – 10
6
2
3 – 4
4
5 – 10
3 – 5
1 – 2
preparing the Group’s opening IFRS balance sheet as at 1 January 2003 (see note 7.6.1) since Fugro elected under
IFRS 1 to apply IFRS 3 prospectively as from the date of transition to IFRS.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating
units and is not amortised but is tested annually for impairment (refer accounting policy 5.14). In respect of non-
consolidated subsidiaries, the carrying amount of goodwill is included in the carrying amount of the investment
in the subsidiary.
Negative goodwill arising on an acquisition is recognised directly in the income statement.
5.9.2 Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in the income statement as an expense as incurred.
The group spends significant amounts on research and development. Since the majority of these activities
take place within contracts with third parties it is not feasible to properly determine the total costs on spending
for these technical developments. These expenditures are recognised in the income statement as an expense as
incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for new or
improved software, is capitalised if the product is technically and commercially feasible and the Group has
sufficient resources to complete development. The capitalised expenditure includes the cost of materials, direct
labour and an attributable proportion of direct overheads. Capitalised software is stated at cost less accumulated
amortisation (refer below) and impairment losses (refer accounting policy 5.14). The estimated useful lifetime
for software is five years.
At IFRS transition date, the Group reassessed its development projects under IFRS which resulted in the
capitalisation of software development cost in the IFRS opening balance sheet (refer note 7.6.2).
5.9.3 Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (refer
below) and impairment losses (refer accounting policy 5.14).
Expenditure on internally generated goodwill is recognised in the income statement as an expense as
incurred.
5.9.4 Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future
economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as
incurred.
5.9.5 Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite. Goodwill and intangibles assets with an indefinite life are
systematically tested for impairment at each balance sheet date. Other intangible assets (software) are amortised
from the date they are available for use.
5.10 I n v e s t m e n t s
5.10.1 Investments in associates and non-consolidated subsidiaries
Investments in associates and non-consolidated subsidiaries are valued using the equity method, unless in the
case of a negative equity and there is a clear understanding that the entity is neither obliged nor willing
to support the investee to continue its operations when required, in which case the valuation does not fall
below zero.
When these investments are derecognised, the cumulative gain or loss previously recognised directly in
equity is recognised in profit or loss.
77
5.11 I n v e n t o r i e s
5.11.1 Seismic data libraries
The seismic data libraries consist of completed and in progress seismic data that can be sold non-exclusively to
one or more clients. These seismic data libraries are valued at the lower of cost or net realisable value. Cost
includes direct costs and directly attributable overhead, but excluding a profit element. The net realisable value
is reassessed at each reporting date.
5.11.2 Inventories
Other inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
The cost of other inventories is based on the first-in first-out principle and includes expenditure incurred in
acquiring the inventories and bringing them to their existing location and condition.
5.12 T r a d e a n d o t h e r r e c e i v a b l e s
5.12.1 Work in progress
Work in progress concerning services rendered on work not yet completed, is stated at cost plus profit
recognised to date (refer accounting policy 5.21.1) less a provision for foreseeable losses and less progress
billings. Costs include all expenditure related directly to specific projects and an allocation of fixed and variable
overheads incurred in the Group’s contract activities based on normal operating capacity.
5.12.2 Other trade other receivables
Services rendered on contract work completed but not yet billed to customers are included in trade receivables
as unbilled revenues.
Trade and other receivables are stated at their cost less impairment losses (refer accounting policy 5.14).
5.13 C a s h a n d c a s h e q u i v a l e n t s
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
5.14 I m p a i r m e n t
The carrying amounts of assets, inventories and deferred tax assets (refer accounting policy 5.23),
are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any
such indication exists, the asset’s recoverable amount is calculated.
For goodwill and intangible assets that are not available for use, the recoverable amount is determined at
each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount. Impairment losses are recognised in the income statement.
Goodwill was tested for impairment at 1 January 2003, the date of transition to IFRS, even though no
indication for impairment existed.
5.14.1 Calculation of recoverable amount
The recoverable amount of assets is the higher of its fair value less costs to sell and its value in use.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
78
5.14.2 Reversals of impairment
An impairment loss in respect of a held-to-maturity security or receivable is reversed if the subsequent increase
in recoverable amount can be related objectively to an event occurring after the impairment loss was
recognised.
An impairment loss in respect of goodwill is not reversed in a subsequent period.
In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognised.
5.15 S h a r e c a p i t a l
5.15.1 Share capital
Share capital is classified as equity. The Group has not issued preference shares.
5.15.2 Repurchase of share capital
When share capital recognised as equity is repurchased, the amount of the consideration paid, including
directly attributable costs, is recognised as a change in equity. Repurchased shares are reported as reserve for
own shares and presented as a deduction from total equity.
5.15.3 Dividends
Dividends are recognised as a liability in the period in which they are declared.
5.16 C o n v e r t i b l e n o t e s
Convertible notes that can be converted to share capital at the option of the holder, where the number of shares
issued does not vary with changes in their fair value, are accounted for as compound financial instruments, net
of attributable transaction costs. The equity component of the convertible notes is calculated as the difference
between the issue proceeds and the present value of the future interest and principal payments, discounted
at the market interest rate applicable to similar liabilities that do not have a conversion option. The interest
expense recognised in the income statement is calculated using the effective interest rate method.
5.17 I n t e r e s t - b e a r i n g b o r r o w i n g s
Interest-bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent
to initial recognition, interest-bearing borrowings are stated at amortised cost.
5.18 E m p l o y e e b e n e f i t s
5.18.1 Defined contribution plans
Obligations for contributions to defined contribution pension plans and related plans are recognised as an
expense in the income statement as incurred.
5.18.2 Defined benefit plans
The Group’s net obligation in respect of defined benefit pension plans and related plans is calculated separately
for each plan by calculating the present value of future benefits that employees have earned in return for their
service in the current and prior periods; that benefit is discounted to determine the present value, and the fair
value of any plan assets is deducted. The discount rate is the yield at balance sheet date on high quality corporate
or government bonds that have maturity dates approximating the terms of the Group’s obligations.
The calculation is performed by qualified actuaries using the projected unit credit method.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by
employees is recognised as an expense in the income statement on a straight-line basis over the average period
until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised
immediately in the income statement.
79
Under IFRS 1, all actuarial gains and losses as at 1 January 2003, the date of transition to IFRS, were recognised.
In respect of actuarial gains and losses that arise subsequent to 1 January 2003 in calculating the Group’s
obligation in respect of a plan, the Group has adopted the IAS 19 amendment from December 2004 which
permits an entity to recognise all actuarial gains and losses in the periode in which they occur outside profit
and loss in the statement of total result for the period.
Where the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any
unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or
reductions in future contributions to the plan.
5.18.3 Long term service benefits
The Group’s net obligation in respect of long term service benefits, other than pension plans, is the amount of
future benefit that employees have earned in return for their service in the current and prior periods.
The obligation is calculated using the projected unit credit method and is discounted based on high quality
corporate or government bonds that have maturity dates approximating the terms of the Group’s obligations.
5.18.4 Share based payment transactions
The share option programme allows Group employees to acquire shares of the Company. The fair value of
options is recognised as an employee expense with the corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the employees become unconditionally
entitled to the options. The fair value of the options granted from 7 November 2002 onwards is measured
using a binominal model, taking into account the terms and conditions upon which the options were granted.
The amount recognised as an expense is adjusted annually to reflect the actual number of share options that vest.
5.19 P r o v i s i o n s
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as result of a
past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to the
liability.
5.19.1 Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring
plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are
not provided for.
5.19.2 Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting its obligations under the contract.
5.20 T r a d e a n d o t h e r p a y a b l e s
Trade and other payables are stated at cost.
5.21 R e v e n u e
5.21.1 Services rendered
Revenue from services rendered is recognised in the income statement in proportion to the stage of completion
of the transaction at the balance sheet date. The stage of completion is assessed using the proportion of contract
cost incurred for work performed to balance sheet date compared to work performed in relation to the
estimated total contract cost method as this method is most appropriate for the majority of the services
provided by the Group (which are mainly based on daily rates for staff and equipment or rates per (square) mile
for vessels and airplanes).
80
For fixed price contracts revenue is recognised when: (i) the total contract revenue can be measured reliably; (ii)
it is probable that future economic benefits will flow to the Group as a result of that contract;
(iii) contract costs to completion and the stage of completion at the balance sheet date can be measured reliably;
and (iv) contract costs can be identified clearly and measured reliably so that actual cost can be compared with
prior estimates.
In case of cost plus contracts (mainly daily rates or rates per (square) mile), revenue of the contract is recorded
when: (i) it is probable that future economic benefits will flow to the Group as a result of that contract; and (ii)
contract costs can be identified clearly and measured reliably.
No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due,
associated costs or the possible return of goods.
5.21.2 Royalty, software licences and subscription income
Royalty, software licences and subscription income from (intangible) assets are recognised in the period during
which the underlying services (such as information or signals) have been provided.
5.21.3 Government grants
An unconditional government grant is recognised in the balance sheet when the grant becomes receivable.
Any other government grant is initially recognised in the balance sheet as deferred income when there is
reasonable assurance that it will be received and that the Group will comply with the conditions attaching to it.
Grants that compensate the Group (partly) for expenses incurred are recognised as revenue in the income
statement on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate
the Group for the cost of an asset are recognised in the income statement as revenue on a systematic basis over
the useful life of the asset.
5.21.4 Other income
Other income regards income not related to the key business activities of the Group, like income from the sale of
non-monetary assets and or liabilities, exceptional and/or non-recurring items.
5.22 E x p e n s e s
5.22.1 Third party costs
Third party costs are matched with related revenues on contracts and accounted for on a historical cost basis.
5.22.2 Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the
term of the lease. Lease incentives received are recognised in the income statement as an integral part of the
total lease expense.
5.22.3 Financial lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding
liability. The finance charge is allocated to each period in such a way that this results in a constant periodical
interest rate for the remaining balance of the liability during the lease term.
5.22.4 Net financing costs
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method,
interest receivable on funds invested, dividend income, foreign exchange gains and losses, and gains and losses
on hedging instruments that are recognised in the income statement (refer accounting policy 5.7).
Interest income is recognised in the income statement as it accrues, taking into account the effective yield on
the asset. Dividend income is recognised in the income statement on the date the entity’s right to receive the
payments is established which in the case of quoted shares is usually the ex-dividend date.
81
The interest expenses component of finance lease payments is recognised in the income statement using the
effective interest rate method.
5.23 I n c o m e t a x
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the
income statement except to the extent that it relates to items recognised directly to equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantially enacted at the balance sheet date, and any adjustment to tax in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax
purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at
the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the
liability to pay the related dividend.
5.24 S t a t e m e n t o f c a s h f l o w
The statement of cash flow is prepared using the indirect method. The cash flow statement distinguishes
between operational, investing and financing activities. Cash flows in foreign currencies are converted at the
average rates during the reporting period. Currency exchange differences are separately shown. Payments and
receipts of corporate taxes are included as cash flow form operational activities and interest is shown as cash
flow from financing activities as far as the interest is related to long term financing; remaining interest is
included in operational cash flow. Cash flows as a result from acquisition/divestment of financial interest in
group companies and subsidiaries are included as cash flow from investment activities, taking into account the
available cash in these interests. Dividends paid are part of the cash flow from financing activities. In its report
Fugro defines a segment as a division.
5.25 S e g m e n t r e p o r t i n g
Segment information is presented in respect of the Group’s business and geographical segments. The primary
format, business segments, is based on the Group’s management and internal reporting structure. Segment
results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly deferred tax, interest-bearing loans,
borrowings and expenses, and corporate assets and expenses. Segment capital expenditure is the total cost
incurred during the period to acquire segment assets that are expected to be used for more than one period.
The Group defines a segment as a division in its reports.
82
5.25.1 Business segments
As an engineering firm with operations throughout the world, the Group delivers its services to clients located
all over the globe and collects and interprets data related to the earth’s surface and the soils and rocks beneath.
On the basis of this data the Group provides advice, generally for purposes related to the oil and gas industry,
the mining industry and the construction industry. The Group recognises three groups of services as business
segments:
The Geotechnical division provides a group of related services. These concern investigations and advice
regarding the physical characteristics of the soil, foundation design and materials for construction.
The activities are mainly design related. The client base of the pre-design phase activities is focussed on advice
concerning the prime question of whether the foundation of a structure will be safe, both on- and offshore.
Laboratory testing supports the reporting service. In principle geotechnical services are rendered in a very early
stage of a development.
The Survey division provides a group of related services. This concerns positioning services, geological advice,
topographic, hydrographical and geological mapping and support services for construction projects and data
management. These activities are mainly provided in the installation, construction and maintenance phase.
In a large number of cases Group-companies supply information like weather forecasting, signals for precise
positioning (the signals are also used for rig moves). Moreover, special equipment is used to assist clients with
construction of offshore structures (ROV, AUV, etc). These activities do not include soil sampling nor penetration
of the earth’s surface. Survey services are rendered during a construction phase.
The Geoscience division provides a range of related services. This concerns gathering and interpreting
geophysical data, quantitative and qualitative estimates of oil, gas, mineral and water resources leading to
advising on the optimisation of their production. These are mainly exploration related activities (to determine
what resources are there). The clients get advice about the potential presence of oil/gas, minerals and water and
also about the quantitative and qualitative data regarding natural resources. The division also has techniques to
advise clients on how to extract the natural resources in the most optimal way.
The segments are managed on a worldwide basis, and operate in four principal geographical areas,
The Netherlands, Europe/Africa, Near/Middle East/Asia/Australia and the Americas.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of operating companies. Segment assets are based on the geographical location of the assets.
Inter-segment pricing is determined on an arm’s length basis.
83
Business segments
(EUR x 1,000)
Revenue from external customers
Inter-segment revenue
Total revenue
Segment result
Unallocated expenses
Profit from operations
Net financing costs
Income from associates
Income tax expense
Minority interest
Extraordinary item
Net profit for the year
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Depreciation
Amortisation
Capital expenditure
Development immaterial fixed assets
84
ConsolidatedUnallocated/EliminationsGeoscienceSurveyGeotechnical
2003
822,372
–
822,372
63,272
–
63,272
(32,321)
181
(11,436)
(824)
–
18,872
968,939
87,064
1,056,003
690,780
365,223
1,056,003
54,004
6,780
53,095
4,557
2004
1,008,008
–
1,008,008
104,236
–
104,236
(31,846)
139
(19,944)
(3,268)
–
49,317
910,458
72,892
983,350
688,402
294,948
983,350
66,139
7,078
68,730
5,771
2003
4,171
(51,529)
(47,358)
(13,770)
–
–
4,536
–
4,240
–
2004
–
(62,155)
(62,155)
(43,775)
–
–
11,502
–
2,410
–
2003
184,811
5,057
189,868
3,914
351,490
300,433
13,483
4,202
12,709
4,557
2004
265,459
6,183
271,642
37,514
407,565
340,444
15,377
4,457
13,103
5,771
2003
352,136
22,485
374,621
30,837
457,561
328,019
23,064
2,578
26,458
–
2004
470,026
27,637
497,663
70,634
355,298
279,793
28,980
2,621
32,037
–
2003
281,254
23,987
305,241
42,291
159,888
62,328
12,921
–
9,688
–
2004
272,523
28,335
300,858
39,863
147,595
68,165
10,280
–
21,180
–
Geographical segments
(EUR x 1,000)
Revenue from
external customers
Segment assets
Depreciation
Amortisation
Capital expenditure
5.26 A c q u i s i t i o n s a n d d i s p o s a l o f s u b s i d i a r i e s
5.26.1 Acquisitions 2004
In June 2004 the Group acquired (and paid in cash) all the business of C&M Storage Inc., United States of America
for a consideration of EUR 4.9 million. The acquisition was accounted for using the purchase accounting
method. After the initial allocation of the cost of the business combination to the net assets acquired and
liabilities (EUR 3.1 million) other intangible fixed assets amounting to EUR 1.3 million were recorded.
The company stores oil/exploration company core samples for a monthly rental fee. C&M Storage has an annual
turnover of USD 2 million and 18 employees working for the company have been transferred to other Group
companies. Also, the remaining 50% interest of the seismic vessels ‘Geo Baltic’ and ‘Geo Pacific’ has been
acquired. The price of this acquisition amounted to EUR 10.3 million. The purchase resulted in negative goodwill
of EUR 2.2 million. This item has been recorded in the profit and loss.
If and to the extent that the acquisition date for all business combinations effected during 2004 had been the
beginning of that period the combined revenue of the Group for 2004 would have been hardly changed.
5.26.2 Acquisitions 2003
5.26.2.1 Thales GeoSolutions Group
On 19 November 2003 the Group acquired all the shares of the former Thales subsidiaries forming the
Thales GeoSolutions Group (purchase price EUR 142.5 million). These companies mainly carry out offshore
activities in the Survey segment. The acquisition was accounted for using the purchase accounting method.
After the initial allocation of the cost of the business combination to the assets acquired and liabilities and
contingent liabilities assumed goodwill amounting to EUR 46.2 million was recorded per 19 November 2003. In
the six weeks to 31 December 2003 the Fugro-TGS realised a net loss from operations of EUR 4.5 million included
in the consolidated net profit for the year 2003.
In 2004 the Fugro-TGS companies have been integrated into various Fugro entities within the Survey division.
Subsequently, the final allocation of the cost of the business combination to the assets acquired and liabilities
and contingent liabilities assumed was made resulting in an adjustment to goodwill of EUR 22.9 million.
Fugro has a dispute with the Seller regarding the final transaction price. This has been formulated in a claim
against the Seller. The outcome of the claim is currently not valued. A possible adjustment of the transaction
price will result in an adjustment of goodwill.
5.26.2.2 Svitzer Ltd.
In June 2003 the Group acquired all the shares in Svitzer Ltd. The Svitzer group of companies operates vessels in
the Survey market and executes projects. In the six months to 31 December 2003 the subsidiary was integrated
into existing Group companies and as such did not contribute as an entity to the consolidated net profit for the
year. The purchase price for Svitzer Ltd was 1 GBP, the goodwill is EUR 8.2 million.
85
2003
822,372
1,056,003
54,004
6,780
53,095
2004
1,008,008
983,350
66,139
7,078
68,730
Consolidated
2003
–
–
–
–
–
2004
–
–
–
–
–
Unallocated
2003
225,435
225,697
10,002
190
11,805
2004
300,194
85,374
15,757
335
18,775
Americas
2003
175,315
187,626
9,676
2,578
15,347
2004
195,531
197,291
14,959
2,621
13,361
Near and Middle East/
Asia/Australia
2003
319,436
464,285
26,201
227
23,393
2004
414,975
525,276
30,752
337
30,872
Europe other/Africa
2003
102,186
178,395
8,125
3,785
2,550
2004
97,308
175,409
4,671
3,785
5,722
Netherlands
5.26.2.3 Foundation Exploration Services Ltd.
Foundation Exploration Services Ltd (100%) was added to the Fugro group in January 2003. Foundation
Exploration Services Ltd., Basingstroke, UK (turnover GBP 6.5 million, about 100 employees). The company is one
of the largest geotechnical companies in the UK. The purchase price was about GBP 4.1 million. The company
was immediately thereafter integrated with the onshore activities of one of the Group companies in the United
Kingdom.
5.26.2.4 Oceanor Holding ASA
The acquisition of Oceanor Holding ASA took place in March 2003. Oceanor Holdings ASA, Trondheim, Norway
(turnover NOK 100 million, about 50 employees). The company is a leading supplier of water control systems and
meteorological and oceanological services. The public offering for the company that was listed at the Oslo stock
exchange was NOK 40 million. As from the date of acquisition the company contributed a small loss to the net
consolidated result.
5.26.2.5 Petcom
All the shares of Petcom Inc were acquired in January 2003. Petcom Inc., Dallas, USA (turnover USD 1.6 million,
8 employees). This company provides state-of-the-art petrophysical software and services to the oil and gas
industry. The purchase price was USD 3 million.
5.26.2.6 Volumetrix
Volumetrix Ltd was acquired by the Fugro group in May 2003 for an amount of EUR 2.3 million.
Volumetrix developes reservoir modelling software (Fasttracker).
5.26.2.7 Seiscan
The entire share capital of Seiscan was acquired in July 2003 at an acquisition price of EUR 0.3 million.
Excluding TGS the 2003 acquisitions contributed to the groups’ result in 2003 an amount of approximately
EUR 500.
5.26.3 Disposal
In October 2004 the Group disposed of the 50% shareholding in the associate Bodem Sanering Nederland
(BSN) B.V. This equity accounted associate contributed EUR 181 to the consolidated net profit for the year ended
31 December 2003 and EUR 139 for the nine months ended 30 September 2004.
Furthermore, the ROV activities in the Untied States, Mexico and Canada have been sold for USD 16.5 million.
These activities were part of the acquisition of Thales GeoSolutions in 2003. The gain on disposal has been
recorded against goodwill.
Also, the environmental advisory activities of Fugro Ingenieursbureau B.V. in the Netherlands have been sold.
The proceeds are negligible.
Finally, Fugro’s interest in Geometius B.V. has been sold. The proceeds amounted to EUR 150.
In 2003, no disposals have taken place.
86
5.26.4 Effect of acquisitions and disposal
The acquisitions and disposal had the following effect on the Group’s assets and liabilities.
(EUR x 1,000)
Property, plant and equipment
Other fixed assets
Inventories
Trade and other receivables
Deferred taxes
Cash and cash equivalents
Minority interest
Interest-bearing loans and borrowings
Provisions
Current tax liabilities
Trade payables
Net identifiable assets and liabilities
Goodwill/(negative goodwill) on acquisition
Consideration paid/(received), in cash
Cash (acquired)/disposed of
Net cash outflow/(inflow)
In 2004 the Group determined the final valuation on the assets and liabilities acquired in its 2003 acquisition
of Thales GeoSolutions. This valuation was not complete at the time of publishing the 2003 financial statements.
As a result of the valuation, the above value attributed to assets has been reduced by EUR 22.9 million
(refer note 5.3). A corresponding adjustment has been made to goodwill (refer note 5.26.2).
The adjustments have been made effective at the date of acquisition, and the consecutive amendments to
depreciation and amortisation have been recognised in the current year. If the 2003 financial statements had
been restated, net profit for 2003 would have been increased by EUR 0.3 million, relating to reduced
depreciation for the six weeks of the consolidation of Fugro-TGS in 2003.
5.27 G o v e r n m e n t g r a n t s
The company has not been awarded any significant government grants.
5.28 T h i r d p a r t y c o s t s
Refers to direct operating expenses from third parties that are project related (thus the third party cost of sales)
and the movement in work in progress compared to the previous reporting date.
87
Acquisition2003
79,916
3,786
31,496
86,084
2,268
26,834
(943)
(105,421)
(3,489)
(270)
(100,211)
20,050
69,821
89,871
26,834
63,037
Acquisition2004
(9,935)
1,335
(3,782)
(5,286)
1,061
–
–
–
–
(97)
(1,535)
(18,239)
22,877
4,638
–
4,638
5.29 O t h e r i n c o m e
(EUR x 1,000)
Release of unused provisions
Government credits
Negative goodwill
Gain on disposal of property, plant and equipment
Sundry income
5.30 P e r s o n n e l e x p e n s e s
(EUR x 1,000)
Wages and salaries
Compulsory social security contributions
Costs option plan
Contributions to defined contribution plans
Contributions to defined benefit plans
In(de)crease in liability for long service leave
5.30.1 Share based payments
In 1989 the Group established a share option programme for employees.
Option rights are granted dependent on the achievement of the targets of the operating companies and their
staff. The individual performance of the relevant employee is also weighted in the granting of the number of
option rights. Senior management receives options also based on the profitability of the company of the past
year, the development of the strategic activities in the past year and personal targets.
In accordance with the programme, the options are exercisable at the closing price of the share on the last
trading day of the year, EUR 61.40 per share as at 31 December 2004. The options for foreign employees vest over
a three-year period, starting at the end of three years’ continued employment. For Dutch employees the options
vest immediately. However, when exercised within three years after granting, 90% of a possible gain will be
withheld by the company. Options expire three years respectively six years after their exercise date.
88
2003
–
85
–
3,579
13,225
16,889
2004
2,700
249
2,220
1,023
10,348
16,540
2003
257,545
25,257
1,944
6,649
6,434
–
297,829
2004
287,083
28,297
3,531
5,999
6,724
(11)
331,623
During the year no shares were issued in relation to the option plan (2003: nil). As per 31 December 2004 the
following options were outstanding:
1997
1998
1999
2000
2001
2002
2003
2004
* For the years 2001 through 2003 this only relates to options granted to Dutch residents.
The options are granted at the end of the respective financial years.
The weighted average share price during 2004 was EUR 52.92 (2003: EUR 40.05).
One option gives right to one (certificate of an) ordinary share in Fugro N.V. At the end of 2004 266,200
options are granted to 493 employees. These options have an issue price of EUR 61.40.
Concerning the options granted in 2004 17.1% (2003: 17.7%) are classified as ‘incentive stock options’.
In 2004 calculations were made to determine the expectation value of the options granted as from 7
November 2002 as a consequence of adopting of IFRS 2.
The valuation of the options granted is based on the so-called ‘binominal method’, whereby early exercise, as
well as the chance on employee departure during the vesting period is taken into account. A difference exists
between options granted to Dutch residents and to foreign residents. For the latter group of employees a vesting
period of three years starting at the first of January of the year following the granting. For Dutch residents the
granting is considered unconditional. The costs recognised for the options are based on the valuation principles
listed here and consist of the options granted to Dutch residents in the year and a pro rata share of the costs of
the options granted (as from 7 November 2002) to foreign employees during the vesting period.
The recognition and measurement principles in IFRS 2 have not been applied for option arrangements
granted before 7 November 2002.
89
Exerciseprice
(EUR)
28.04
19.97
36.90
68.75
50.10
43.13
40.80
61.40
Exercis-able at 31-12-2004
–
–
72,250
207,750
114,700
123,950
123,150
–
641,800
Out-standing at 31-12-
2004
–
–
72,250
207,750
215,150
234,600
244,650
266,200
1,240,600
Exercised in 2004
50,930
59,250
83,500
–
–
–
–
–
193,680
Expired in 2004
1,870
1,450
200
5,150
5,850
7,850
6,000
–
28,370
Out-standing at 01-01-
2004
52,800
60,700
155,950
212,900
221,000
242,450
250,650
–
1,196,450
Issued
166,000
170,850
166,700
226,400
227,700
246,650
250,650
266,200
1,721,150
Number of parti-cipants
194
231
266
336
347
406
429
493
Duration
5 years
5 years
6 years
6 years
6 years
6 years
6 years
6 years
Date of issue
*
Options outstanding at 1 January
Forfeited during the period
Options granted during the period
Options exercised during the period
Options outstanding at 31 December
Exercisable at the end of the period
The Group has sold 193,680 shares held by Fugro. The average puchase price of these shares was EUR 48.29 per
share. The options were exercised mainly in October 2004, when the market price of the shares was between
EUR 59.00 and EUR 63.00 per share.
The options outstanding at 31 December 2004 have an exercise price in the range of EUR 36.90 to EUR 68.75
and a weighted average contractual life of 4 years (2003: 3 years).
The valuation principles used for determining the expectation value are as follows:
The date of valuation is equal to the date of granting (year end). The duration of the options is six years.
The volatility is based on the historical analysis of the daily share price fluctuations over the period 1993
through the reporting date. The expected return on dividend is based on a historical analysis of the dividends
paid out during the period 1994 through reporting date. Concerning early leave different percentages for
different categories of staff are used: Directors 1%, Executive Committee members 2%, managers of operating
companies 7%. The expected behaviour for exercising the options for the Directors is estimated till the end
of the vesting period and for the other two groups with a multiple of three.
Average share price
Excercise price
Granting
Volatility
Dividend
Risk free interest
Costs of granted option rights at the end of 2002 in EUR
Costs of granted option rights at the end of 2003 in EUR
Costs of granted option rights at the end of 2004 in EUR
90
Number ofoptions
987,100
(13,280)
250,650
(28,020)
1,196,450
617,050
Weighted averageexercise
price
46.73
54.98
40.80
25.30
45,83
Number ofoptions
1,196,450
(28,370)
266,200
(193,680)
1,240,600
641,800
Weighted averageexercise
price
45.83
46.50
61.40
29.40
45,84
2004 2003
Dutch residents
40.05
40.80
2003
37%
3.2%
3.8%
–
1,441,498
–
Foreign residents
52.39
43.13
2002
36%
3.3%
3.73%
501,844
–
–
Dutch residents
52.92
61.40
2004
33%
3.2%
3.3%
–
–
2,497,898
Foreign residents
40.05
40.80
2003
37%
3.2%
3.8%
501,844
531,657
–
2004 2003
Share options are granted under a service condition and, for grants to key management personnel, a non-market
performance condition. Such conditions are not taken into account in the grant date fair value measurement of
the services received. There are no market conditions associated with the share option grants.
5.30.2 Number of employees as at 31 December
Technical staff
Management and administrative staff
Temporary and contract staff
Average number of employees during the year
5.31 O t h e r o p e r a t i n g e x p e n s e s
(EUR x 1,000)
Maintenance and operational supplies
Indirect operating expenses
Occupancy costs
Communication and office expenses
Restructuring costs
Loss on disposal of property, plant and equipment
Other indirect operating expenses
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, which hardly ever are involved in the
audit of the annual accounts of the relevant subsidiary. Other than these advisory services, Fugro makes only
limited use of external advisors. 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, which are included in Other expenses (other) are evaluated on
a regular basis and in line with the market.
91
Total
6,304
1,521
647
8,472
7,160
Foreign
5,573
1,356
550
7,479
6,129
Domestic
731
165
97
993
1,031
Total
5,682
1,460
473
7,615
7,864
Foreign
4,991
1,335
399
6,725
6,945
Domestic
691
125
74
890
919
20032004
2003
30,221
26,204
22,529
19,720
20,265
37
25,028
144,004
2004
36,715
32,003
25,126
21,058
4,340
300
31,286
150,828
5.32 N e t f i n a n c i n g c o s t s
(EUR x 1,000)
Interest income
Interest expenses
Dividend income
Net foreign exchange loss
Exchange gains on USD long term loans
Loss on financial hedging instruments
5.33 I n c o m e t a x e x p e n s e
Recognised in the income statement
(EUR x 1,000)
Current tax expense
Current year
Under/(over) provided in prior years
Deferred tax from expense
Origination from and reversal of timing differences
Decrease tax percentage
Benefit of tax losses recognised
Total income tax expense in the income statement
Reconciliation of effective tax rate
(EUR x 1,000)
Profit before tax
Income tax using the domestic corporation tax rate
Effect of tax rates in foreign jurisdictions (rates decreased)
Non-deductible expenses
Tax exempt costs
Tax charge on non local activities
Effect of tax losses utilised
Effect of non-recognised tax losses
Under/(over) provided in prior years
Non-compensable losses
92
2003
25,177
(113)
(124)
7,381
(19,091)
19,091
32,321
2004
28,733
(2,114)
(277)
5,504
(7,271)
7,271
31,846
2003
8,635
184
8,819
2,635
–
(18)
2,617
11,436
2004
19,060
(612)
18,448
(808)
20
2,284
1,496
19,944
2003
31,132
10,741
(5,469)
251
–
497
(18)
–
184
5,250
11,436
2003%
34.5
(17.6)
0.8
–
1.6
(0.1)
–
0.6
16.9
36.7
2004
72,529
25,022
(12,800)
350
(408)
1,139
2,284
(202)
(612)
5,171
19,944
2004%
34.5
(17.6)
0.5
(0.6)
1.6
3.1
(0.3)
(0.8)
7.1
27.5
Deferred tax credit recognised directly in equity
(EUR x 1,000)
Relating to net loss recognised directly in equity
Relating to hedge results
Relating to share option rights
Exchange rate differences
Unrecognised tax losses changed over the period as follows:
Unrecognised tax losses
(EUR x 1,000)
As of 1 January
Movements during the period:
Additional losses
Utilised
Exchange rate differences
Change from reassessment
Resulting from acquisitions
As of 31 December
Reference is also made to note 5.40.
5.34 C u r r e n t t a x a s s e t s a n d l i a b i l i t i e s
The current tax liability of EUR 3,330 (2003: EUR 4,283) represents the balance of income tax payable and
receivable in respect of current and prior periods that exceed receipts.
93
2003
(395)
2,847
(661)
748
2,539
2004
1,019
2,582
(1,201)
20
2,420
2003
16,599
5,250
–
(218)
(919)
9,359
30,071
2004
30,071
5,171
(202)
(759)
405
–
34,686
5.35 P r o p e r t y , p l a n t a n d e q u i p m e n t
(EUR x 1,000)
Costs
Balance at 1 January 2003
Acquisitions through business combinations
Other additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 December 2003
Depreciation
Balance at 1 January 2003
Acquisitions through business combinations
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange rates
Balance at 31 December 2003
Carrying amounts
At 1 January 2003
At 31 December 2003
94
Total
612,459
205,377
53,095
(34,707)
(58,835)
777,389
378,362
134,489
54,004
(26,943)
(31,324)
508,588
234,097
268,801
Other
123,640
94,683
11,733
(9,544)
(11,165)
209,347
97,068
48,359
13,166
(4,789)
(9,235)
144,569
26,572
64,778
Vessels
144,400
8,500
6,879
–
(22,291)
137,488
38,367
6,200
11,094
–
(5,694)
49,967
106,033
87,521
Plant andequip-ment
267,193
98,451
25,653
(20,602)
(19,058)
351,637
221,003
78,626
27,158
(19,790)
(14,894)
292,103
46,190
59,534
Land and buildings
77,226
3,743
8,830
(4,561)
(6,321)
78,917
21,924
1,304
2,586
(2,364)
(1,501)
21,949
55,302
56,968
2003
(EUR x 1,000)
Costs
Balance at 1 January 2004
Acquisitions through business combinations
Reclassification ROVs
Other additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 December 2004
Depreciation and impairment losses
Balance at 1 January 2004
Acquisitions through business combinations
Reclassification ROVs
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange rates
Balance at 31 December 2004
Carrying amounts
At 1 January 2004
At 31 December 2004
5.35.1 Impairment loss and subsequent reversal
The company has not incurred nor reversed any impairment losses in 2004 and 2003.
5.35.2 Tangible assets per segment
The category vessels include vessels and survey equipment. The carrying value of tangible fixed assets is
distributed as follows:
– Geotechnical division EUR 61 million (2003: EUR 57 million);
– Survey division EUR 83 million (2003: EUR 130 million);
– Geoscience division EUR 89 million (2003: EUR 82 million).
5.35.3 Assets under construction
Assets under construction included in other amount to EUR 3.2 million (2003 EUR 2.6 million).
95
2004
Total
777,389
2,296
–
68,732
(97,450)
(24,308)
726,659
508,588
–
–
66,139
(65,412)
(15,612)
493,703
268,801
232,956
Other
209,347
1,345
(63,600)
14,311
(32,110)
(4,184)
125,109
144,569
–
(29,300)
14,086
(24,599)
(3,474)
101,282
64,778
23,827
Vessels
137,488
–
–
4,328
(16,476)
(4,658)
120,682
49,967
–
–
7,042
(15,816)
(1,408)
39,785
87,521
80,897
Plant andequip-ment
351,637
–
63,600
32,222
(46,386)
(12,357)
388,716
292,103
–
29,300
42,387
(23,995)
(10,020)
329,775
59,534
58,941
Land and buildings
78,917
951
–
17,871
(2,478)
(3,109)
92,152
21,949
–
–
2,624
(1,002)
(710)
22,861
56,968
69,291
5.35.4 Leased vessels and equipment
Through mid 2004 the Group leased vessels and on board survey equipment under two finance lease
agreements. The Group used the possibility to purchase the vessels at a beneficial price. At 31 December 2003
the net carrying amount relating to leased vessels and on board equipment amounted to EUR 35.2 million.
As from the date of acquisition (24 May 2004) these tangible fixed asset are accounted for as owned.
Consequently the lease obligations have been replaced by loans in 2004.
5.35.5 Security
Land and Buildings includes EUR 21 million (2003: EUR 21 million) in the Netherlands, EUR –
(2003: EUR 4.6 million) in the United Kingdom, in Hong Kong EUR – (2003: EUR 4.7 million) and in Australia
EUR – million (2003: EUR 1.8 million) serve as security for mortgage loans (refer note 5.46).
5.36 I n t a n g i b l e f i x e d a s s e t s
(EUR x 1,000)
Cost
Balance at 1 January 2003
Acquisitions through business combinations
Adjustments prior period
Internally developed intangible fixed assets
Effect of movements in foreign exchange rates
Balance at 31 December 2003
Amortisation and impairment losses
Balance at 1 January 2003
Amortisation charge for the year
Effect of movements in foreign exchange rates
Balance at 31 December 2003
Carrying amount
At 1 January 2003
At 31 December 2003
96
Total
233,192
68,040
1,781
4,557
(4,869)
302,701
21,347
6,780
623
28,750
211,845
273,951
Other
1,800
–
–
–
60
1,860
330
189
8
527
1,470
1,333
Software
40,496
1,633
–
4,557
1,066
47,782
21,017
6,591
615
28,223
19,479
19,559
Goodwill
190,896
66,377
1,781
–
(5,995)
253,059
–
–
–
–
190,896
253,059
2003
(EUR x 1,000)
Cost
Balance at 1 January 2004
Acquisitions through business combinations
Adjustments prior period
Internally developed intangible fixed assets
Effect of movements in foreign exchange rates
Balance at 31 December 2004
Amortisation and impairment losses
Balance at 1 January 2004
Amortisation charge for the year
Effect of movements in foreign exchange rates
Balance at 31 December 2004
Carrying amount
At 1 January 2004
At 31 December 2004
In 2004 significant amounts were spent on research and development expenditure has been recognised in the
profit and loss account, just as in 2003.
5.36.1 Amortisation charge
The amortisation charge is separately recognised in the income statement.
5.37 I m p a i r m e n t t e s t s f o r c a s h g e n e r a t i n g u n i t s c o n t a i n i n g g o o d w i l l
The following units have significant carrying amounts of goodwill:
(EUR x 1,000)
Airborne
Survey
Jason group
Robertson group
Other
Total
97
Total
302,701
1,335
22,877
4,436
(2,041)
329,308
28,750
7,078
(511)
35,317
273,951
293,991
Other
1,860
1,335
–
–
(30)
3,165
527
334
(26)
835
1,333
2,330
Software
47,782
–
–
4,436
(507)
51,711
28,223
6,744
(485)
34,482
19,559
17,229
Goodwill
253,059
–
22,877
–
(1,504)
274,432
–
–
–
–
253,059
274,432
2004
2003
19,163
69,350
77,721
78,630
8,195
253,059
2004
18,475
92,126
77,466
78,587
7,778
274,432
Annually the Group carries out impairment tests on these balances using the relevant cash-generating unit.
The system and calculation method are already described in separate notes. The period for the discounted cash
flow calculations is in principle indefinite. However the Group has set the period at 50 years, subject to periodic
evaluation, for the following reasons.
The group is for over 70% serving the oil and gas industry. The services are in principle of such a nature that
our clients use us to help them to explore and extract mineral resources.
Experts are without doubt that these mineral resources will continue to be available to mankind for many
decades and their reports indicate periods between 50 and 100 years.
Easy accessible places may ‘dry-up’ but with new techniques and means also more hostile areas can be
exploited. The Group has with its high market shares and specialised techniques a solid position to continue
to serve its customers.
The Group recognises that the search for alternative means of energy, like wind, nuclear and hydro energy
will continue. These means however will have limited output and will be difficult to transport. Moreover
environmental issues will prevent that these sources will overtake the current resources oil and gas.
The recoverable amounts of the various cash generating units that carry goodwill are determined on
calculations of value in use. Those calculations use cash flow projections based on actual operating results and a
five year forecast. Cash flows for further future periods are extrapolated using growth rate percentages varying
from 0 to 3.5% which are deemed appropriate because of the long term nature of the business. These growth
rates are also consistent with the long term averages in the industry. A pre-tax discount rate of 9.5% has been
used discounting the projected cash flows.
An exception to the growth rates mentioned above has been made for the calculation of the recoverable
amount of the cash generating unit that carries the goodwill of the Jason group. Here the growth rate used after
the five years forecast stands at 10%. The reason for the higher growth rate is that the main activities of the Jason
group of companies concentrate on the analysis of oil field reservoirs for the oil & gas industry, including state-
owned companies.
The key assumptions and the approach to determine their value are the growth rates that are based on
analysis of the long-term market price trends in the oil and gas industry adjusted for actual experience.
The carrying amounts of the units remain below the recoverable amounts and as such no impairment losses
are accounted for. Future adverse changes in the assumptions could however reduce the recoverable amounts
below the carrying amount.
5.38 F i n a n c i a l f i x e d a s s e t s
The Group holds the following non-consolidated subsidiaries, associates and other investments:
(EUR x 1,000)
Non-consolidated subsidiaries at equity value
Other investments at cost
Long term loans
Other long term receivables
The Group’s share in realised profit in the above mentioned non-consolidated subsidiaries amounted to EUR 139
in 2004 (2003: EUR 181). In October 2004, the Group sold its interest in BSN (refer to note 5.26.3).
98
2003
2,642
5,896
4,361
1,764
14,663
2004
2,562
1,609
3,907
1,209
9,287
5.39 O t h e r i n v e s t m e n t s
The Group has the following other investments accounted for at cost:
Name of the company
LaCoste & Romberg, Scintrex, Inc.
5.40 D e f e r r e d t a x a s s e t s a n d l i a b i l i t i e s
Deferred tax assets and liabilities are attributable to the following items:
(EUR x 1,000)
Property, plant and equipment
Intangible assets
Other investments
Interest loans and borrowings
Employee benefits
Provisions
Tax value of recognised loss carry-forwards
Other items
Tax (assets)/liabilities
Set off of tax
Net tax (assets)/liabilities
99
Profit/loss
205
Owner-ship
10%
Revenues
9,583
Equity
5,057
Liabilities
1,418
Assets
6,475
2003
(200)
(4,788)
1,422
1,041
13,230
1,131
8,314
(1,230)
18,920
–
18,920
2004
(260)
(5,005)
44
4,512
13,602
2,036
6,820
(844)
20,905
–
20,905
2003
(3,301)
(4,852)
–
–
(13)
(55)
–
(1,336)
(9,557)
8,074
(1,483)
2004
(3,904)
(5,113)
–
–
(183)
(55)
–
(1,115)
(10,370)
6,648
(3,722)
2003
3,101
64
1,422
1,041
13,243
1,186
8,314
106
28,477
(8,074)
20,403
2004
3,644
108
44
4,512
13,785
2,091
6,820
271
31,275
(6,648)
24,627
NetLiabilitiesAssets
With respect to the capitalised deferred tax assets an amount of EUR 6,820 (2003: EUR 8,314) is dependent on
future taxable profits in excess of profits arising from the reversal of existing taxable temporary differences.
At 31 December 2004 no deferred tax liabilities relating to an investment in a subsidiary have been
recognised (2003: nil).
In some of the countries where the Group operates, local tax laws provide that gains on disposal of certain
assets are tax exempt, provided that the gains are not distributed. At balance sheet date, no tax reserves exempt
which would result in a tax liability should the subsidiaries pay dividends from these reserves.
Movement in temporary differences during the year
(EUR x 1,000)
Property, plant and equipment
Intangible assets
Other investments
Interest-bearing loans and borrowings
Employee benefits
Share based payments
Provisions
Tax value of recognised loss carry-forward
Exchange differences
Other items
(EUR x 1,000)
Property, plant and equipment
Intangible assets
Other investments
Interest-bearing loans and borrowings
Employee benefits
Share based payments
Provisions
Tax value of recognised loss carry-forward
Exchange differences
Other items
100
Balance31-12-2004
(260)
(5,005)
44
4,512
13,602
–
2,036
6,820
–
(844)
20,905
Recog-nised in
equity
–
–
–
2,582
1,019
(1,201)
–
–
20
–
2,420
Recog-nised inincome
(331)
(217)
(1,378)
889
(647)
1,201
905
(2,284)
(20)
386
(1,496)
Acqui-sitions
271
–
–
–
–
–
–
790
–
–
1,061
Balance01-01-2004
(200)
(4,788)
1,422
1,041
13,230
–
1,131
8,314
–
(1,230)
18,920
2004
Balance31-12-2003
(200)
(4,788)
1,422
1,041
13,230
–
1,131
8,314
–
(1,230)
18,920
Recog-nised in
equity
–
–
–
2,847
(395)
(661)
–
–
748
–
2,539
Recog-nised inincome
416
(225)
(2,078)
850
(156)
661
(1,017)
18
(748)
(338)
(2,617)
Acqui-sitions
316
–
–
–
–
–
–
1,952
–
–
2,268
Balance01-01-2003
(932)
(4,563)
3,500
(2,656)
13,781
–
2,148
6,344
–
(892)
16,730
2003
Deferred tax assets have not been recognised in respect of the following items:
Unrecognised deferred tax assets
(EUR x 1,000)
Compensable temporary differences
Tax losses
Capital allowances
Total
Of the total recognised and unrecognised deferred tax assets an amount of EUR 96 expires in periods varying
from two to five years. An amount of EUR 3,560 expires between five and ten years and an amount of EUR 37,850
can be offset indefinitely. The deductible temporary differences do not expire under current tax legislation.
Deferred tax assets have not been recognised in respect of these items because it is not probable that future
taxable profit will be available against which the Group can utilise these benefits.
5.41 I n v e n t o r i e s
(EUR x 1,000)
Work in progress
Inventories
Seismic libraries
(EUR x 1,000)
Work in progress
Costs less provision for losses
Addition for profit element
Less: contractual advances received
During 2004 EUR 3,515 (2003: EUR 2,304) of inventories were recognised as an expense and EUR 415 was written
down in the profit and loss account (2003: EUR 11).
(EUR x 1,000)
Seismic data
Net realisable value
101
2003
1,729
20,107
8,235
30,071
2004
4,516
20,269
9,901
34,686
2003
8,419
6,588
21,994
37,001
2003
10,664
3,379
(5,624)
8,419
2004
7,295
4,847
39,660
51,802
2004
14,120
2,619
(9,444)
7,295
2003
21,994
2004
39,660
5.42 T r a d e a n d o t h e r r e c e i v a b l e s
(EUR x 1,000)
Unbilled turnover on completed projects
Other trade receivables
Non-trade receivables
Fair value derivatives
Trade receivables due from non-consolidated subsidiaries
At 31 December 2004 trade receivables include retentions of EUR 4.8 million (2003: EUR 3.3 million) relating to
work in progress.
Trade receivables are shown net of impairment losses amounting to EUR 17.2 million (2003: EUR 7.6 million)
arising from identified doubtful receivables from customers.
5.43 C a s h a n d c a s h e q u i v a l e n t s
(EUR x 1,000)
Bank balances, cash, and cash equivalents
Bank overdrafts
Cash and cash equivalents in the statement of cash flows
5.44 C a p i t a l a n d r e s e r v e s
Reconciliation of movement in capital and reserves
(EUR x 1,000)
Balance at 1 January 2003
Changes in accounting policy
to IFRS
Restated balance at 1 January 2003
Total recognised gains and losses
Exercised option rights personnel
Own shares acquired
Addition to reserves
Stockdividend
Dividends to shareholders
Balance at 31 December 2003
102
2003
51,264
253,071
65,876
562
–
370,773
2004
62,496
228,872
44,192
417
147
336,124
2003
65,237
(44,436)
20,801
2004
26,330
(41,018)
(14,688)
Total equity
274,250
(12,102)
262,148
(29,615)
(129)
(4,124)
–
–
(14,616)
213,664
Minorityinterest
2,552
(300)
2,252
216
–
–
–
–
–
2,468
Total
271,698
(11,802)
259,896
(29,831)
(129)
(4,124)
–
–
(14,616)
211,196
Retainedearnings
60,218
–
60,218
18,872
–
–
(45,540)
(62)
(14,616)
18,872
Reserve for ownshares
–
(19,555)
(19,555)
–
(129)
(4,124)
–
–
–
(23,808)
Other reserves
1,350
6,348
7,698
519
–
–
45,540
–
–
53,757
Hedgingreserve
–
1,381
1,381
(5,527)
–
–
–
–
–
(4,146)
Translationreserve
–
24
24
(43,695)
–
–
–
–
–
(43,671)
Share premium
207,159
–
207,159
–
–
–
–
–
–
207,159
Share capital
2,971
–
2,971
–
–
–
–
62
–
3,033
2003
(EUR x 1,000)
Balance at 1 January 2004
Total recognised gains and losses
Share options exercised
by employees
Addition to reserves
Own shares acquired
Stockdividend
Dividends to shareholders
Balance at 31 December 2004
5.44.1 Share capital and share premium
(In thousands of shares)
On issue and fully paid at 1 January
Stock dividend 2003 respectively 2002
Repurchased for option plan at year end
On issue at 31 December – fully paid
At 31 December 2004 the authorised share capital comprised 80,000,000 ordinary shares (2003: 57,554,500). No
preference shares have been issued. The shares have a par value of EUR 0.20 (refer note 5.15).
The holders of ordinary shares are entitled to receive dividends as approved by the Annual General Meeting
from time to time and are entitled to one vote per share at meetings of the Company. As per 31 December 2004
the Directors propose a dividend to be paid out in the form of a cash dividend of EUR 1.90 (2003: EUR 1.85) per
(depository receipts of) share with a nominal value of EUR 0.20 or in the form of (depository receipts of) ordinary
shares with a nominal value of EUR 0.20 charged to the reserves. This dividend proposal is currently part of
retained earnings.
5.44.2 Share premium
The share premium is considered to be paid in capital.
5.44.3 Translation reserve
The translation reserve comprises all foreign exchange differences, as from transition date, arising from the
translation of the financial statements of foreign operations that are not integral to the operations of the
Company, as well as from the translation of liabilities that hedge the Company’s net investment in a foreign
subsidiary.
103
Total equity
213,664
19,077
5,686
–
(761)
–
(9,426)
228,240
Minorityinterest
2,468
1,859
–
–
–
–
–
4,327
Total
211,196
17,218
5,686
–
(761)
–
(9,426)
223,913
Retainedearnings
18,872
49,317
–
(9,369)
–
(77)
(9,426)
49,317
Reserve for ownshares
(23,808)
–
5,686
–
(761)
–
–
(18,883)
Other reserves
53,757
(1,990)
–
9,369
–
–
–
61,136
Hedgingreserve
(4,146)
(6,339)
–
–
–
–
–
(10,485)
Translationreserve
(43,671)
(23,770)
–
–
–
–
–
(67,441)
Share premium
207,159
–
–
–
–
–
–
207,159
Share capital
3,033
–
–
–
–
77
–
3,110
2004
2003
14,862
304
(589)
14,577
2004
15,166
382
(411)
15,137
Ordinary shares
5.44.4 Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments where the hedged transactions have not yet occurred.
5.44.5 Reserve for own shares
The Company has, in view of its option plan repurchased 15,219 (certificates of) own shares during the year
under review with an average price of EUR 50.0 (2003: 150,000 certificates with an average price of EUR 34.26).
Further 193,680 certificates with a nominal value of EUR 0.20 were sold with an average exercise price of EUR
58.26 following the exercise by the option holders (2003: 28,020 certificates at EUR 25.30). As per the end of the
year under review the Company holds 410,401 own shares (2003: 588,862). The number of treasury shares held by
the Company at the end of the year under review amounts to 2.6% of the issued and paid up capital (2003: 3.9%).
5.44.6 Dividends
After the balance sheet date the following dividends were proposed by the Board of Management. There are no
income tax consequences related to this proposal.
(EUR x 1,000)
EUR 1.90 per qualifying ordinary share (2003: EUR 1.85)
5.45 E a r n i n g s p e r s h a r e
The average basic earnings per share for the period amounts to EUR 3.32 (2003: EUR 1.30); the diluted earnings
per share amount to EUR 3.29 (2003: EUR 1.47).
The calculation of basic earnings per share at 31 December 2004 was based on the net profit attributable to
ordinary shareholders of 49,317 (2003: EUR 18,872) and a weighted average number of ordinary shares
outstanding during the year ended 31 December 2004 of 14,840 (2003: 14,464), calculated as follows:
5.45.1 Basic earnings per share
Net profit attributable to ordinary shareholders
(EUR x 1,000)
Net profit for the year
Net profit attributable to ordinary shareholders
104
2003
26,967
26,967
2004
28,760
28,760
2003
18,872
18,872
2004
49,317
49,317
Weighted average number of ordinary shares
(In thousands of shares)
Issued ordinary shares at 1 January
Effect of own shares purchased
Effect of shares issued due to exercised option rights
Effect of shares issued due to optional dividend
Weighted average number of ordinary shares at 31 December
5.45.2 Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2004 was based on net profit attributable to
ordinary shareholders of EUR 54,072 (2003: EUR 23,609) and a weighted average number of ordinary shares
outstanding during the year ended 31 December 2004 of 16,428 (2003: 16,080), calculated as follows:
Net profit attributable to ordinary shareholders (diluted)
(EUR x 1,000)
Net profit attributable to ordinary shareholders
After-tax effect of interest on convertible notes
Net profit attributable to ordinary shareholders (diluted)
Weighted average number of ordinary shares (diluted)
(In thousands of shares)
Weighted average number of ordinary shares at 31 December
Effect of conversion of convertible notes
Effect of share options on issue
Weighted average number of ordinary shares (diluted) at 31 December
105
2003
14,395
(111)
13
167
14,464
2004
14,577
(11)
64
210
14,840
2003
14,464
1,557
59
16,080
2004
14,840
1,557
33
16,430
IFRS
18,872
4,737
23,609
DutchGAAP
32,420
3,088
35,508
DutchGAAP
49,456
3,088
52,544
IFRS
49,317
4,755
54,072
2004 2003
5.46 I n t e r e s t - b e a r i n g l o a n s a n d b o r r o w i n g s
This note provides information about the contractual terms of the Group’s interest-bearing loans and
borrowings. For more information about the Group’s exposure to interest rate and currency risk, refer
to note 5.50 and 5.51.
(EUR x 1,000)
Non-current liabilities
Secured bank loans
Private placement loans in USD
Private placement loan in EUR
Cash flow hedge on loans in USD
Currency difference on future interest in USD
Convertible notes
Financial lease liabilities/asset loans
Mortgage loans
Other loans
Subtotal
Less: Current portion of long-term loans*
* Agreement has been reached with regard to the refinancing of these items (new maturity: 5 years).
Terms and debt repayment schedule
(EUR x 1,000)
Secured bank loans
Private Placement loans:
44 million USD bonds 2012 at 6.45%
39 million USD bonds 2014 at 6.49%
37 million USD bonds 2017 at 6.58%
20 million Eurobonds 2012, fixed at 6.45%
Convertible notes:
EUR – fixed at 4.75%
Other loans
The bank loans are secured by land and buildings with a carrying amount of EUR 19.0 million (2003: EUR 18.7
million).
106
2003
142,489
94,136
20,000
41,458
6,282
96,153
17,530
14,355
1,755
434,158
2,263
431,895
2004
127,486
86,923
20,000
48,729
14,978
99,218
–
14,609
212
412,155
227,887
184,268
More than5 years
–
55,231
48,955
46,444
20,000
–
5,809
176,439
2 – 5years
–
–
–
–
–
–
2,206
2,206
1 – 2years
–
–
–
–
–
–
5,623
5,623
1 year or less
127,486
–
–
–
–
99,218
1,183
227,887
Total
127,486
55,231
48,955
46,444
20,000
99,218
14,821
412,155
5.46.1 Secured bank loans
In 2003 a loan facility of EUR 200 million was agreed with Rabobank Nederland to finance the acquisition 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 Private Placement loans
explained hereunder.
5.46.2 Private Placement USD loans
In May 2002 long term loans were concluded with twenty American and two British institutional investors.
The conditions for the loans are based on annual accounts prepared under the previous accounting principles
(Dutch GAAP):
– Equity > EUR 200 million
– EBITA/Interest > 2.5
– Debt/EBITA < 3.0
– Debt (excluding private placement and convertible notes) < 15% of the consolidated balance sheet total.
At the 12 month rolling forward measurement dates in 2003 and 2004, the company complied with the above
conditions.
The currency exchange risk on the loans in USD and also the (future) interest payable on these loans are
hedged for the entire term of the loans by means of ‘cross currency swaps’. Since the hedges are regarded as
perfect, hedge accounting is applied. Initial recognition has taken place at the exchange rate of the transaction.
At reporting date the loans are valued at the closing rate. The currency exchange difference on the loans
between the initial exchange rate or the exchange rate at the last revision date is accounted for in the profit and
loss account. Further the related ‘cross currency swaps’ are converted at market value at reporting date.
Differences between the initial market value or the last revision and the market value per reporting date are also
included in the profit and loss account.
For the year under review the currency exchange differences on loans in USD amount to EUR 7,271 positive
(2003: EUR 19,091 positive), while the movement due to the change in the fair value of the related currency
hedge financial instruments amounts to EUR 15,967 negative (2003: EUR 27,466 negative). The latter amount is
debited to equity, less the part that is attributable to the loans as hedge result being EUR 7,271 (2003: EUR 19,091)
which amount is charged to the profit and loss account.
Every five years, for the first time in 2007, based on the currency exchange USD - EUR the conversion rate of
the loans, deviations that lead to a higher loan amount in EUR than originally recognised or at the last reset date
result in an inflow of cash for the group amounting to the difference. Deviations that lead to a lower loan
amount in EUR than originally recognised or at the last reset date result in an outflow (inflow) of cash for the
group amounting to the difference to the issuer of the hedge instrument.
With respect to the hedge contracts relating to the future interest payments on the USD loans during the
year under review an amount of EUR 6,339 (2003: EUR 5,527) net after taxes has been charged to equity as a
result of the decline in the currency exchange rate of the USD against the EUR. The in the equity recorded
cumulative currency exchange difference on these hedge contracts concerning the future interest payments
amounts to EUR 14,983 (2003: EUR 6,282).
107
Convertible notes
(EUR x 1,000)
Proceeds from issue of convertible notes
Transaction costs
Net proceeds
Amount classified as equity
Transaction costs amortised
Carrying amount of liability at 31 December
The recognised amount of the convertible notes classified as equity of EUR 657 is net of attributable transaction
costs.
From 12 May 2000 till 21 March 2005 the holders have the option to convert notes held for share certificates at
a conversion price of EUR 64.21 per treasury share of nominal EUR 0.20 each. The Company has the right to
redeem the convertible notes if, as from 3 April 2003, the stock exchange price of the Company’s treasury shares
at least equals 130% of the conversion price during consecutive 30 days. Notes that are not converted to ordinary
share certificates will be redeemed at face value on 3 April 2005.
5.46.3 Finance lease liabilities
Finance lease liabilities are payable as follows:
(EUR x 1,000)
Less than one year
Under the terms of the lease agreements, no contingent rents are payable. In 2003 the interest on the financial
lease obligations amounts to 9%; at the end of 2004 no financial leases exist.
5.46.4 Mortgage and other loans
The average interest rate on mortgage loans and other loans over one year amounts to 4.9% (2003: 4.8%).
108
2003
100,000
(2,500)
97,500
(3,222)
1,875
96,153
2004
100,000
(2,500)
97,500
(657)
2,375
99,218
20032004
Principal
17,530
Interest
2,338
Payments
8,951
Principal
–
Interest
–
Payments
–
5.47 E m p l o y e e b e n e f i t s
(EUR x 1,000)
Present value of funded obligations
Fair value of plan assets
Present value of net obligations
Recognised actuarial gains (losses)
Recognised liability for defined benefit obligations
Liability for long service leave
Total employee benefits
Liability for defined benefit obligations
The Group makes contributions to a number of defined benefit plans that provide pension benefits for
employees upon retirement in a number of countries being: the Netherlands, United Kingdom, and Norway.
In all other countries the pension plans are classified as Defined Contribution plans and/or similar
arrangements for employees, if customary, are maintained, taking local circumstances into account. As in the
USA a 401 K plan exists the contribution of which is based on an agreed scheme in conformity with IRS
regulations.
As of 31 December 2004 the existing final pay pension scheme in the Netherlands has been replaced by
a average pay pension scheme. This scheme qualifies as a ‘defined benefit plan’ according to IFRS.
In the Netherlands the ‘defined benefit’ pension plans comprising mitigated final pay arrangements are fully
re-insured. In determining the annual costs the nature of the plan is recognised which includes (conditional)
indexation of pension benefits insofar as the return on the separated investments surpasses the actuarial
required interest. The required reserves of these obligations are, net of plan assets, recognised in the balance
sheet.
In the United Kingdom pension obligations exist as a result of two final pay ‘defined benefit’ plans, that were
terminated in 2001. The required reserves for these obligations are, net of plan assets, recognised in the balance
sheet.
In Norway a ‘defined benefit’ pension plan exists that, combined with the available State pension plan, leads
to a pension on the age of 67 years based on a defined maximum. The contribution of the employer consists of
a premium based on an expected return on plan assets and the (positive or negative) investment risk.
Movements in the net liability recognised in the balance sheet
(EUR x 1,000)
Net liability at 1 January
Contributions received
Expense recognised in the income statement
Actuarial differences
Exchange rate differences
Net liability at 31 December
109
2003
162,234
117,979
44,255
(1,238)
43,017
2,027
45,044
2004
174,588
130,277
44,311
2,075
46,386
1,822
48,208
2003
46,273
(7,324)
7,970
(1,238)
(2,664)
43,017
2004
43,017
(7,894)
7,950
3,313
–
46,386
Expenses recognised in the income statement
(EUR x 1,000)
Current service costs
Interest on obligation
Expected return on plan assets
Past service costs
Results on change of pension plans
The expenses are recognised in the following line items in the income statement:
(EUR x 1,000)
Personnel expenses
Interest
Actual return on plan assets
Liability for defined benefit obligations
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):
Discount rate at 31 December
Expected return on plan assets at 31 December
Future salary increases
Medical cost trend rate
Future pension increases
110
2003
6,399
7,985
(6,449)
17
18
7,970
2004
6,023
8,827
(7,601)
234
467
7,950
2003
6,434
1,536
7,970
6,449
2004
6,724
1,226
7,950
7,601
2003
5 – 6%
5 – 8%
3%
n/a
2 – 3%
2004
5 – 6%
4 – 8%
3%
n/a
1 – 3%
5.48 P r o v i s i o n s
(EUR x 1,000)
Balance at 1 January
Provisions made during
the year
Provisions used during the year
Provisions reversed during
the year
Exchange rate differences
Balance at 31 December
Non-current
Current
5.48.1 Restructuring
The provision of EUR 21,525 at 1 January 2004 was used to restructure certain of the Group’s activities resulting
from the acquisition of Thales GeoSolutions. The estimated costs are based on a detailed plan agreed between
management and employees’ representatives. The restructuring was completed in the course of 2004.
5.49 O t h e r p a y a b l e s
(EUR x 1,000)
Other trade payables
Advance instalments to construction work in progress
Non-trade payables and accrued expenses
5.50 T r a n s l a t i o n r i s k a n d c u r r e n c y r i s k
The global nature of the business expose the operations and reported financial results and cash flows to the risks
arising from fluctuations in the exchange rates. The Group’s business is exposed to currency risk whenever it has
revenues in a currency that is different from the currency in which it incurs the costs of generating those
revenues. Once the revenues are offset against the incurred costs in the same currency, the remainder may be
affected if the value of the currency in which the revenues are generated declines in the interim relative to the
Group’s reporting currency. This risk exposure primarily affects the operations of the Group that generates a
significant portion of its revenues in foreign currencies and incurs its costs primarily in Euros.
Cash inflows and outflows of the business segments are offset if they are denominated in the same currency.
This means that revenues generated in a particular currency balance out costs in the same currency, even if the
revenues arise from a different transaction than that in which the costs are incurred. As a result, only the
unmatched amounts are subject to currency risk.
To mitigate the impact of currency exchange rate fluctuations, the Group continually assesses the exposure
to currency risks and a portion of those risks is hedged by using derivative financial instruments. The principal
derivative financial instruments used to cover foreign currency exposure are forward foreign currency exchange
contracts.
111
2003
74,341
17,127
177,975
269,443
2004
66,554
14,467
138,573
219,594
Total
2,044
22,033
(1,045)
–
–
23,032
584
22,448
23,032
Other
1,840
145
(478)
–
–
1,507
–
1,507
1,507
Onerouscontracts
–
–
–
–
–
–
–
–
–
Restruc-turing
204
21,888
(567)
–
–
21,525
584
20,941
21,525
Total
23,032
5,915
(26,888)
(10)
(11)
2,038
1,075
963
2,038
Other
1,507
–
(1,447)
(60)
–
–
–
–
–
Onerouscontracts
–
745
(439)
50
(8)
348
–
348
348
Restruc-turing
21,525
5,170
(25,002)
–
(3)
1,690
1,075
615
1,690
2004 2003
The principal amounts of the Group’s USD loans and the future interest payments (see note 5.46) have been fully
hedged by means of ‘cross currency swap’ transactions using the same dates as the loans and the interest
thereon are due for (re)payment.
Forecasted transactions
The Group classifies its firm commitments from forward exchange contracts hedging and forecasted
transactions as cash flow hedges and states them at fair value. The fair value of forward exchange contracts at
1 January 2003 was adjusted against the opening balance of the hedging reserve at that date. The net fair value
of forward exchange contracts used as hedges of firm commitments and forecasted transactions at 31 December
2004 was EUR 417 (2003: EUR 562), comprising assets of EUR 417 (2003: 927) and liabilities EUR – (2003: 365) that
were recognised in fair value derivatives.
5.50.1 Effect of currency translation
Many of the Group’s subsidiaries are located outside the euro zone. Since the financial reporting currency of the
Group is the euro, income statements of these subsidiaries are translated into euros in order to include their
financial result in the consolidated financial statements. Period-to-period changes in the average exchange rate
for a particular country’s currency can significantly affect the translation of both revenues and operating
income denominated in that currency into euros. Unlike the effect of exchange rate fluctuations on transaction
exposure, the exchange rate translation risk does not affect local currency cash flows.
The Group has assets and liabilities outside the euro zone. These assets and liabilities are denominated in
local currencies and reside primarily in the United States, United Kingdom and Far East holding subsidiaries.
When the net assets are converted into euros, currency fluctuations result in period-to period changes in those
net asset values. The equity position of the holding company reflects these changes in net asset values and the
long term currency risk inherent in these investments are periodically evaluated. In general the Group does not
hedge against this type of risk, except in specific circumstances.
5.51 I n t e r e s t r a t e r i s k
The Group holds a variety of interest rate sensitive assets and liabilities to manage the liquidity and cash needs
of the day-to-day operations. The long term external financing of the Group is primarily based on liabilities
bearing long term fixed interest rates.
5.52 C r e d i t r i s k
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on all customers requiring credit over a certain amount. The Group does not require
collateral in respect of financial assets.
Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal
to or better than the Group. Transactions involving derivative financial instruments are with counterparties,
that have high credit ratings and with whom the Group has a signed netting agreement. Given their high credit
ratings, management does not expect any counterparty to fail to meet its obligations.
At balance sheet date there were no significant concentrations of credit risk. The maximum exposure to
credit risk is represented by the carrying amount of each financial asset, including derivative financial
instruments, in the balance sheet.
5.53 H e d g i n g
The Group adopts a policy of reducing its exposure to changes in interest rates on bank loans by entering into
agreements with a fixed rate. Further the currency risks on long term financial liabilities in foreign currencies
are fully hedged. Cross currency swaps, denominated in EUR, have been entered into to achieve this purpose.
The swaps mature over the next 15 years following the maturity of the related loans (refer following table) and
have interest rates ranging from 6.45% to 6.58%. At 31 December 2004 the Group had cross currency swap
contracts with a notional contract amount of USD 120 million (2003: USD 120 million).
112
The Group classifies interest rate cross currency swaps as cash flow hedges and states them at fair value.
The fair value of swaps at 1 January 2003 was adjusted against the opening balance of the hedging reserve at
that date. The net fair value of swaps at 31 December 2004 was EUR 14,978 (2003: EUR 6,282) comprising assets of
EUR 48,729 (2003: EUR 41,458) and liabilities of EUR 63,707 (2003: EUR 47,740) These amounts were recognised as
fair value derivatives.
5.54 E f f e c t i v e i n t e r e s t r a t e s a n d r e p r i c i n g a n a l y s i s
In respect of income-earning financial assets and interest-bearing financial liabilities, the following table
indicates their effective interest rates at the balance sheet date and the periods in which they reprice.
(EUR x 1,000)
Cash and cash equivalents*
Secured bank loans
USD fixed rate loan
EUR fixed rate loan
Convertible notes*
Effect of cross currency swaps
Effect of interest rate swaps
Mortgage and other loans*
Bank overdrafts*
(EUR x 1,000)
Cash and cash equivalents*
Secured bank loans
USD fixed rate loan
EUR fixed rate loan
Convertible notes*
Effect of cross currency swaps
Effect of interest rate swaps
Mortgage and other loans*
Finance lease liabilities*
Bank overdrafts*
113
* These assets/liabilities bear interest at a fixed rate.
2004
More than5 years
–
–
(86,923)
(20,000)
–
(48,729)
(14,978)
(5,809)
–
(176,439)
2 – 5years
–
–
–
–
–
–
–
(2,206)
–
(2,206)
1 – 2years
–
–
–
–
–
–
–
(5,623)
–
(5,623)
6 – 12months
–
(127,486)
–
–
–
–
–
(1,183)
–
(128,669)
6 monthsor less
26,330
–
–
–
(99,218)
–
–
–
(41,018)
(113,906)
Total
26,330
(127,486)
(86,923)
(20,000)
(99,218)
(48,729)
(14,978)
(14,821)
(41,018)
(426,843)
Effectiveinterest
rate
0
2.83
6.45
6.45
7.81
6.45
6.45
5.58
3.75
2003
More than5 years
–
–
(94,136)
(20,000)
(41,458)
(6,282)
(6,535)
(17,530)
–
(185,941)
2 – 5years
–
–
–
–
–
–
–
(2,732)
–
–
(2,732)
1 – 2years
–
(142,489)
–
–
(96,153)
–
–
(4,580)
–
–
(243,222)
6 – 12months
–
–
–
–
–
–
–
(2,263)
–
–
(2,263)
6 monthsor less
65,237
–
–
–
–
–
–
–
–
(44,436)
20,801
Total
65,237
(142,489)
(94,136)
(20,000)
(96,153)
(41,458)
(6,282)
(16,110)
(17,530)
(44,436)
(413,634)
Effectiveinterest
rate
0
2.83
6.45
6.45
7.81
6.45
6.45
5.58
9.00
3.75
5.55 R e c o g n i s e d a s s e t s a n d l i a b i l i t i e s
Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities
in foreign currencies and for which no hedge accounting is applied are recognised in the income statement.
Both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating
to the monetary items are recognised as part of ‘net financing costs’ (refer note 5.22.4). The fair value of forward
exchange contracts used as economic hedges of monetary assets and liabilities in foreign currencies at
31 December 2004 was EUR 417 (2003: EUR 562), comprising of assets EUR 417 (2003: 927) and liabilities
EUR – (2003: EUR 365) recognised in fair value derivatives.
5.56 S e n s i t i v i t y a n a l y s i s
In managing interest rate and currency risks the Group aims to reduce the impact of short term fluctuations on
the Group’s earnings. Over the longer term, however, permanent changes in foreign exchange and interest rates
would have an impact on consolidated earnings.
At 31 December 2004 it is estimated that a general increase of one percentage point in interest rates would
decrease the Group’s profit before tax by approximately EUR 2.5 million (2003: EUR 2.5 million). Interest rate
swaps have been included in this calculation.
It is estimated that a general increase of one percentage point in the value of the EUR against other foreign
currencies would have decreased the Group’s profit before tax by approximately EUR 0.4 million for the year
ended 31 December 2004 (2003: EUR 0.4 million). The forward exchange contracts have been included in this
calculation.
5.57 F a i r v a l u e s
The fair values of the following financial instruments differ from their carrying amounts shown in the
balance sheet:
(EUR x 1,000)
Trade and other receivables (excl WIP)
Cash and cash equivalents
Forward exchange contracts
Secured bank loans
Convertible notes
Mortgage loans
USD fixed rate loans
EUR fixed rate loan
Cash flow hedge on USD loans
Cross currency interest swap
Finance lease liabilities
Bank overdraft
Trade and other payables
Total
Unrecognised gains/(losses)
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of the
financial instruments reflected in the table.
114
Fairvalue
319,509
65,237
562
(142,489)
(99,900)
(14,355)
(94,136)
(23,352)
(41,458)
(6,282)
(17,530)
(44,436)
(269,443)
(368,073)
(7,099)
Carryingamount
319,509
65,237
562
(142,489)
(96,153)
(14,355)
(94,136)
(20,000)
(41,458)
(6,282)
(17,530)
(44,436)
(269,443)
(369,974)
–
Fairvalue
273,628
26,330
417
(127,486)
(102,260)
(14,609)
(86,923)
(24,034)
(48,729)
(14,978)
–
(41,018)
(219,594)
(379,256)
(7,076)
Carryingamount
273,628
26,330
417
(127,486)
(99,218)
(14,609)
(86,923)
(20,000)
(48,729)
(14,978)
–
(41,018)
(219,594)
(372,180)
–
2004 2003
Derivatives
Forward exchange contracts are marked to market using listed market prices.
Interest bearing borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows.
Convertible notes
The fair value is based on quoted market prices.
Fair value lease liabilities
The fair value is estimated as the present value of future cash flows, discounted at market interest for
homogeneous lease arrangements.
Trade and other receivable/payables
For receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect
the fair value. All other receivables/payables are discounted to determine the fair value.
Interest rates used for determining fair value
The group uses the government yield curve as of 31 December 2004 plus an adequate constant credit spread to
discount financial instruments. The interest rates used are as follows:
Derivatives
Loans and borrowings
Leases
Fair value has been determined either by reference to the market value at the balance sheet date or by
discounting the relevant cash flows using current interest rates for similar instruments.
5.58 O f f b a l a n c e s h e e t c o m m i t m e n t s
5.58.1 Operational leases as lessee
Non-cancellable operating lease rentals are payable as follows:
(EUR x 1,000)
Less than one year
Between one and five years
More than five years
The Group leases a number of offices and warehouse/laboratory facilities under operating leases. The leases
typically run for an initial period of between five and ten years, with an option to renew the lease after that date.
Lease payments are increased annually to reflect market rentals. None of the leases includes contingent rentals.
The Group does, in principle, not act as a lessor.
5.58.2 Capital commitments
During the year ended 31 December 2004 the Group entered into a contract to purchase property, plant and
equipment for EUR 888 (2003: EUR nil).
115
4.75% – 6.5%
9%
2003
4.75% – 6.5%
n/a
2004
2003
14,234
11,980
8,394
34,608
2004
12,677
11,017
5,946
29,640
5.58.3 Contingencies
The Group has contingent liabilities arising from contracts with a duration of more than one year such as
guarantees and lease obligations.
The holding company has issued a net worth statement for a line of credit for the companies in the United States.
Some 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 the majority of the Dutch operating companies form a fiscal unit for corporate tax.
Each of the operating companies is severally liable for tax to be paid by all companies that belong to the fiscal unit.
5.59 S u b s e q u e n t e v e n t s
During the first months of 2005 the conversion of the convertible notes has started. Up to the end of February
2005 409 notes have been offered for conversion. Fugro has entered into an arrangement to refinance on a long-
term basis the remaining balance of the convertible subordinated notes and the bankloan used for the
acquisition of Thales GeoSolutions. The final funding mix will be determined shortly.
Fugro reached an agreement to sell the standard diving activities in Mexico. Also Fugro reached an agreement
to sell its 40% interest in Chartco, located in the United Kingdom. The company acquired assets and business of
BTW Ltd. in New Zealand. Fugro has been rewarded two orders to execute a large geophysical and geotechnical
survey for a LNG project in Nigeria.
5.60 R e l a t e d p a r t i e s
5.60.1 Identity of related parties
The Group also has a related party relationship with its subsidiaries, its associates (refer note 14), and with its
statutory Directors.
5.60.2 Transactions with statutory Directors and executive officers
Directors of the Company and management control 8.5% of the voting shares of the Company.
In addition to their salaries, the Group contributes to a post-employment defined benefit plan on their behalf.
Executive officers also participate in the Group’s share option programme (refer note 5.30.1).
The remuneration of the statutory Directors for 2004 and 2003 is as follows:
(in EUR)
Fixed salary
Bonus with respect to the previous year
Pension costs
Valuation of options granted
Total
1) Excluding subsequently calculated backservice up to 2002 of EUR 624.
2) Mr A. Jonkman became a statutory Director as from 19 May 2004.
The statutory Directors have the availability of a company car and a mobile telephone. They also receive a
limited monthly allowance to cover expenses.
The remuneration of the statutory Directors is determined by the Remuneration Committee. In 2004 an
independent investigation took place to review the level and composition of the remuneration of the statutory
Directors. The conclusion from this investigation was that the remuneration with regard to the fixed salary
component were out of step with the remuneration of statutory Directors in similar positions elsewhere.
116
K.S.Wester
2003
265,615
135,520
284,861
335,610
1,021,606
2004
298,987
88,500
411,211
463,050
1,261,748
G-J. Kramer
2003
442,000
228,666
357,3151)
402,732
1,430,713
2004
492,000
147,333
779,900
555,660
1,974,893
A. Jonkman
2003
–
–
–
–
n/a2)
2004
135,938
–
143,239
343,000
622,177
It was decided to eliminate this backlog. As a consequence the back service obligation for Mr G-J Kramer would
be significant. The pension agreement structure is based on an available premium system. In connection with
the resignation of Mr. Kramer in 2005, in 2004 a sum of EUR 875 of which EUR 440 is reported in the income
statement over 2004, was paid in order to meet the pension obligations Fugro agreed with Mr. Kramer at the
time. The relevant period is 2005 to 2007. The remunerations are adjusted as from 2003 based on the conclusions
of the independent investigation. Upon determining the level of bonuses the realisation of company and
personal targets are taken into account.
There are no guarantees or obligations towards or on behalf of the statutory Directors. Hereunder the
information of the options granted to members of the statutory Directors is given on an individual basis.
Statutory Directors
G-J. Kramer
Total
K.S. Wester
Total
A. Jonkman
Total
Total
117
1) Bonus in the bookyear; paid in the next year.
2) Shares not sold subsequent to exercise of option rights.
3) Shares partly sold subsequent to exercise of option rights.
4) Weighted averege.
Bonus1)
5
6
5
7
7
7
4
6
5
6
5
7
7
7
4
6
6
Expiring date
31-12-2004
31-12-2004
31-12-2005
31-12-2006
31-12-2007
31-12-2008
31-12-2009
31-12-2010
31-12-2004
31-12-2004
31-12-2005
31-12-2006
31-12-2007
31-12-2008
31-12-2009
31-12-2010
31-12-20084)
31-12-2010
Shareprice at
exercisedate
62.25
62.25
62.25
62.21
59.54
62.074)
Exerciseprice
28.04
19.97
36.90
68.75
50.10
43.13
40.80
61.40
28.04
19.97
36.90
68.75
50.10
43.13
40.80
61.40
45.844)
61.40
Number at 31 Dec.
2004
–
–
–
32,400
32,400
32,400
32,400
32,400
162,000
–
–
13,500
27,000
27,000
27,000
27,000
27,000
148,500
37,600
20,000
20,000
330,500
Forfeitedin 2004
–
–
–
–
Exercisedin 2004
16,2002)
16,2002)
16,2002)
48,600
13,500
13,5003)
27,000
2,700
–
75,600
Grantedin 2004
32,400
32,400
27,000
27,000
20,000
20,000
79,400
Number at 1 Jan.2004
16,200
16,200
16,200
32,400
32,400
32,400
32,400
178,200
13,500
13,500
13,500
27,000
27,000
27,000
27,000
148,500
40,300
–
326,700
Year
1997
1998
1999
2000
2001
2002
2003
2004
1997
1998
1999
2000
2001
2002
2003
2004
1997 – 2003
2004
Number ofmonthsIn EURNumber of option rights
118
(in EUR)
F.H. Schreve, Chairman
M.W. Dekker, Vice-chairman
P.J. Crawford
J.A. Colligan
Th. Smith
P. Winsemius
There are no options granted and no assets available to the members of the Supervisory Board. There are no loans
outstanding to the members of the Supervisory Board and no guarantees given on behalf of members of the
Supervisory Board.
5.60.3 Other related party transactions
5.60.3.1 Joint venture
The Group has not entered into any joint ventures.
5.61 G r o u p e n t i t i e s
5.61.1 Significant subsidiaries
For an overview of (significant) subsidiaries we refer to chapter 6.
5.62 E s t i m a t e s a n d m a n a g e m e n t j u d g e m e n t s
Management discussed with the Audit Committee the development and choice of, and supply of information on
the critical accounting principles and estimates and also practice of these principles.
Key sources of estimation uncertainty
Note 5.57 contains information about the assumptions and their risk factors relating to goodwill impairment.
In Note 5.50 detailed analysis is given on the foreign currency exposure of the Group and risks in relation to
foreign exchange movements.
Critical accounting judgements in applying the Group’s accounting policies
Except as already described in the notes to the financial statements no other critical accounting judgements in
applying the Group’s accounting policies exist that require further explanation.
2003
40,000
33,000
31,000
28,000
16,800
31,000
179,800
2004
43,000
36,000
31,000
31,000
38,000
31,000
210,000
6 S u b s i d i a r i e s a n d A s s o c i a t e s o f F u g r o N . V .(Including statutory seat and interest)
119
Unless mentioned differently the interest of Fugro N.V., direct or indirect amounts to 100%.
Insignificant subsidiary companies in terms of third party revenue and balance sheet total have been deleted.
These subsidiary companies are fully incorporated into the consolidated annual accounts of Fugro N.V.,
unless indicated differently. Companies in which the Group participates and which are not included in
the consolidated Annual Accounts are marked by an #.
Company % Office, Country Company % Office, Country
Fugro Mauritius Ltd. (Sucursal EM Angola) Luanda, Angola
Fugro Airborne Surveys Pty Ltd. Perth, Australia
Fugro Ground Geophysics Pty Ltd. Perth, Australia
Fugro Holdings (Australia) Pty Ltd. Perth, Australia
Fugro Multi Client Services Pty Ltd. Perth, Australia
Fugro Spatial Solutions Pty Ltd. Perth, Australia
Fugro Survey Pty Ltd. Perth, Australia
Fugro-Jason Australia Perth, Australia
Kevron Aerial Surveys Pty Ltd. Perth, Australia
Kevron Geophysics Pty Ltd. Perth, Australia
OmniSTAR Pty Ltd. Perth, Australia
Robertson Research Australia Pty Ltd. Perth, Australia
Azeri-Fugro # 40% Baku City, Azerbaijan
Fugro Caspian B.V. Baku City, Azerbaijan
Fugro (TGS) Caspian Ltd. Baku City, Azerbaijan
Fugro België N.V. Mechelen, Belgium
Fugro Engineers S.A. Brussels, Belgium
Fugro International Ltd. Hamilton, Bermuda
Fugro Airborne Surveys Ltd. Gaborone West, Botswana
Fugro do Brasil Ltda Rio de Janeiro, Brazil
Fugro Marsat Servicide Submarinos Ltda Rio de Janeiro, Brazil
Geomag S/A Prospeccoes Aerogeofisicas 20% Rio de Janeiro, Brazil
LASA Engenhariae Prospeccoes S.A. 20% Rio de Janeiro, Brazil
Fugro Sdn Bhd (Brunei) Bandar Seri Begawan, Brunei Darussalam
Fugro TGS Brunei Sdn Bhd Kuala Belait, Brunei Darussalam
Geodetic Surveys (B) Sdn Bhd 70% Kuala Belait, Brunei Darussalam
Fugro (Canada) Inc. New Brunswick, Canada
Fugro Airborne Surveys Corp. Ottawa, Ontario, Canada
Fugro Airborne Surveys Corp. Mississauga, Toronto, Canada
Fugro Airborne Surveys Quebec Ltd. St-Laurent, Montreal, Canada
Fugro Jacques GeoSurveys Inc. 70% St. John’s, Newfoundland, Canada
Fugro/SESL Geomatics Ltd. Calgary, Alberta, Canada
China Offshore Fugro GeoSolutions Co, Ltd. 50% Shekou, Shenzhen, China
Fugro Offshore Survey (Shenzhen) Company Ltd. Shekou, Shenzhen, China
Fugro (Beijing) Engineering Consultants Ltd. Beijing, China
Shanghai Fugro Geotechnique Co. Ltd. 60% Shanghai, China
Fugro Denmark AS Esbjerg, Denmark
Fugro Egypt Ltd Cairo, Egypt
Fugro M.I.S.R. 75% Cairo, Egypt
Fugro S.A.E. Cairo, Egypt
Fugro TGS Ltd (Equatoria Guinea) Malabo, Equatorial Guinea
Fugro Geoid S.A.S. Clapiers, France
Fugro France S.A. Nanterre, France
Fugro Geotechnique S.A. Nanterre, France
Fugro Topnav S.A.S. Paris (Massy), France
Fugro Topnav S.A.S. Port Gentil, Gabon
Fugro Consult GmbH Berlin, Germany
IGF GmbH Könz, Germany
Fugro Airborne Surveys (Pty) Ltd Accra, Ghana
Fugro (Hong Kong) Ltd. Wanchai, Hong Kong
Fugro Data Services Ltd. Wanchai, Hong Kong
Fugro FLI-MAP International Ltd. Wanchai, Hong Kong
Fugro Geosciences International Ltd. Wanchai, Hong Kong
Fugro Holdings (Hong Kong) Ltd. Wanchai, Hong Kong
Fugro International (Hong Kong) Ltd. Wanchai, Hong Kong
Fugro Investment (Hong Kong) Ltd. Wanchai, Hong Kong
Fugro Marine Survey International Ltd. Wanchai, Hong Kong
Fugro SEA Ltd. Wanchai, Hong Kong
Fugro Survey (Middle East) Ltd. Wanchai, Hong Kong
Fugro Survey International Ltd. Wanchai, Hong Kong
Fugro Survey Ltd. Wanchai , Hong Kong
Fugro Survey Management Ltd. Wanchai, Hong Kong
Fugro Technical Services Ltd. Fo Tan, Shatin, N.T., Hong Kong
Cedec Geotechnical Services (Hong Kong) Ltd. Fo Tan, Shatin, N.T., Hong Kong
Geotechnical Instruments (Hong Kong) Ltd. Fo Tan, Shatin, N.T., Hong Kong
Terraform-FGS Ltd. Fo Tan, Shatin, N.T., Hong Kong
MateriaLab Consultants Ltd. Tuen Mun, N.T., Hong Kong
Fugro Geonics Pvt. Ltd. 90% Navi Mumbai, India
Fugro India Pvt. Ltd. New Mumbai, India
Fugro Geotech (Pvt) Ltd. Navi Mumbai, India
Fugro Geodetic Indonesia Jakarta Selatan, Indonesia
Fugro-Jason Netherlands B.V. Jakarta Selatan, Indonesia
P.T. Fugro Indonesia Jakarta Selatan, Indonesia
P.T. Kalvindo Raya Semesta Jakarta Selatan, Indonesia
120
Company % Office, Country Company % Office, Country
Fugro Oceansismica S.p.A. Roma, Italy
Robertson Italia S.a.r.l. Milan, Italy
Fugro Geoscience Co., Ltd. Tokyo, Japan
Fugro Japan Co., Ltd. Tokyo, Japan
Fugro Caspian B.V. Almaty, Kazakhstan Republic
Fugro Kazakhstan LLC Atyrau, Kazakhstan Republic
Fugro KazProject LLC Atyrau, Kazakhstan Republic
Fugro Eco Consult S.a.r.l. Munsbach, Luxembourg
Fugro (Macau) Limitada Engenharia Geotecnica Macau, Macau
Fugro Geodetic (Malaysia) Sdn Bhd 30% Kuala Lumpur, Malaysia
Fugro GEOS Sdn Bhd Kuala Lumpur, Malaysia
Fugro Geosciences (Malaysia) Sdn Bhd Kuala Lumpur, Malaysia
Fugro TGS Malaysia Sdn Bhd Kuala Lumpur, Malaysia
Fugro-Jason (M) Sdn. Bhd Kuala Lumpur, Malaysia
Fugro Airborne Surveys Ltd. Port- Louis, Mauritius
Fugro Aircraft Leasing Ltd. Port- Louis, Mauritius
Fugro Mauritius Ltd. Port- Louis, Mauritius
Fugro-Chance de Mexico S.A. de C.V. Ciudad Del Carmen, Campeche, Mexico
Fugro TGS Mexicana S.A de C.V. Ciudad Del Carmen, Campeche, Mexico
Geomundo S.A. de C.V. Ciudad Del Carmen, Campeche, Mexico
Ingenieria Subacquatica S.A. de C.V. Ciudad Del Carmen, Campeche, Mexico
Fugro Airborne Surveys (Pty) Ltd. Klein Windhoek, Namibia
Fugro TGS Namibia (Pty) Ltd. Walvis Baai, Namibia
Ecodemka B.V. Leidschendam, Netherlands
Fugro C.I.S. B.V. Leidschendam, Netherlands
Fugro Caspian B.V. Leidschendam, Netherlands
Fugro Ecoplan B.V. Leidschendam, Netherlands
Fugro Engineers B.V. Leidschendam, Netherlands
Fugro Ingenieursbureau B.V. Leidschendam, Netherlands
Fugro Intersite B.V. Leidschendam, Netherlands
Fugro Nederland B.V. Leidschendam, Netherlands
Fugro Survey B.V. Leidschendam, Netherlands
Fugro Vastgoed B.V. Leidschendam, Netherlands
Fugro-Inpark B.V. Leidschendam, Netherlands
OmniSTAR B.V. Leidschendam, Netherlands
Oserco B.V. Leidschendam, Netherlands
Fugro Robertson B.V. Leiden, Netherlands
Fugro-Jason Netherlands B.V. Rotterdam, Netherlands
Osiris B.V. Heemstede, Netherlands
Fugro Airborne Surveys N.V. Willemstad, Curaçao, Netherlands Antilles
Fugro Cable N.V. Willemstad, Curaçao, Netherlands Antilles
Fugro Curaçao N.V. Willemstad, Curaçao, Netherlands Antilles
Fugro Gravity N.V. Willemstad, Curaçao, Netherlands Antilles
Fugro Jacques N.V. 70% Willemstad, Curaçao, Netherlands Antilles
Fugro Satellite Services N.V. Willemstad, Curaçao, Netherlands Antilles
Fugro SeaSTAR N.V. Willemstad, Curaçao, Netherlands Antilles
Fugro Survey Caribbean N.V. Willemstad, Curaçao, Netherlands Antilles
Fugro BTW Ltd. New Plymouth, New Zealand
Fugro Survey (Nigeria) Ltd. Port Harcourt, Nigeria
Fugro Consultants Nigeria Ltd. Port Harcourt, Nigeria
Fugro Geotechnics AS Oslo, Norway
Fugro Multi Client Services AS Oslo, Norway
Fugro Norway AS Oslo, Norway
Fugro SeaSTAR AS Oslo, Norway
Fugro Starfix (Europe) AS Oslo, Norway
Fugro Survey AS Oslo, Norway
Fugro-Geoteam AS Oslo, Norway
Oceanor ASA Trondheim, Norway
Fugro Middle East & Partners LLC Muscat, Oman, Sultanate of
Fugro Geodetic Ltd. Karachi, Pakistan
Fugro Peninsular Geotechnical Services Doha, Qatar, State of
Fugro Project Ltd. Moscow, Russia
Fugro-Jacques NSTC Moscow, Russia
Fugro Geoscience GmbH Moscow, Russia
Fugro Project Ltd. Yuzhno-Sakhalinsk, Russia
Fugro-Geostatika Co Ltd. St. Petersburg, Russia
Sevoteam 50% St. Petersburg, Russia
Fugro-Suhaimi Ltd. 50% Dammam, Saudi Arabia
Fugro Geodetic Pte Ltd. Singapore, Singapore
Fugro Geosoft Solutions Pte Ltd. Singapore, Singapore
Fugro Holdings (Singapore) Pte Ltd. Singapore, Singapore
Fugro OmniSTAR Pte Ltd. Singapore, Singapore
Fugro Singapore Pte Ltd. Singapore, Singapore
Fugro Survey Pte Ltd. Singapore, Singapore
Fugro-GEOS Pte Ltd. Singapore, Singapore
Fugro Airborne Surveys (Pty) Ltd. Johannesburg, South Africa
Fugro Survey Africa (Pty) Ltd. Cape Town, South Africa
OmniSTAR (Pty) Ltd. Cape Town, South Africa
TPA-Fugro S.A. # 40% Madrid, Spain
Fugro Data Services AG Zug, Switzerland
Fugro Finance AG Zug, Switzerland
Fugro Geodetic AG Zug, Switzerland
Fugro Geoscience GmbH Zug, Switzerland
Fugro Survey GmbH Zug, Switzerland
Fugro Survey Pte Ltd. Bangkok, Thailand
Oceanor Thailand Co Ltd. Bangkok, Thailand
Siam Fugro Co. Ltd. Bangkok, Thailand
Fugro Survey Caribbean Inc. Chaguaramas, Trinidad and Tobago
Fugro Caspian B.V. Ashgabat, Turkmenistan
Fugro Middle East B.V. Dubai, United Arab Emirates
Fugro-Jason Middle East Dubai, United Arab Emirates
Robertson Research International Dubai, United Arab Emirates
Fugro Survey (Middle East) Ltd. Abu Dhabi, United Arab Emirates
Fugro TGS Overseas Ltd Abu Dhabi, United Arab Emirates
Fugro TGS (Saudi Arabia) Abu Dhabi, United Arab Emirates
Fugro-GEOS UAE Abu Dhabi, United Arab Emirates
121
Company % Office, Country
Alluvial Mining Ltd. Great Yarmouth, United Kingdom
Fugro Engineering Services Ltd. Basingstoke, United Kingdom
Fugro Airborne Surveys Ltd. Hemel Hempstead, United Kingdom
Fugro Ltd. Hemel Hempstead, United Kingdom
Fugro SL Ltd. Hemel Hempstead, United Kingdom
Fugro-Robertson Aberdeen Ltd. Aberdeen, United Kingdom
Fugro Survey Limited Aberdeen, United Kingdom
Global Positioning Systems Ltd. Aberdeen, United Kingdom
Fugro-GEOS Ltd. Swindon, United Kingdom
Fugro-Jason (UK) Ltd. Woking, Surrey, United Kingdom
Fugro-Robertson International Ltd. Llandudno, United Kingdom
Fugro Seismic Imaging Ltd. Swanley, United Kingdom
Fugro (USA), Inc. Houston, United States
Fugro Airborne Surveys Inc. Houston, United States
Fugro Geosciences, Inc. Houston, United States
Fugro GeoServices, Inc. Houston, United States
Fugro Gulf, Inc. Houston, United States
Fugro Multi Client Services, Inc. Houston, United States
Fugro Consultants LLP Houston, United States
Fugro, Inc. Houston, United States
Fugro-GEOS, Inc. Houston, United States
Fugro-Jason Inc. Houston, United States
Fugro-McClelland Marine Geosciences, Inc. Houston, United States
Fugro-Robertson, Inc. Houston, United States
Fugro Seismic Imaging Inc. Houston, United States
OmniSTAR, Inc. Houston, United States
John Chance Land Surveys Inc. Lafayette, United States
Fugro Chance Inc. Lafayette, United States
Fugro Pelagos, Inc. San Diego, United States
Fugro Seafloor Surveys, Inc. Seattle, United States
Fugro West, Inc. Ventura, United States
Petcom Inc Richardson, United States
Fugro-McClelland Marine Geosciences, Inc. Caracas, Venezuela
As stated in note 5.1, these are the Group’s first financial consolidated statements prepared in accordance with
IFRS.
The accounting policies set out in note 5.2 have been applied in preparing the financial statements for the
year ended 31 December 2004, the comparative information presented in these financial statements for the year
ended 31 December 2003 and in preparation of an opening IFRS balance sheet as at 1 January 2003 (the Group’s
date of transition).
In preparing its opening IFRS balance sheet, the Group had adjusted amounts reported previously in financial
statements prepared in accordance with Dutch GAAP. An explanation of how the transition from Dutch GAAP to
IFRS has affected the Group’s financial position, financial performance and cash flows is set out in the following
tables and the notes that accompany the tables.
122
7 S t a t e m e n t s o f r e c o n c i l i a t i o n o n f i r s t t i m e a d o p t i o n o f I F R S
(EUR x 1,000)
A s s e t s
Property, plant and equipment
Intangible assets
Financial fixed assets
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
E q u i t y
Issued capital
Share premium
Reserves
Retained earnings
Total equity
Minority interest
L i a b i l i t i e s
Interest-bearing loans and borrowings
Employee benefits
Provisions
Deferred tax liabilities
Total non-current liabilities
Bank overdraft
Interest-bearing loans and borrowings
Trade and other payables
Provisions
Current tax liabilities and social premiums
Income tax payable
Total current liabilities
Total liabilities
Total equity, minority interest and liabilities
7.1 R e c o n c i l i a t i o n o f I F R S o p e n i n g b a l a n c e s h e e t
As at 1 January 2003
123
Effect oftransition
to IFRS
41,804
(6,172)
(12,038)
18,034
41,628
(32,037)
27,938
(560)
(4,659)
36,969
–
–
(11,802)
–
(11,802)
(300)
16,163
42,866
(91)
1,256
60,194
–
–
(2,256)
(6,068)
(138)
(2,956)
(11,418)
49,071
36,969
Dutch GAAP
192,293
218,016
21,096
–
431,405
62,279
274,784
24,777
361,840
793,245
2,971
207,159
1,350
60,218
271,698
2,552
273,520
4,749
295
49
278,613
18,338
1,762
194,767
7,980
12,851
5,051
240,677
518,995
793,245
IFRS
234,097
211,844
9,058
18,034
473,033
30,242
302,722
24,217
357,181
830,214
2,971
207,159
(10,452)
60,218
259,896
2,252
289,683
47,615
204
1,305
338,807
18,338
1,762
192,511
1,840
12,713
2,095
229,259
568,066
830,214
7.2 R e c o n c i l i a t i o n o f b a l a n c e s h e e t
As at 31 December 2003, respectively 31 December 2004
124
20032004
Effect oftransition
to IFRS
32,112
(17,991)
(9,758)
19,306
23,669
(35,101)
32,327
5,174
(51)
2,349
26,018
(16,039)
(13,548)
(29,587)
(481)
19,195
40,684
(1,805)
(1,434)
56,640
(91)
4,698
(2,132)
(7,172)
4,143
(554)
56,086
26,018
Dutch GAAP
236,689
291,942
24,421
1,097
554,149
72,102
338,446
–
65,288
475,836
1,029,985
3,033
207,159
(1,829)
32,420
240,783
2,949
412,700
4,360
2,389
2,917
422,366
44,436
2,354
264,745
24,580
22,458
5,314
363,887
786,253
1,029,985
IFRS
232,956
293,991
9,287
24,627
560,861
51,802
336,124
8,233
26,330
422,489
983,350
3,110
207,159
(35,673)
49,317
223,913
4,327
184,268
48,208
1,075
3,722
237,273
41,018
227,887
219,594
963
16,812
11,563
517,837
755,110
983,350
Effect oftransition
to IFRS
840
(8,098)
(1)
24,627
17,368
(42,875)
40,545
(2,115)
–
(4,445)
12,923
–
–
(36,080)
(139)
(36,219)
(339)
(213,206)
44,640
(1)
(2,367)
(170,934)
–
226,704
(2,187)
(1,783)
(2,376)
57
220,415
49,481
12,923
Dutch GAAP
232,116
302,089
9,288
–
543,493
94,677
295,579
10,348
26,330
426,934
970,427
3,110
207,159
407
49,456
260,132
4,666
397,474
3,568
1,076
6,089
408,207
41,018
1,183
221,781
2,746
19,188
11,506
297,422
705,629
970,427
IFRS
268,801
273,951
14,663
20,403
577,818
37,001
370,773
5,174
65,237
478,185
1,056,003
3,033
207,159
(17,868)
18,872
211,196
2,468
431,895
45,044
584
1,483
479,006
44,436
2,263
269,443
22,448
15,286
9,457
363,333
842,339
1,056,003
(EUR x 1,000)
A s s e t s
Property, plant and equipment
Intangible assets
Financial fixed assets
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Total current assets
Total assets
E q u i t y
Issued capital
Share premium
Reserves
Retained earnings
Total equity
Minority interest
L i a b i l i t i e s
Interest-bearing loans and borrowings
Employee benefits
Provisions
Deferred tax liabilities
Total non-current liabilities
Bank overdraft
Interest-bearing loans and borrowings
Trade and other payables
Provisions
Current tax liabilities
Income taxes payable
Total current liabilities
Total liabilities
Total equity, minority interest and liabilities
(EUR x 1,000)
Revenue
Third party costs
Net revenue own services
Other income
Personnel expenses
Depreciation
Amortisation
Other operating expenses
Profit from operations (EBIT)
Financial income
Financial expenses
Income from non-consolidated subsidiaries
Profit before tax
Income tax expense
Profit after tax
Minority interest
Net profit for the year
Basic earnings per share (EUR)
Diluted earnings per share (EUR)
7.3 R e c o n c i l i a t i o n o f i n c o m e s t a t e m e n t
For the financial year 2003 respectively 2004
125
2003
Effect oftransition
to IFRS
(7,695)
13,148
5,453
16,889
2,366
(4,521)
5,906
(26,428)
(335)
(1,168)
(12,630)
181
(13,952)
224
(13,728)
180
(13,548)
(0.94)
(0.74)
Dutch GAAP
830,067
(286,520)
543,547
–
(300,195)
(49,483)
(12,686)
(117,576)
63,607
1,405
(19,928)
–
45,084
(11,660)
33,424
(1,004)
32,420
2.24
2.21
IFRS
822,372
(273,372)
549,000
16,889
(297,829)
(54,004)
(6,780)
(144,004)
63,272
237
(32,558)
181
31,132
(11,436)
19,696
(824)
18,872
1.30
1.47
2004
Effect oftransition
to IFRS
(13,631)
10,598
(3,033)
16,540
2,083
(772)
10,163
(14,507)
10,474
277
(8,925)
139
1,965
(2,175)
(210)
71
(139)
(0.01)
0.09
Dutch GAAP
1,021,639
(376,242)
646,397
–
(333,706)
(65,367)
(17,241)
(136,321)
93,762
2,114
(25,312)
–
70,564
(17,769)
52,795
(3,339)
49,456
3.33
3.20
IFRS
1,008,008
(364,644)
643,364
16,540
(331,623)
(66,139)
(7,078)
(150,828)
104,238
2,391
(34,237)
139
72,529
(19,944)
52,585
(3,268)
49,317
3.32
3.29
(EUR x 1,000)
Cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation
Amortisation
Foreign exchange losses
Minority interest
Result non-consolidated subsidiaries
Gain on sale of property, plant and equipment
Costs granted option rights
Operating profit before changes in working
capital and provisions
In(de)crease in trade and other receivables
In(de)crease in inventories
In(de)crease in trade and other payables
Increase in provisions and employee benefits
Cash generated from the operations
Interest paid
Income tax paid
Net cash from operating activities
7.4 R e c o n c i l i a t i o n o f c a s h f l o w s t a t e m e n t
For the financial year 2003 respectively 2004
126
2003
Effect oftransition
to IFRS
(8,463)
4,521
(5,906)
6,849
(1)
181
(37)
1,944
(912)
(4,389)
3,064
(80)
(255)
(2,572)
(2,750)
2,994
(2,387)
Dutch GAAP
71,735
49,483
12,686
(24,073)
(1,550)
–
3,579
–
111,860
22,422
21,673
(20,626)
15,183
150,512
(19,928)
(9,896)
120,688
IFRS
63,272
54,004
6,780
(17,224)
(1,551)
181
3,542
1,944
110,948
18,033
24,737
(20,706)
14,928
147,940
(22,678)
(6,902)
118,360
2004
Effect oftransition
to IFRS
5,208
772
(10,163)
(137)
213
112
–
3,531
(464)
(8,218)
7,774
(2,089)
4,208
1,211
(356)
(2,806)
(1,951)
Dutch GAAP
99,028
65,367
17,241
(19,274)
(1,622)
27
723
–
161,490
37,581
(26,357)
(47,769)
(23,939)
101,006
(25,312)
(16,692)
(59,002)
IFRS
104,236
66,139
7,078
(19,411)
(1,409)
139
723
3,531
161,026
29,363
(18,583)
(49,858)
(19,731)
102,217
(25,668)
(19,498)
57,051
(EUR x 1,000)
Cash flows from investing activities
Proceeds from sale of plant and equipment
Proceeds from sale of investments
Interest received
Dividends received
Acquisition of subsidiary, net of cash acquired
Acquisition of property, plant and equipment
Development intangible fixed assets
Acquisition of other investments
Net cash from investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Proceeds from long-term loans
Repurchase of own shares
Repayment of borrowings
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 31 December
Presentation in balance sheet
Cash and cash equivalents
Bank overdraft
127
2003
Effect oftransition
to IFRS
(158)
(1,608)
(1,292)
124
19,386
(1,658)
(4,557)
1,090
11,327
–
–
–
(8,490)
–
(8,490)
509
(560)
–
(51)
(51)
–
(51)
Dutch GAAP
4,380
1,918
1,405
–
(82,423)
(42,409)
–
(3,443)
(120,572)
886
37,950
(5,139)
(3,599)
(14,616)
15,482
15,598
6,439
(1,185)
20,852
65,288
(44,436)
20,852
IFRS
4,222
310
113
124
(63,037)
(44,067)
(4,557)
(2,353)
(109,245)
886
37,950
(5,139)
(12,089)
(14,616)
6,992
16,107
5,879
(1,185)
20,801
65,237
(44,436)
20,801
2004
Effect oftransition
to IFRS
(15,842)
(9,806)
–
–
5,020
42,112
(4,436)
49
17,097
2,330
–
–
(17,425)
–
(15,095)
51
(51)
–
–
–
–
–
Dutch GAAP
42,943
16,749
2,114
277
(9,658)
(123,075)
–
(1,609)
(72,259)
5,686
–
(761)
(16,397)
(9,426)
(20,898)
(34,155)
20,852
(1,385)
(14,688)
26,330
(41,018)
(14,688)
IFRS
27,101
6,943
2,114
277
(4,638)
(80,963)
(4,436)
(1,560)
(55,162)
8,016
–
(761)
(33,822)
(9,426)
(35,993)
(34,104)
20,801
(1,385)
(14,688)
26,330
(41,018)
(14,688)
7.5 I n t r o d u c t i o n
In the Netherlands IFRS is not yet accepted for statutory purposes for the financial year 2004. Therefore the
annual report 2004 of the Group has been prepared under a dual accounting based principle. The consolidated
financial statements are presented for both Dutch GAAP and IFRS based financial figures. The Fugro N.V.
company financial statements however are presented on Dutch GAAP basis only. Please note that the Dutch
GAAP based company financial statements are the legally required statutory accounts.
As stated in note 5.1, these are the Group’s first consolidated financial statements prepared in accordance
with IFRS.
The accounting policies set out in note 5.2 have been applied in preparing the financial statements for the
year ended 31 December 2004, the comparative information presented in these financial statements for the year
ended 31 December 2003 and in the preparation of an opening IFRS balance sheet at 1 January 2003 (the Group’s
date of transition)
In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial
statements prepared in accordance with its former basis of accounting (Dutch GAAP). An explanation of how the
transition from Dutch GAAP to IFRS has affected the Group’s financial position, financial result and cash flows is
set out in the tables and the notes that accompany the tables.
7.6 E x p l a n a t i o n o f t r a n s i t i o n t o I F R S ( n u m b e r s x E U R 1 , 0 0 0 )
7.6.1 Property, plant and equipment
Under Dutch GAAP, certain leases were classified as operating lease based on quantified criteria. Under IFRS
(IAS 17) those leases are classified as finance leases since the Group holds substantially all the risks and rewards
to the ownership of the related assets. These assets are recognised in the balance sheet of the group.
The effect is to increase Property, plant and equipment by EUR 41,804 at 1 January 2003, by EUR 32,112 at
31 December 2003 and by EUR 840 at 31 December 2004. As a result depreciation charges increase by
EUR 4,521 for the year ended 31 December 2003 and EUR 772 for the year ended 31 December 2004.
The effect is also to increase Interest-bearing loans and borrowings by EUR 16,163 at 1 January 2003,
by EUR 19,195 at 31 December 2003 and decreased by EUR 213,206 at 31 December 2004. This decrease is caused
by the classification as short-term of some loans that will be redeemed in 2005.
The Group did not elect to measure items of property, plant and equipment at the date of transition to IFRS
(1 January 2003) at its fair value with the exception of two vessels as set out in note 5.8. Instead, previous GAAP
values were used as deemed cost, taking into consideration the impact of application of the component approach.
Under IFRS (IAS 16) the Group applied the component approach and reassessed the useful life of the
components at 1 January 2003, 31 December 2003 and 31 December 2004. Under Dutch GAAP, maintenance
costs for overhauls and dry-docking were accrued for over the period until the next overhaul or dry-docking was
carried out. A separate component was recognised for overhaul and dry-docking cost that are performed on
a regular basis. The carrying value of property, plant and equipment decreased with EUR 3,818 at 1 January 2003,
EUR 357 at 31 December 2003 and EUR 173 at 31 December 2004.
7.6.2 Intangible assets
The Group has applied IFRS 3 to all business combinations that have occurred since 1 January 2003 (the date of
transition to IFRS). In addition, the group has elected not to apply IFRS 3 retrospectively to business
combinations that have occurred before 1 January 2003.
At transition date to IFRS (1 January 2003), the Group identified certain intangibles (mainly software)
that meet the recognition criteria of IAS 38. These intangible assets were acquired in business combinations
and were subsumed in goodwill under Dutch GAAP. Consequently, Intangible assets increase with EUR 19,479 at
1 January 2003, EUR 19,559 at 31 December 2003 (after capitalisation of EUR 4,557) and EUR 17,229 at
31 December 2004 (after capitalisation of EUR 4,436). Consistent with IFRS (IFRS 1), the Group decreased goodwill
with EUR 27,121 at 1 January 2003, EUR 38,883 at 31 December 2003 and EUR 27,657 at 31 December 2004. Since
software is amortised under IFRS and is not recognised under Dutch GAAP, amortisation charges increased with
EUR 6,780 for the year ended 31 December 2003 and EUR 7,078 for the year ended 31 December 2004.
128
Under IFRS (IFRS 3) goodwill is measured at cost less any accumulated impairment losses. Under Dutch GAAP,
goodwill was amortised over its useful life. Consequently, amortisation cost decreased by EUR 12,686 for the year
ended 31 December 2003 and EUR 17,241 for the year ended 31 December 2004, resulting in an increase of
Goodwill with EUR 12,686 at 31 December 2003 and EUR 17,241 at 31 December 2004.
Furthermore, the Group tested the goodwill for impairment at the date of transition to IFRS in accordance
with the provisions of IFRS (IFRS 1 and IAS 36). It followed that no impairment loss over 2003 was required.
Under Dutch GAAP, the Group recorded a restructuring provision of EUR 17,500 (against goodwill) relating to
a business combination acquired in 2003. Under IFRS (IFRS 3) this restructuring provision is not allowed to be
recorded against goodwill as the provision does not qualify under IAS 37 from the perspective of the acquiree
(but has been set-up by the acquirer). Consequently, other operating expenses increased with EUR 17,500
for the year ended 31 December 2003 and with EUR 5,170 in 2004, and goodwill decreased with EUR 17,500
at 31 December 2003 and EUR 22,670 as of 31 December 2004 compared to Dutch GAAP.
7.6.3 Investments in non-consolidated subsidiaries/other investments
Under Dutch GAAP a 50% shareholding was fully consolidated with the elimination of a 50% minority interest.
However, the Group believes that they have no control, but significant influence over the shareholding which
was classified as an associate under IFRS (IAS 28) and accounted for under the equity method. The minority
interest that was recorded under Dutch GAAP has been released (EUR 301 at 1 January 2003 respectively
EUR 481 at 31 December 2003). As a result of this property, plant and equipment decreased with EUR 2,611 at
1 January 2003 and EUR 2,442 at 31 December 2003. Working capital increased with EUR 2,013 at 1 January 2003
and with EUR 1,480 at 31 December 2003. Further two 50% participations in partnerships of which all the risk
and return are substantially for the Group have been eliminated against the capitalisation of the underlying
assets and the inclusion of the lease obligations concerning the assets. At 1 January 2003 financial fixed assets
decreased with EUR 12,342 and with EUR 9,758 at 31 December 2003. In 2004 the partner shares in the
partnerships were fully acquired by the Group.
7.6.4 Deferred tax assets
Under Dutch GAAP, unused tax losses carried forward were recorded if there was a high degree of probability
that these tax losses carried forward would be realised. Under IFRS (IAS 12) deferred tax assets are recognised for
unused tax losses carried forward to the extent that it is probable that future taxable profit will be available
against which the unused tax losses can be utilised. Consequently, deferred tax assets increased at 1 January
2003 with EUR 19,231, at 31 December 2003 with EUR 20,750 and at 31 December 2004 with EUR 22,364.
Unlike IFRS, Dutch GAAP allowed deferred tax assets and deferred tax liabilities to be offset where they were
not related to income taxes levied by the same taxation authority. The effect of the change at transition date is
to increase deferred tax assets and deferred tax liabilities by EUR 392 at 1 January and a decrease by EUR 1,604
at 31 December 2003.
7.6.5 Equity
The Group has elected as first time adopter to use the IFRS (IFRS 1) exemption whereby the cumulative
translation differences for all foreign entities are deemed to be zero at the date of transition to IFRS (1 January
2003). As from this date the translation differences in respect of all foreign entities is presented as a separate
component of equity.
129
7.6.6 Employee benefits
7.6.6.1 Pensions
Under Dutch GAAP the Group recognised the contribution and the related staff costs on the basis of premiums
charged.
The Group has adopted the IAS 19 amendment from December 2004 which permits an entity to recognise all
actuarial gains and losses in the periode in which they occur outside profit and loss in the statement of
recognised income and expense. The Group has elected under IFRS (IFRS 1) to recognise all cumulative actuarial
gains and losses at the date of transition to IFRS. Consequently, an employee benefit liability of EUR 46,273 is
recorded at 1 January 2003 against equity. Under Dutch GAAP a pension provision of EUR 4,749 has been
recorded at 1 January 2003.
Further long term service liabilities are presented under this heading under IFRS at 1 January 2003 EUR 1,884
of which EUR 383 was already provided for, at 31 December 2003 EUR 2,027 of which 728 was already provided
for. At 31 December 2004 the corresponding amount are EUR 1,822, of which EUR 674 was already provided for
under Dutch GAAP.
The employee benefit liability amounts to EUR 43,017 at 31 December 2003 and EUR 46,386 at 31 December
2004, compared to the previous GAAP pension provision of EUR 4,360 respectively EUR 3,568.
7.6.6.2 Share-based payments
The Group applied IFRS 2 to its active share-based arrangements at 1 January 2004, except for equity-settled
share-based payment arrangements granted before 7 November 2002.
Under Dutch GAAP these equity-settled share-based payment arrangements were not valued at balance sheet
date (but only disclosed in the notes to the financial statements).
Consistent with IFRS (IFRS 2), the Group accounts for the equity-settled share-based payment arrangements at
fair value measured at grant date. As a consequence employee benefit related liabilities increase with EUR 1,944
at 31 December 2003 and personnel expenses increased by the same amount. Furthermore, exployee benefit
related liabilities have increased by EUR 3,531 for the year ended 31 December 2003 and personnel expenses
increased by the same amount.
7.6.7 Provisions
Under IFRS (IAS 37) maintenance provisions are no longer allowed. Consequently, the maintenance provision
of EUR 4,160 at 1 January 2003, EUR 2,946 at 31 December 2003 and EUR 1,783 at 31 December 2004 have been
released against retained earnings respectively the result for the year ending at 31 December 2003 and
31 December 2004. This resulted in a reduction of other operating expenses by EUR 2,245 for the year ended
31 December 2003 and EUR 1,386 for the year ended 31 December 2004.
Further a reorganisation provision taken under Dutch GAAP in 2002 of EUR 2,204 does not qualify under IFRS.
Consequently this amount has been reversed and taken into retained earning at 1 January 2003. The result for
the year ended 31 December 2003 has been decreased with EUR 2,204 forming this provision in 2003 under IFRS.
130
7.6.8 Financial instruments
The Group has under IFRS 1 split the compound financial instruments (the convertible loan) into a separate
liability and equity component. Furthermore, the Group has applied IAS 32, 39 and IFRS 4 as of IFRS transition
date. Applying the effective interest method this results in an increase in equity at 1 January 2003 of EUR 5,721.
Financing cost in the year ended 31 December 2003 increased with EUR 2,499 and EUR 2,565 for the year ended
at 31 December 2004.
Under Dutch GAAP financial instruments were not recognised in the financial statements.
Under IFRS (IAS 32 & IAS 39) financial instruments are included at fair value or amortised cost depending on
the nature of the financial instruments.
As a consequence the Group has applied hedge accounting for a number of perfect foreign currency hedge
contracts regarding the repayments as well as the interest payments on long term USD loans. As a consequence
the related currency exchange differences on the USD loans are offset against an equal amount of value changes
in the financial instrument. For the year ended 31 December 2003 these differences amounted to EUR 19,091
and for the year ended 31 December 2004 EUR 7,271.
The fair value of the financial hedging instruments on the future interest payments on the USD loans
are recognised in equity and amount to EUR 2,092 positive at 1 January 2003 and EUR 6,282 negative at
31 December 2003. At 31 December 2004 the fair value amounted to EUR 14,978 negative.
The fair value changes as a result of short term foreign currency contracts in relation to future transactions
are recognised in the profit and loss account. At 1 January 2003 the effect on retained earnings of these
derivatives amount to EUR 735. At 31 December 2003 the effect amounts to EUR 1,120; at 31 December 2004 the
effect was EUR 1,555. In the year ended 31 December 2003 the amount of changes in value of these derivatives
amounts to EUR 385; for the year ended 31 December 2004 EUR 435.
7.6.9 Work in progress
A large portion of the work in progress under Dutch GAAP qualifies as unbilled receivables under IAS 38.
As a consequence the amount of the work in progress presented under IFRS is substantially lower than under
Dutch GAAP. As per 31 December 2004 the amount of unbilled receivables classified under trade and other
receivables under IFRS is EUR 42,512 (31 December 2003: EUR 34,707 and 1 January 2003: EUR 32,037).
131
7.7 R e c o n c i l i a t i o n o f r e t a i n e d e a r n i n g s
As at 1 January 2003, 31 December 2003 and respectively (EUR x 1,000)
Total retained earnings in accordance with Dutch GAAP
Release of provisions
Re-allocation goodwill/introduction depreciated software
Lapsing of amortised goodwill under IFRS
Reorganisation costs in equity
Introduction of DB plan (net) obligations
Long term service leave obligations
Equity component in convertible loan
Valuation of financial instruments in connection with
foreign currency cash flow hedges
Valuation of short term foreign currency exchange contracts
Capitalisation of partnership asset minus liabilities
Adjustments on accounts receivables
Adjustments of inventory
Tax effect IFRS adjustments to equity
Recognition of tax assets from tax losses
Exchange rate differences
Total equity in accordance with IFRS
132
1-1-2003
271,698
4,215
(6,353)
–
–
(41,524)
(1,501)
5,721
2,092
735
5,759
(177)
–
12,838
6,393
–
259,896
31-12-2003
240,783
5,588
(12,498)
12,686
(17,500)
(38,657)
(1,299)
3,222
(6,282)
1,120
4,326
(365)
(368)
12,436
8,314
(310)
211,196
31-12-2004
260,132
3,231
(15,142)
29,927
(22,670)
(42,818)
(1,148)
657
(14,978)
1,555
4,326
(365)
(368)
15,544
6,820
(790)
223,913
7.8 A u d i t o r s ’ R e p o r t o n t h e c o n s o l i d a t e d I F R S A n n u a l a c c o u n t s 2 0 0 4
Introduction
We have audited the consolidated IFRS financial statements (‘financial statements’) of Fugro N.V.,
Leidschendam, for the year 2004 (as set out on pages 68 to 133). These financial statements are the responsibility
of the company’s Management. Our responsibility is to express an opinion on these financial statements based
on our audit.
Scope
We conducted our audit in accordance with auditing standards generally accepted in the Netherlands. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by Management, as well as evaluating the overall
presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the company as at
31 December 2004 and of the result for the year then ended in accordance with the International Financial
Reporting Standards.
The Hague, 10 March 2005
KPMG Accountants N.V.
133
8.1 G e n e r a l
The Annual Accounts of Fugro N.V. as presented hereafter are prepared in conformity with Generally Accepted
Accounting Principles in the Netherlands and compliant with the legal requirements concerning annual
reporting as included in Titel 9 Book 2 BW.
These accounting principles are in general in accordance with the valuation principles as applied in the
primary consolidated annual accounts prepared under IFRS. Reference is made to the accounting principles
on the pages 73 through 83 of this annual report.
The notes to the consolidated Annual Accounts under IFRS form an integral part of the Annual Accounts
prepared under Dutch GAAP. Material differences are separately disclosed in this paragraph.
8.2 C o n s o l i d a t i o n
Refer to note 5.4 to the consolidated IFRS financial statements.
8.3 F o r e i g n c u r r e n c i e s
Refer to note 5.5 to the consolidated IFRS financial statements.
8.4 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.
8.5 R e s e a r c h a n d d e v e l o p m e n t
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.
8.6 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 determined as the difference between the acquisition price and the fair value of the acquired assets
and liabilities. The fair 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.
8.7 T a n g i b l e f i x e d a s s e t s
Refer to note 5.8 to the consolidated IFRS financial statements.
8.8 F i n a n c i a l f i x e d a s s e t s
The Group’s share in associated companies where the Group has significant influence are recorded in the
consolidated financial statements on an equity accounted basis, using the most recent financial statements that
use the Group’s accounting policies. 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 significant control can be exercised are valued at the acquisition price.
Long-term receivables included here are stated at nominal value less any provisions considered necessary.
134
8 D u t c h G A A P a n n u a l r e p o r t
8.9 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
Refer to note 5.11 and 5.12.1. Unlike under IFRS work in progress is presented in total separate from advances
received in total which are included in short term liabilities; so not on a contract by contract basis.
Refer to note 5.11.2 to the consolidated IFRS financial statements with respect to the multi-client seismic library.
8.10 R e c e i v a b l e s
These receivables are stated at nominal value less a provision for doubtfull debts if required.
8.11 L i q u i d a s s e t s
Refer to note 5.13 to the consolidated IFRS financial statements.
8.12 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.
8.13 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 backservice, which are based upon actuarial
valuations.
8.14 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 realised. Deferred tax assets are included as other receivables.
8.15 C o n t i n g e n t l i a b i l i t i e s
These include conditional and unconditional liabilities resulting from agreements such as guarantees,
lease obligations et cetera.
8.16 T u r n o v e r
Refer to note 5.21 to the consolidated IFRS financial statements. For segment information, refer to note 5.25.
8.17 T h i r d p a r t y c o s t s
Refer to note 5.22.1 to the consolidated IFRS financial statements.
8.18 D e p r e c i a t i o n
Refer to note 5.8.4 to the consolidated IFRS financial.
8.19 A m o r t i s a t i o n
Goodwill is amortised over the estimated useful live to a maximum of 20 years.
8.20 I m p a i r m e n t o f a s s e t s
Refer to note 5.14.
8.21 P e r s o n n e l e x p e n s e s a n d o t h e r o p e r a t i n g c o s t s
Personal expenses and other operating costs are reported in the period to which they relate.
135
8.22 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 relate to interest income receivable from and expenses payable to third parties.
8.23 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.
8.24 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
Refer to note 5.24 to the consolidated IFRS financial statements.
136
(EUR x 1,000)
F i x e d a s s e t s
(14.1) Intangible fixed assets
(14.2) Tangible fixed assets
(14.3) Financial fixed assets
Current assets
(14.4) Stocks and work in progress
(14.5) Accounts receivable
Cash and Banks
Total assets
Equity
Third party interests
(13) Group equity
(14.6) Provisions
(14.7) Long term debts
(14.9) Short term liabilities
Total liabilities and shareholders equity
9 C o n s o l i d a t e d D u t c h G A A P b a l a n c e s h e e t(before proposed appropriation of result)
137
2003
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
2004
302,089
232,116
9,288
543,493
94,677
305,927
26,330
426,934
970,427
260,132
4,666
264,798
13,479
397,474
294,676
970,427
(EUR x 1,000)
(14.10) Revenues
(14.10) Third party costs
(14.11) Staff costs
(14.12) Depreciation
(14.13) Other operational expenses
Operating result before amortisation of goodwill
(14.14) Amortisation of goodwill
Operating result (EBIT)
(14.14) Interest revenues
(14.15) Financing costs
Operational result before taxes
(14.16) Taxation
Operating result after taxes
Third party share
Net result
Net result before amortisation of goodwill
Net result per share before amortisation of goodwill (EUR)
Net result after dilution (EUR)*
Net result per share after amortisation of goodwill (EUR)
Net result after dilution (EUR)*
* Refer to note 5.45.2 for calculation of the dilution effect.
1 0 C o n s o l i d a t e d D u t c h G A A P i n c o m e s t a t e m e n t
138
2003
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
2004
1,021,639
(375,242)
(333,706)
(65,367)
(136,321)
(910,636)
111,003
(17,241)
93,762
2,114
(25,312)
(23,198)
70,564
(17,769)
52,795
(3,339)
49,456
66,697
4.49
4.25
3.33
3.20
(EUR x 1,000)
Foreign exchange translation differences
Other movements
Net loss recognised directly in equity
Net profit for the period
Total result for the period
Attributable to:
Equity holders of the parent
Minority interest
Total recognised income and expenses for the period
1 1 C o n s o l i d a t e d D u t c h G A A P s t a t e m e n t o f t o t a l i n c o m e a n d e x p e n s e(For the year ended 31 December)
139
2003
(42,629)
(6,090)
(48,719)
32,420
(16,299)
(17,303)
1,004
(16,299)
2004
(23,104)
2,423
(20,681)
49,456
28,775
25,436
3,339
28,775
1 2 C o n s o l i d a t e d D u t c h G A A P s t a t e m e n t o f c a s h f l o w s(For the year ended 31 December)
140
2003*
71,735
49,483
12,686
(24,073)
(1,550)
–
3,579
–
111,860
22,422
21,673
(20,626)
15,183
150,512
(19,928)
(9,896)
120,688
4,380
1,918
1,405
–
(82,423)
(42,409)
(3,443)
(120,572)
886
37,950
(5,139)
(3,599)
(14,616)
15,482
15,598
6,439
(1,185)
20,852
65,288
(44,436)
20,852
2004
99,028
65,367
17,241
(19,274)
(1,622)
27
723
–
161,490
37,581
(26,357)
(47,769)
(23,939)
101,006
(25,312)
(16,692)
59,002
42,943
16,749
2,114
277
(9,658)
(123,075)
(1,609)
(72,259)
5,686
–
(761)
(16,397)
(9,426)
(20,898)
(34,155)
20,852
(1,385)
(14,688)
26,330
(41,018)
(14,688)* Adjusted for comparison purposes.
(EUR x 1,000)
C a s h f l o w f o r o p e r a t i o n a l a c t i v i t i e s
Operating profit before financing costs
Adjustments for:
Depreciation
Amortisation
Foreign exchange losses
Change in minority interest
Share of profit associates
Result on sale of fixed assets
Equity settled share based payments
Operating profit before changes in working capital and provisions
Decrease in trade and other receivables
In(de)crease in inventories
In(de)crease in trade and other payables
In(de)crease in provisions and employee benefits
Cash generated from operating activities
Interest paid
Income tax paid (received)
Net cash from operating activities
C a s h f l o w f r o m i n v e s t i n g a c t i v i t i e s
Proceeds from sale of plant and equipment
Proceeds from sale of investments
Interest received
Dividends received
Acquisition of subsidiary, net of cash acquired
Acquisition of property, plant and equipment
Acquisition of other investments
Net cash from investing 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
Proceeds from the issue of share capital
Proceeds from other non-current borrowings
Repurchase of own shares
Repayment of borrowings
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents at 31 December
Presentation in balance sheet:
Cash and cash equivalents
Bank overdrafts
The following tables show the details of recognised income resulting in the equity movements for the reporting
period and the comparative data for the previous reporting period.
(EUR x 1,000)
Opening balance 1 January 2003
Stock dividend previous year
Cash dividend previous year
Addition to other reserves
Exercised options
Repurchase/purchase share certificates
Currency exchange differences group companies
Other
Result for the year
Total recognised income
Closing balance 31 December 2003
(EUR x 1,000)
Opening balance 1 January 2004
Issue of shares
Stock dividend previous year
Cash dividend previous year
Exercised options
Repurchase/purchase share certificates
Currency exchange differences group companies
Other
Result for the year
Total recognised income
Closing balance 31 December 2004
141
1 3 D u t c h G A A P e q u i t y m o v e m e n t s
Unappro-priated
retainedprofit
60,218
(62)
(14,616)
(45,540)
–
–
–
–
32,420
(27,798)
32,420
Other reserves
5,860
–
–
45,540
886
(5,139)
(1,837)
–
39,450
45,310
ReserveCurrency
differ-ences
(4,510)
–
–
–
–
–
(42,629)
–
–
(42,629)
(47,139)
Capital surplus
207,159
–
–
–
–
–
–
–
–
–
207,159
Issued and paid
up capital
2,971
62
–
–
–
–
–
–
–
62
3,033
Total 2003
271,698
–
(14,616)
–
886
(5,139)
(42,629)
(1,837)
32,420
(30,915)
240,783
Unappro-priated
retainedprofit
32,420
(77)
(9,426)
(22,917)
–
–
–
–
49,456
17,036
49,456
Other reserves
45,310
–
–
22,917
5,686
(761)
–
(2,502)
–
25,340
70,650
ReserveCurrency
differ-ences
(47,139)
–
–
–
–
–
(23,104)
–
–
(23,104)
(70,243)
Capital surplus
207,159
–
–
–
–
–
–
–
–
–
207,159
Issued and paid
up capital
3,033
77
–
–
–
–
–
–
–
77
3,110
Total 2004
240,783
–
(9,426)
–
5,686
(761)
(23,104)
(2,502)
49,456
19,349
260,132
Reference is made to the notes with the consolidated balance sheet in accordance with IFRS. Differences between
Dutch GAAP and IFRS are explained hereunder.
14.1 I n t a n g i b l e f i x e d a s s e t s
Refer to note 5.36 and 5.37 of the consolidated financial statements based on IFRS.
N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
(EUR x 1,000)
Intangible fixed assets
As of 1 January
Purchase value
Cumulative amortisation
Book value
Movement during the year
Goodwill related to the acquisition of business combinations
Change goodwill previous years
Amortisations
Exchange rate differences
As of 31 December
Purchase value
Accumulated amortisation
Balance
14.2 T a n g i b l e f i x e d a s s e t s
Refer to note 5.35 for the consolidated financial statements based on IFRS.
As at 31 December 2003 leased assets are not recognised (EUR 17,530) contrary to IFRS where these qualify
as financial lease. In 2004 these assets were acquired. The remaining difference of EUR 840 is caused by the
IFRS interpretation of the components approach.
14.3 F i n a n c i a l f i x e d a s s e t s
Refer to note 5.38 for the consolidated financial statements based on IFRS.
Financial fixed assets at 31 December 2003 are, compared to IFRS, EUR 9,758 higher. The difference relates to
the accounting treatment of the 50% ownership of two vessels. Fugro has acquired full ownership of these two
vessels in 2004 (refer to note 5.8.1).
142
1 4 N o t e s t o t h e c o n s o l i d a t e d D u t c h G A A P f i n a n c i a l s t a t e m e n t s
2003
234,240
(16,224)
218,016
91,475
–
(12,686)
(4,863)
73,926
320,463
(28,521)
291,942
2004
320,463
(28,521)
291,942
1,335
27,897
(17,241)
(1,844)
10,147
349,695
(47,606)
302,089
14.4 S t o c k s a n d w o r k i n p r o g r e s s
Refer to note 5.41 for the consolidated financial statements based on IFRS. Work in progress includes unbilled
receivables.
IFRS requires a different presentation of work in progress as outlined in note 7.6.9. This causes the difference
in carrying value of EUR at 31 December 2004 under Dutch GAAP.
14.5 A c c o u n t s r e c e i v a b l e s
Refer to note 5.42 for the consolidated financial statements based on IFRS. Under Dutch GAAP accounts
receivable do not include unbilled receivables; these are included under work in progress.
This heading does include the tax receivables which, for different amounts, are under IFRS separately
presented on the face of the balance sheet. Under IFRS EUR 368 was written off from inventories to reflect fair
value.
14.6 P r o v i s i o n s
(EUR x 1,000)
As of 1 January
Allocation
Addition related to acquisition
Withdrawals
As of 31 December
The other provisions comprise mainly maintenance provisions.
14.7 L o n g t e r m d e b t s
Refer to note 5.46 for the consolidated financial statements based on IFRS.
The convertible loan included under this heading is valued at its nominal value of EUR 100 million.
The valuation of the private placement loans in USD is based on the currency exchange rate used to hedge
the nominal amounts of these loans. Lease obligations (as at 31 December 2003) are disclosed in the notes
14.8 S h o r t t e r m l i a b i l i t i e s
Refer to note 5.20 for the consolidated financial statements based on IFRS.
Short term liabilities do not include amounts invoiced which at a project level surpass the work in progress.
Furthermore, tax liabilities are included which under IFRS are presented on the face of the balance sheet.
143
Total 2004
34,246
10,523
–
(31,290)
13,479
Other
4,895
2,181
–
(4,945)
2,131
Restruct-uringcosts
22,074
5,170
–
(25,553)
1,691
Deferred
2,917
3,172
–
–
6,089
Pensionobliga-
tions
4,360
–
–
(792)
3,568
Total 2003
12,706
4,270
20,405
(3,135)
34,246
14.9 O f f - b a l a n c e r i g h t s a n d o b l i g a t i o n s
Refer to note 5.58 for the consolidated financial statements based on IFRS.
Under Dutch GAAP the off-balance sheet commitments in 2003 for shorter than one year are EUR 10,080
higher and for two to five years EUR 21,846 higher with regard to lease obligations, mainly due to vessels that
have been reported as tangible fixed assets under IFRS.
14.10 R e v e n u e
Refer to note 5.28 for the consolidated financial statements based on IFRS.
Revenue includes the movement in work in progress EUR 7,918 (2003: EUR 254). Consolidation of a 50%
subsidiary contributes EUR 5,713 (2003: EUR 7,949) to revenue under Dutch GAAP.
14.11 P e r s o n n e l e x p e n s e s
Refer to note 5.30 for the consolidated financial statements based on IFRS.
Apart from the absence of option costs EUR 3,531 in 2004 (2003: EUR 1,944) the personnel expenses deviate
as a result of not recognizing the consequences following from the calculations for the Defined Benefit plans
and the consolidation of a 50% subsidiary EUR 932 (2003: EUR 912).
14.12 D e p r e c i a t i o n
Refer to note 5.35 for the consolidated financial statements based on IFRS.
Depreciation does not contain for 2004 the leased assets EUR 1,781 (2003: EUR 4,750). Furthermore,
depreciation from the consolidated 50% subsidiary amounts to EUR 423 (2003: EUR 557).
14.13 O t h e r o p e r a t i n g e x p e n s e s
Refer to note 5.31 for the consolidated financial statements based on IFRS.
These include lease payments to an amount of EUR 3,187 (2003: EUR 8,500) and exclude in 2003 and 2004 a
total amount of EUR 22,700 reorganisation expenses following acquisitions, which is under Dutch GAAP taken
into goodwill.
14.14 A m o r t i s a t i o n o f g o o d w i l l
Capitalised goodwill is amortised over a period of maximum 20 years, contrary to IFRS, which does not allow
goodwill to be amortised.
14.15 F i n a n c i n g c o s t s
Refer to note 5.32 for the consolidated financial statements based on IFRS.
Under Dutch GAAP this item does not include interest on lease payments (2003: EUR 3,750), the amortisation
of the effective interest on the convertible loan EUR 2,565 (2003: EUR 2,499) and foreign exchange rate
differences on short term hedge contracts EUR 417 (2003: EUR 562 positive).
14.16 T a x e s
Refer to note 5.33 for the consolidated financial statements based on IFRS.
At year-end 2004 income tax receivable is EUR 8,233 (2003: EUR 5,174) and income tax payable is EUR 11,563
(2003: EUR 9,457). The Group has not recognised deferred tax assets relating to temporary differences and
deferred tax liabilities of EUR 6,089 (2003: 2,917). Tax losses carried forward are valued in the balance sheet at
year-end 2004 at EUR 910 (2003: EUR 1,096).
The difference between the nominal tax rate (34.5% based on the Dutch rate) en the effective tax rate (25%)
over 2004 is primarily caused by the application of local lower tax rates.
14.17 A r t i c l e 4 0 2
The Company profit and loss account is prepared under the application of Article 402 Book 2 BW.
144
(EUR x 1,000)
F i x e d a s s e t s
(17.1) Intangible fixed assets
(17.2) Tangible fixed assets
(17.3) Financial fixed assets
Current assets
(17.4) Receivables
Cash and banks
Total assets
(17.5) E q u i t y
Issued and paid in capital
Capital surplus
Other reserves
Net result for the year
(17.6) Provisions
(17.8) Long term debts
(17.9) Short term liabilities
Total shareholders equity and liabilities
1 5 D u t c h G A A P C o m p a n y b a l a n c e s h e e tBefore appropriation of result
145
2004
77,907
548
435,810
514,265
15,636
4,381
20,017
534,282
3,110
207,159
407
49,456
260,132
185
256,364
17,601
534,282
2003
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
(EUR x 1,000)
Net result subsidiaries
Other results
Net result before amortisation of goodwill
(14.14) Amortisation of goodwill
Net result for the year
Added to unappropriated result
Other results concern the costs of the Company less reimbursements from subsidiaries.
1 6 D u t c h G A A P C o m p a n y i n c o m e s t a t e m e n t
146
2003
39,298
(2,262)
37,036
(4,616)
32,420
32,420
2004
60,279
(6,172)
54,107
(4,651)
49,456
49,456
17.1 I n t a n g i b l e f i x e d a s s e t s
17.1.1 Goodwill
(EUR x 1,000)
Opening balance 1 January
Acquisition costs
Cumulative amortisation
Book value
Movements during the year
Amortisation
(EUR x 1,000)
Closing balance 31 December
Acquisition cost
Cumulative amortisation
Book value
17.2 T a n g i b l e f i x e d a s s e t s
(EUR x 1,000)
Opening balance 1 January
Investments (net)
Depreciation
Book value 31 December
(EUR x 1,000)
Closing balance 31 December
Acquisition cost
Cumulative depreciation
Book value 31 December
1 7 N o t e s t o t h e D u t c h G A A P C o m p a n y f i n a n c i a l s t a t e m e n t s
147
2003
93,024
(5,850)
87,174
(4,616)
2003
93,024
(10,466)
82,558
2004
93,024
(10,466)
82,558
(4,651)
2004
93,024
(15,117)
77,907
2003
883
10
(242)
651
2004
651
335
(438)
548
2003
1,676
(1,025)
651
2004
2,011
(1,463)
548
17.3 F i n a n c i a l f i x e d a s s e t s
The full list of group companies is included in the pages 119 through 121.
(EUR x 1,000)
Opening balance 1 January
Net result subsidiaries
Acquired subsidiaries
Loans
Dividend received
Exchange rate differences
Other
Closing balance 31 December
* Included herein is a loan to a group company bearing an interest of 5%. In principle the loan will be repaid in two years.
17.4 R e c e i v a b l e s
(EUR x 1,000)
Receivables from group companies
Taxes and social security premiums
Other receivables
Closing balance 31 December
17.5 E q u i t y
Reference is made to page 141.
17.6 P r o v i s i o n s
(EUR x 1,000)
Pensions
Other
Closing balance 31 December
17.7 P e n s i o n o b l i g a t i o n s
The calculations of the provision for pensions take into account an interest of 3% (2003: 3%).
148
Total 2003
345,499
39,298
101,807
18,414
(11,985)
(42,629)
(1,545)
448,859
Total 2004
448,859
60,279
8,520
(65,872)
–
(23,104)
7,128
435,810
*Loans/receivablesfrom groupcompanies
79,904
–
–
(65,872)
–
76
–
14,108
Partici-pation in
group companies
368,955
60,279
8,520
–
–
(23,180)
7,128
421,702
2003
4,969
6,856
4,748
16,573
2004
5,174
6,562
3,900
15,636
2003
233
91
324
2004
185
–
185
17.8 L o n g t e r m d e b t s
(EUR x 1,000)
Convertible subordinated loan
Private Placement loans
Closing balance 31 December
For the notes to the convertible loan and the Private Placement loans reference is made to note 5.46.2 of the
consolidated IFRS statements.
The average interest on long term debt amounts to 5.8% per annum (2003: 5.8%).
17.9 S h o r t t e r m l i a b i l i t i e s
(EUR x 1,000)
Banks current-accounts
Trade creditors
Interest payable Private Placement
Interest payable convertible loan
Group companies
Other payables
Closing balance 31 December
17.10 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 liabilities for a number of Dutch subsidiaries at
the relevant Chambers of Commerce.
The Company has deposited a list with the Chambers of Commerce which included all financial interests of
the Group in subsidiaries as well as a reference to each subsidiary for which such a declaration of liability has
been deposited.
Leidschendam, 10 March 2005
149
Over 5 years
–
156,364
156,364
Total
100,000
156,364
256,364
Over 5 years
–
156,364
156,364
Total
100,000
156,364
256,364
2004 2003
2003
35,561
1,832
1,502
3,562
–
8,713
51,170
2004
–
1,651
1,502
3,562
719
10,167
17,601
Executive Directors
G-J. Kramer, President and Chief Executive Officer
K.S. Wester, Director
A. Jonkman, Chief Financial Officer
Supervisory Board
F.H. Schreve, Chairman
M.W. Dekker, Vice-chairman
J.A. Colligan
P. J. Crawford
Th. Smith
P. Winsemius
18.3 F o u n d a t i o n B o a r d s
Stichting Administratiekantoor Fugro
The Board of the Stichting Administratiekantoor Fugro
comprises Messrs.:
name function term
R. van der Vlist, Chairman Board member 2008
J.V.M. Commandeur Board member 2005
J.F. van Duyne Board member 2007
W. Schatborn Board member 2006
Stichting Beschermingspreferente Aandelen Fugro
The Board of the Stichting Beschermingspreferente
Aandelen Fugro comprises Messrs.:
name function term
S.C.J.J. Kortmann, Chairman Board member B 2006
J.V.M. Commandeur Board member B 2008
J.C. de Mos Board member B 2005
P.H. Vogtländer Board member B 2007
F.H. Schreve Board member A 2006
Apart from Mr. Schreve no Board member has any links
with Fugro.
Stichting Continuïteit Fugro
The Board of the Stichting Continuïteit Fugro in the
Dutch Antilles is composed as follows:
name function term
F.D. Leo, Chairman Board member B 2006
A.C.M. Goede Board member B 2005
R. de Paus Board member B 2007
M.A. Pourier Board member B 2008
F.H. Schreve Board member A Fixed
Apart from Mr. Schreve no Board member has any links
with Fugro.
18.4 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 (as far as relevant):
36.2 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
1 8 O t h e r i n f o r m a t i o n
18.1 A u d i t o r s ’ R e p o r t o n t h e D u t c h
G A A P a n n u a l a c c o u n t s 2 0 0 4
Introduction
We have audited the Dutch GAAP financial statements
(‘financial statements’) of Fugro N.V., Leidschendam for
the year 2004 (as set out on pages 134 to 149). These
financial statements are the responsibility of the
company’s Management. Our responsibility is to express
an opinion regarding these financial statements, based
on our audit.
Scope
We conducted our audit in accordance with auditing
standards generally accepted in the Netherlands. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the accounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles
used and significant estimates made by Management,
as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides
a reasonable basis for our opinion.
Opinion
In our opinion, the financial statements give a true and
fair view of the financial position of the company as at
31 December 2004 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 2005
KPMG Accountants N.V.
18.2 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
Reference is made to note 5.59.
150
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.
36.5 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.
36.6 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.
36.7 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.
18.5 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 EUR 28.8 million be paid out in the form of
a cash payment of EUR 1.90
per (depositary receipt of) share with a nominal value of EUR
0.20 or in the form of (depository receipts of) ordinary shares
with a nominal value of EUR 0.20 charged to the reserves.
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.
36.3 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.
36.4 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
151
R e s u l t (x EUR 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 EUR 1,000)
Tangible fixed assets
Investments
of which in acquisitions
Depreciation of tangible fixed assets
Net current assets 2)
Total assets
Provisions
Long-term liabilities
Capital and reserves 2)
K e y r a t i o s (in %) 3)
Operating result/turnover
Net result/turnover
Net result/net revenue
Net result/capital and reserves 2)
Group’s equity/total assets 2)
Interest cover
D a t a p e r s h a r e (x EUR 1.–) 3)
Capital and reserves 2)
Operating result 4)
Cash flow 4)
Net result 4)
Dividend
S h a r e p r i c e (x EUR 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 (x 1,000)
Of nominal EUR 0.20 at year-end
Of nominal NLG 1.– at year-end
Of nominal NLG 10.– at year-end
Of nominal NLG 100.– at year-end
152
H i s t o r i c r e v i e w 1)
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
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
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
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
2004
1,021,639
375,242
646,397
111,003
132,064
66,697
232,116
113,140
45,938
65,367
132,258
970,427
13,479
397,474
260,132
10.9
6.5
10.3
26.6
27.3
4.0
16.73
7.48
8.90
4.49
1.90
61.40
65.65
40.20
7,615
15,548
1) Based on Dutch GAAP
2) In 2003 and 2002 no accrued dividend has been incorporated.
3) Before amortisation of goodwill.
4) Unlike preceding years the figures as from the year 1999 have been calculated based upon the wweeiigghhtteedd average number of outstanding shares.
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
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
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
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
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
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
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
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
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
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
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
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
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
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
153
The Board of the Stichting comprises Messrs.:
R. van der Vlist, Chairman
J.V.M. Commandeur
J.F. van Duyne
W. Schatborn
Mr. Van der Vlist was General Secretary of N.V.
Koninklijke Nederlandsche Petroleum Maatschappij.
Mr. Commandeur was a member of the Board of
Management of Nagron Nationaal Grondbezit N.V.
Mr. Van Duyne was Chairman of the Board of
Management of Koninklijke Hoogovens N.V. and later
CEO of Corus. Mr. Schatborn was a member of the Board
of Management of Stork.
In accordance with the roster, in June 2005
Mr. Commandeur will resign from the Board of the
Stichting. As Mr. Commandeur has already been a
member of the Board for 14 years, his reappointment is
not deemed advisable. The Board intends to appoint
Mr L.P.E.M. van den Boom. In accordance with Art. 4.3 of
the Articles of Association, the Board offers holders of
depository receipts of shares with a holding of 15% of the
issued depository receipts of shares the opportunity to
request, before 22 April 2005 , that the Board convenes a
Meeting of holders of depository receipts of shares in
order to nominate a candidate for membership of the
Stichting Board. The request should be submitted to the
Stichting’s office, in writing, and should state the name
and address of the nominee.
In 2004 the remuneration of the Board amounted to
EUR 21,000 and the total costs of the Stichting amounted
to EUR 91,457.
On 31 December 2004, 13,367,060 ordinary shares with
a nominal value of EUR 0.20 were in administration,
against which 13,367,060 depository receipts of shares in
denominations of 1, 10 and 100 shares with a nominal
value of EUR 0.20 had been issued in CF-form. During the
financial year 11,714 certificates were converted into
ordinary shares and 58,611 ordinary shares were
converted into certificates. 304,874 depository receipts
of shares were issued as a result of the stock dividend.
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, 23 February 2005
The Board
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 19 of the Administration
Conditions for the ordinary shares in the name of Fugro
N.V., the undersigned issue the following report to
holders of depository receipts of shares (certificates).
During 2004 all the Stichting’s activities were related
to the administration of ordinary shares against which
depository receipts of shares have been issued. The Board
met twice during 2004; the meetings were dedicated to
preparations for the Annual General Meeting of
Shareholders in Fugro N.V. and on 30 September 2004 the
Meeting, held after the publication of the half-yearly
results of Fugro N.V., was dedicated to the general
business. Another topic discussed was Corporate
Governance within the Company.
On 6 April 2004 the Articles of Association and the
Administrative Conditions were amended to comply with
the Dutch Corporate Governance Code, with the
exception of Best Practice stipulation IV. 2.8 (see also
page 50). Since then all the members of the Stichting’s
Board have been independent of the Company. The Board
may offer holders of depository receipts of shares the
opportunity to recommend candidates for appointment
to the Board. Further regulations related to the holding of
a meeting of holders of depository receipts of shares have
been drawn-up. The Stichting is authorised to accept
voting instructions from holders of depository receipts of
shares and to cast these votes during a General Meeting of
Shareholders. The Stichting has taken advice regarding
the aforementioned amendments to the Articles of
Association and the Administrative Conditions.
The Board attended the Annual General Meeting
of Shareholders in Fugro N.V. on 19 May 2004 and
represented 73.1% in favour of the votes cast.
The Stichting voted for all the points put to the vote.
In accordance with the Administrative Conditions,
holders of depository receipts of shares were offered
the possibility of voting, in accordance with their own
opinion, as authorised representatives of the Stichting.
This opportunity was taken by 54 holders of depository
receipts of shares with 1,882,628 certificates.
A Meeting of Holders of Depository Receipts of Shares
also took place on 19 May 2004. 11 holders of depository
receipts of shares, representing 1,935,576 certificates
attended, or were represented at this Meeting. The
Meeting expressed its confidence in the Stichting’s Board.
The minutes of this Meeting are published on the
Company’s website (www.fugro.com).
154
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 4
Regarding 4.75% in depository receipts of ordinary shares
convertible subordinated debenture bond 2000 per 2005 of
EUR 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 EUR 0.20 at a conversion price of EUR 64.21.
During the year no bonds have been offered for con-
version so that on 31 December 2004 the outstanding
amount of the bond was EUR 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 N.V,
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, 3 February 2005
N.V. Algemeen Nederlands Trustkantoor ANT
L.J.J.M. Lutz
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
Amsterdam N.V. in Amsterdam.
Leidschendam, 23 February 2005
Fugro N.V.
The Board of Management
Stichting Administratiekantoor Fugro
The Board
155
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
(hydrophones) to measure 9sub) 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.
UAV (Unmanned Airborne Vehicle): unmanned autonomous mini-aircraft
equipped with electromagnetic measuring equipment.
F i n a n c i a l t e r m s
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.
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 revenue 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.
G l o s s a r y
T e c h n i c a l t e r m s
2D 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 reservoirs.
3D Seismic: accoustic measuring technology which uses multiple ship-towed long
hydrophone streamers. This technique generates a 3D model of the deep seabed and is
used to locate and analyse 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 vessel 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, bio stratification, 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.
156
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,
Hermitage Amsterdam,
International Liszt Concours.
Text:
Boogaard Communications
Consultancy (BCC) v.o.f.
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.
For complete information, see www.fugro.com
GEOTECHNIEK
MILIEU ONDERZOEK