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Royal Boskalis Westminster Reports 116.6 Million Net Profit

The Boskalis 15,960-cubic-meter hopper dredge Oranje.

The Boskalis 15,960-cubic-meter hopper dredge Oranje.

Royal Boskalis Westminster nv, Papendrecht, The Netherlands, released their 2006 financial statement on March 15.

The company achieved a net profit of €116.6 million in 2006, which is 86 percent more than in 2005. Last year closed with a 17 percent higher record turnover of €1,354 million. Boskalis continued its selective contracting policy and benefited from market growth in the more traditional market areas such as Europe, the Middle East and Australia/Asia, as well as opportunities in emerging markets such as Brazil, Russia, India and China. The orderbook reached a new historical high of more than €2.5 billion.

Peter Berdowski, Boskalis CEO said “We have an excellent year behind us and our expectations for the years ahead are also good. Our vessels are almost fully utilized and we are focusing on a broad market spread and good margins. The challenge now will be to pick out the best projects.”

Positive market developments in 2006

The volume of work on the international dredging market reached unprecedented heights, with many large projects in the pipeline. The company is following a policy based on a broad market spread, targeting both existing and new markets. Even more than previously, this means that Boskalis is making deliberate choices about the deployment of people and equipment. This selective contracting policy also produced good results in 2006.

The high market demand is primarily a feature of the markets driven by energy and raw materials. The core activity of dredging and earthmoving, and the partners Archirodon and Lamnalco, generated a strong flow of new contracts. The selective contracting policy made it possible to take appealing opportunities in the Middle East and Australia, and to respond well to new developments in Brazil, Russia, India and China.

But the prospects for Europe are also favorable. Preparations are underway for a range of extensions to container ports, particularly in Germany, the United Kingdom, the Netherlands, France and Spain. These projects are expected to generate a lot of work in the years to come.


A proposal will be submitted to the Annual General Meeting of Shareholders on May 9, 2007 for a dividend, in line with the company’s dividend policy, of €2.04 per share (pay-out 50 percent), to be paid in cash. The dividend will be payable from May 21, 2007 on.

Prospects for the coming year

A further increase in turnover and continued good utilization rates for the equipment are expected for 2007. In general, margins will be good. It is not yet possible to make firm statements about the results expected for 2007.

The investment activity will be at a high level, primarily focused on the accelerated increase of hopper and cutter capacity to capture the growing market demand.

Share split

The Boskalis share price has more than doubled in the last two years. In order to facilitate trading, a proposal will therefore be submitted to the Annual General Meeting of Shareholders on May 9, 2007 to split the share in a ratio of 1:3.

Key figures (in millions of eros) 2006/ 2005 December 31, 2006 / December 31, 2005 Turnover 1,354/1,156 Operating result 150.3/ 82.3 Net profit 116.6/ 62.7 Profit per share (in eros) 4.08/ 2.21 Orderbook 2,543/2,427 Solvency 39.4percent/ 41.3percent

Operational and financial developments Turnover

In the year under review, turnover was €1,354 million (2005: €1,156 million). The rise in turnover of 17 percent was mainly accounted for by dredging and earthmoving. But turnover also increased – by 16 percent – in the energy-driven segment of maritime and terminal services.

Turnover fell in maritime infrastructure, in particular because of the selective contracting policy followed by Archirodon in the booming Middle East market.

Dredging and earthmoving – Home markets (turnover €528 million)

Turnover on the home markets rose to €528 million (2005: €475 million). In Europe, the increase in turnover was particularly strong in the Netherlands. Turnover on the other European home markets was, on balance, stable. Outside Europe, turnover was higher on all of the home markets: Nigeria, Mexico and the United States.

The share of the home markets in turnover matched 2005 at some 40 percent. The Dredging and earthmoving – International projects market (turnover €544 million)

On the international projects market, the turnover in dredging increased to €544 million(2005: €392 million). In the Australia/Asia region there was a strong rise in turnover in the Australian market, which is driven by energy and raw materials and where Boskalis was engaged in a number of major projects. In addition, substantial turnover was achieved in Korea and with a new position in China, on the Tianjin harbor expansion. For the first time, Boskalis was at work in Russia, on a new fairway for Saint Petersburg. There was a strong increase in turnover in the Middle East, in particular because of the major LNG harbor project in Qatar and land reclamation activities in Bahrain and Oman. Turnover in South America moved upwards with major projects in Brazil and Suriname, and beach replenishment in the Dominican Republic.

Dredging and earthmoving – Specialist niche markets (turnover €98 million)

Turnover from specialist offshore services for the oil and gas industry rose to €98 million

(2005: €93 million). These activities consisted mainly of the construction and protection of offshore oil and gas pipelines, for example in Russia, Thailand, Kuwait and the Netherlands, and in the North Sea.

Maritime infrastructure: turnover €141 million
Turnover from maritime infrastructure, which is mainly generated in the Middle East by the 40 percent participating interest in Archirodon, amounted to €141 million (2005: €159 million). Archirodon has a selective contracting policy in a booming Middle East region, where strong market expansion is accompanied by sharp increases in costs for building materials and subcontractors. The company focuses particularly on specialist projects, where attractive margins are possible.

Maritime and terminal services (turnover €43 million)

The increase in turnover generated by the maritime service provider Lamnalco is primarily energy-driven, and it continued last year. Boskalis’ 50 percent share in the turnover amounted to €43 million (2005: €37 million).

Order Book

Orders worth a total of €1,470 million were acquired in 2006, with a broad spread over the various activities and geographical segments. The order book expanded to €2,543 million (year end 2005: €2,427 million). The order book rose particularly in the segments maritime infrastructure (among others a tunnel project in Thessaloniki, Greece) and maritime and terminal services (among others a contract in the port of Aqaba, Jordan). The orderbook includes €271 million for the land reclamation work in Singapore that is still to be carried out (year end 2005: €317 million). The timing of the full resumption of this work is still uncertain due to the unclear sand supply situation.


The rise in turnover, higher operating margins and good fleet utilization pushed up the group result before depreciation, result associated companies, interest and taxation (EBITDA) to €236.8 million (2005: €162.5 million).

The operating result was €150.3 million (2005: €82.3 million); net profit increased to €116.6 million (2005: €62.7 million).

Higher contribution particularly from dredging and earthmoving work

The increase in the contribution from the dredging and earthmoving segment was the major factor behind the higher result. The rapidly growing maritime and terminal services also made a greater contribution to the profit. Lower turnover led to a fall in the contribution from the maritime infrastructure activities.

Segment result (in millions of euros) 2006/2005 Dredging and earthmoving 135.2/65.3 Maritime infrastructure 11.7/16.3 Maritime and terminal services 9.6/6.2

Dredging and earthmoving

The result from this segment increased to €135.2 million (2005: €65.3 million), primarily because of the increase in turnover, higher margins and good equipment utilization. The result for the segment includes exceptional income of €11.6 million (before taxation). This is a payment on an old claim under international debt restructuring for Nigeria.

The average utilization rate for the hopper fleet rose to 43 weeks on an annual basis (2005: 37 weeks), primarily because of the increased utilization of the large trailing suction hopper dredges. Utilization of the cutter fleet was also good, mainly because of the deployment of the larger cutter suction dredges on a few major projects: 34 weeks on an annual basis (2005: 36 weeks).

Maritime infrastructure

The result from maritime infrastructure (40 percent holding in Archirodon) was down at €11.7 million (2005: €16.3 million) as a result of the selective contracting policy and the associated lower turnover.

Maritime and terminal services

The result in this segment (50 percent holding in Lamnalco) rose further to €9.6 million (2005:€6.2 million), particularly as the result of increasing turnover and good operating performance.


Depreciation amounted to €86.6 million, compared to €80.2 million in 2005. This increase was mainly attributable to depreciation on the equipment brought in by the acquisitions of Wasa Dredging in Finland and Blankevoort in The Netherlands, and to additional depreciation charges in a number of large project joint ventures.

The result from associated companies was €2.8 million (2005: €0.3 million). Compared to the previous year, there was an improvement in the result from a number of American participating interests operating dredging equipment. The higher result led to an increase in taxes to €35.3 million (2005: €18.1 million). The effective tax rate was 23.2 percent (2005: 22.2 percent).

For 2006, the return on equity was 20.1 percent (2005: 12.4 percent).

Capital expenditure

In the year under review, capital expenditure reached €185 million. Large investments were made in the dredging and earthmoving segment: approximately €40 million in the equipment of the acquired dredging companies Wasa Dredging and Blankevoort, and some €104 million in fleet extensions and overhauls, as well as pipelines and auxiliary equipment. A major proportion of the capital expenditure (€23 million) came from Lamnalco (maritime and terminal services segment), which is beginning an ambitious growth strategy, mainly in response to rapidly increasing demand for services at LNG import and export terminals. In addition, Archirodon (maritime infrastructure segment) made investments, particularly in equipment for specific projects (€18 million).

Divestments totalled €18 million, this concerned mainly the loss of trailing suction hopper dredger Nautilus, that capsized in Congo at the end of last year.

On balance net investments amounted to €167 million (2005: €79 million).

Balance sheet

In line with the increased operating results, the cash flow in 2006 rose to €203.6 million (2005: €143.5 million).

Particularly as a result of the relatively high level of investments in relation to the cash flow and the distribution of €31.5 million of dividend over the 2005 financial year, there was a limited increase in the cash position to €216 million (year end 2005: €201 million). Part of this amount, €110 million, was freely available (year end 2005: €116 million) and €106 million was tied up in associated companies and projects that are being executed in cooperation with third parties (year end 2005: €85 million).

Solvency as at December 31, 2006 was 39.4 percent (2005: 41.3 percent).

The annual report is scheduled for publication in early April 2007.

Royal Boskalis Westminster nv is an international group with core activities in the construction and maintenance of ports and waterways, land reclamation, coastal defense and riverbank protection. The company holds home market positions in and outside of Europe, and targets all market segments in the dredging industry. It also has positions in strategic partnerships in the Middle East (Archirodon) and in offshore services (Lamnalco). Boskalis has a fleet of more than 300 units, and operates in more than 50 countries in five continents. Including its share in partnerships, The company has approximately 8,000 employees.

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