Boskalis_Annual Report_2017

119

The remaining time to maturity of these derivatives is directly related to the remaining time to maturity of the relating underlying contracts in the order book.

Cash flows from forward currency buying and selling can be rolled forward at the settlement date if they differ from the underlying cash flows.

The results on cash flow hedges recognized in Group equity are as follows:

2017

2016

- 3,905

Hedging reserve as at 1 January

- 15,207

19,470

Movement in fair value of cash flow hedges recognized in Group equity

- 2,004

Transferred to the Statement of Profit or Loss (Raw materials, consumables, services and subcontracted work)

1,573

15,265 13,261 - 2,034 11,227

21,043 - 3,257 17,786

Total directly recognized in Group equity

Taxation

Directly charged to hedging reserve (net of taxes)

Change in fair value of cash flow hedges from joint ventures and associated companies, after taxation

- 8,415

6,365 - 6,290

-

Reclassification of hedge reserve to statement of profit or loss

- 8,415

75

5,466

Balance of hedging reserve as at 31 December

- 3,905

The results on non-effective cash flow hedges are presented within the costs of raw materials, consumables, services and subcontracted work and amount to EUR 2.2 million positive in 2017 (2016: EUR 1.4 million positive).

Netting of financial instruments The Group does not net financial instruments in its statement of financial position.

CAPITAL MANAGEMENT 28.3 The Board of Management’s policy is to maintain a strong capital base so as to maintain customer, investor, creditor and market confidence and to support the future development of the business. The Board of Management monitors the return on equity, which the Group defines as net operating income divided by total shareholders’ equity, excluding minority interests. The Board of Management also monitors the level of dividend to be paid to holders of ordinary shares. For the dividend policy, see the Shareholders Information in the Annual Report. The Board of Management seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the benefits of a sound capital position. The Group’s target is to achieve a long-term return on equity of at least 12%. In 2017 the return was 4.9% (2016: −16.5%); adjusted for 2016 impairments after tax, the return on equity in 2017 was 4.9% (2016: 8.1%). The Group’s solvency calculated as the ratio of total liabilities (EUR 1,745 million; 2016: EUR 2,441 million) to Group equity (EUR 3,025 million; 2016: EUR 3,123 million) amounted to 0.58 (2016: 0.78) at the reporting date. OTHER FINANCIAL INSTRUMENTS 28.4 By decision of the General Meeting of Shareholders held on 9 May 2001 the foundation Stichting Continuïteit KBW (the ‘Foundation’) was granted the right to acquire cumulative protective preference shares in Royal Boskalis Westminster N.V. for an amount equal to the nominal amount of the ordinary shares outstanding at the time of issue of the shares concerned, minus the nominal value of one ordinary share. This right qualifies as a derivative financial liability and is subject to the following important conditions. The cumulative protective preference shares shall only be issued to the Foundation against payment of at least one fourth of the nominal sum. Additional payments on cumulative protective preference shares shall only take place after Royal Boskalis Westminster N.V. will have called these payments. After the issue of cumulative protective preference shares to the Foundation, Royal Boskalis Westminster N.V. is obliged, if the Foundation so requires, to reverse the issue by buyback or by cancellation with repayment, There were no changes in the Group’s approach to capital management during the year. Neither the Group nor any Group companies are subject to externally imposed capital requirements.

ANNUAL REPORT 2017 – BOSKALIS AN L REP RT 2017 -- BOSKALIS