Boskalis Annual Report 2018

119

Contractual cash flows One year or less

More than 5 years

As at 31 December 2017 REVISED

Book value

1 - 5 years

US private placements

269,398

325,136

9,906

39,624

275,606

Other interest-bearing borrowings

1,466

1,715

347

1,368

- - - - -

Bank overdrafts

40,794 978,922 148,488

40,931 978,922 148,488

40,931 978,922 148,488

- - -

Trade and other payables

Income tax payable

Derivatives

2,258

2,258

2,231

27

1,441,326

1,497,450

1,180,825

41,019

275,606

28.1.3 MARKET RISK Market risk concerns the risk that Group income or the value of investments in financial instruments is adversely affected by changes in market prices, such as currency exchange rates, interest rates and fuel prices. The objective of managing market risks is to keep the market risk position within acceptable boundaries while achieving the best possible return. Currency risk The presentation currency of the Group is the euro. A number of group companies (the most important of which being Dockwise) and substantial joint ventures and associates (Smit Lamnalco, Keppel Smit Towage, Asian Lift and Saam Smit Towage) have other functional currencies than the euro. The main other currency is the US dollar (the functional currency of the Dockwise, Smit Lamnalco and Saam Smit Towage entities) and to a lesser extent the Pound Sterling and Singapore dollar. The revenue and expenses of these companies are largely or entirely based on their functional currency, other than the euro. In 2018 group companies, joint ventures and associates with a functional currency other than the euro contributed approximately 20% (2017: 25%) to Group revenue, 35% (2017: 40%) to the operating result excluding impairment charges and 30% (2017: 35%) to EBITDA. The Board of Management has defined a policy to control foreign currency risk based on the hedging by group companies of material transactions in foreign currencies other than the functional currency. The policy is that these group companies hedge any material currency risks resulting from operational transactions in currencies other than their functional currency. This is mainly relevant for group companies involved in dredging or offshore energy projects. The functional currency of a large part of the activities of group companies is the euro. The expenses of these companies are mainly presented in euros and to a lesser extent in the local currency of the country in which the activities are undertaken. The Group contracts projects mainly in euro, US dollar, Pound Sterling and other currencies pegged to the US dollar. The Group only uses derivative financial instruments to hedge underlying business transactions, mainly future cash flows from contracted projects. In most cases forward currency contracts are used to hedge foreign currency cash flows. Also, cash / bank overdraft balances are sometimes used to hedge currency exposures from future cash flows. The same currency and quantity are designated to the hedge, resulting in a one-to-one relationship and in principle in a hedge ratio of one. The Group tests the economic relationship of the hedges periodically. Exposure to currency risk The Group’s currency risk management policy was maintained in 2018 and resulted in a non-material sensitivity of the Group to currency transaction risk.

The following significant exchange rates applied during the year under review:

Average rate

Spot rate as at 31 December

2018

2018

2017

2017

Euro

US dollar

1.180 0.886 1.590

1.133 0.874 1.561

1.143 0.898 1.558

1.201 0.888 1.605

Pound Sterling Singapore dollar

ANNUAL REPORT 2018 – BOSKALIS A AL REP RT 2018 -- BOSKALIS