Boskalis Annual Report 2018

122 ANNUAL REPORT 2018 – BOSKALIS FINANCIAL STATEMENTS 2018 A UAL REP RT 2018 -- BOSKALIS FINANCIAL STATEMENTS 2018 122 Price risks Assets Non-current derivatives Current derivatives Liabilities Non-current derivatives Current derivatives

Risks related to price developments on the purchasing side which are usually borne by the Group, for example developments in wages, costs of materials, sub-contracting costs and fuel, are also taken into account when preparing cost price calculations and tenders. Price index clauses are included in contracts wherever possible, especially on projects that extend over a long period of time. The Board of Management has established a fuel price risk management policy stipulating, amongst other things, approved fuel price risk management instruments based on items such as the amount of fuel costs and the execution period of projects in excess of thresholds. In the event of changes to a project timeline, the Group evaluates the situation to ensure compliance with its risk management objectives and assesses whether a rollover of its position or an adjustment to the hedge is applicable. At year-end 2018 outstanding derivates hedged the price risk of approximately 18,400 tons of gasoil and 30,400 tons of High-Sulphur Fuel Oil. 28.2 ON-BALANCE FINANCIAL INSTRUMENTS AND FAIR VALUE Financial instruments accounted for under assets and liabilities are financial fixed assets, cash and cash equivalents, receivables, and current and non-current liabilities. Derivatives are mainly future cash flows hedged by forward contracts to which hedge accounting is applied. The fair value of forward exchange contracts is based on their listed market price (unadjusted market prices in active markets for identical assets and liabilities) or discounted cash flows based on relevant conditions and durations of the contracts and including public interest rates for comparable instruments as at the balance sheet date, taking into account the credit risk of the counterparty. The fair value of other financial instruments is based on quoted prices or the actual interest rate as at the balance sheet date, taking into account terms and maturity. The fair value of non-interest-bearing financial instruments with a maturity of twelve months or less is deemed to be equal to their book value. The fair value of the majority of the financial instruments does not differ materially from the book value, with the exception of a number of loans and other payables with a fixed rate. The fair value of these instruments is disclosed below.

The carrying amount, fair value and the related hierarchy of derivatives and interest-bearing borrowings with fixed interest rates are:

As at 31 December 2017

As at 31 December 2018

CARRYING AMOUNT

CARRYING AMOUNT

FAIR VALUE

HIERARCHY

FAIR VALUE

HIERARCHY

683

683

2 2

9,904

9,904

2 2

5,684

5,684

19,972

19,972

- 1,701 - 11,435

- 1,701 - 11,435

2 2

- 27

- 27

2 2

- 2,231

- 2,231

Interest-bearing borrowings with fixed interest rates

- 288,751

- 293,160

3

- 270,864

- 279,724

3

Derivatives relate to foreign currency forward contracts used to hedge expected foreign currency cash inflows, with the exception of EUR 60 thousand of the current assets and EUR 2.5 million of the current liabilities that relate to expected cash outflows for fuel costs.

An amount of EUR 283.6 million of the carrying amount of the interest-bearing borrowings with fixed interest rates are designated to net investment hedges.