Boskalis Annual Report 2018

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Derivatives The composition of notional amounts of the outstanding derivatives (that are allocated in a hedge accounting relation) as at year-end is presented below.

WITHIN ONE YEAR

AFTER ONE YEAR

TOTAL

2018

USD forward selling (in US dollar) USD forward buying (in US dollar)

- 304,188

- 31,654 - 335,842

20,044

3,060

23,104

Forward selling of other currencies (average contract rates in EUR) Forward buying of other currencies (average contract rates in EUR)

- 157,852

- 14,547 - 172,399

75,077 40,047

-

75,077 49,972

Fuel hedges (in MT)

9,925

WITHIN ONE YEAR

AFTER ONE YEAR

TOTAL

2017

USD forward selling (in US dollar) USD forward buying (in US dollar)

- 128,874

- 98,755 - 227,629

7,039

-

7,039

Forward selling of other currencies (average contract rates in EUR) Forward buying of other currencies (average contract rates in EUR)

- 198,611

- 76,121 - 274,732

81,933

34,343

116,276

The average rate of the USD forward contracts as per 31 December 2018 is USD 1.198.

The Board of Management has established a currency risk management policy stipulating, amongst other things, approved currency risk management instruments, based on items such as the amount of expected foreign currency cash flows and the period of these cash flows related to Group currency risk thresholds. In the event of changes to a project timeline and related foreign currency cash flows, the Group evaluates the circumstances to ensure compliance with its risk management objectives and assesses whether a rollover of its position or an adjustment to the hedge is applicable. The economic relationship between the hedged risk and the assigned derivative is determined by their critical terms. In general the Group uses the same underlying volume and currency of the hedged risk for the derivative, which results in a one-to-one hedge ratio. Limited ineffectiveness occurs in these hedge relationships due to changes in the timing of the hedged transactions. The remaining time to maturity of these derivatives is directly linked to the remaining time to duration of the related 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:

2018

2017

5,466

- 3,905

Hedging reserve as at 1 January

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

- 12,971

19,470

Recycled to the Consolidated Statement of Profit or Loss (raw materials, consumables, services and subcontracted work) Total directly recognized in Group equity (Consolidated Statement of Other Comprehensive Income, in the item Movement in fair value of cash flows hedges)

- 7,445

1,573

- 20,416

21,043 - 3,257 17,786 - 8,415 - 8,415

Taxation

3,931

Directly charged to hedging reserve (net of taxes)

- 16,485

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

- 173 - 173

- 11,192

5,466

Hedging reserve as at 31 December

Any spot elements of the hedges that are separated from the forward element and basic spread elements are included separately in the hedging reserve. At 31 December 2018 the cost of hedging was EUR 6.2 million (1 January 2018: nil). During 2018, an increase of EUR 7.4 million transcend a release of EUR 1.2 million.

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