Boskalis Annual Report 2020


LIQUIDITY AND FUNDING RISKS As is customary for a contractor, Boskalis also has significant obligations outstanding in the form of guarantees from banks and insurance companies, mainly in favor of clients. Given that the availability of sufficient credit and bank guarantee facilities is essential to the continuity of the business, Boskalis’ funding policy is aimed at maintaining a strong financial position. Solid balance sheet ratios and the use of diversified sources of funding provide for ample capacity to absorb liquidity risks and the constant creation of adequate borrowing capacity and guarantee facilities. The company has ample credit and bank guarantee facilities at its disposal and operates well within the agreed covenants under its financing agreements. CURRENCY RISKS The reporting currency of Boskalis is the euro. Most of the business units have the euro as their functional currency while some use other functional currencies as well. The most important of these is the US dollar, followed by the Singapore dollar. The revenues and expenses of these entities are largely or entirely based on these non-euro currencies. Our holdings in these entities are viewed from a long-term perspective. Exchange rate risks related to these entities are not hedged as it is assumed that currency fluctuations and developments in interest rates and inflation will offset each other in the long term. A significant proportion of the activities of the group companies that have the euro as their functional currency are not contracted in euros. This particularly applies to the group companies that are involved in dredging and related projects. The costs of these entities, however, are largely incurred in euros. Generally, the net cash flows in non-euro currencies within these entities are fully hedged, usually by means of forward exchange contracts. The US dollar exchange

rate in relation to the euro is particularly relevant in this context. A large proportion of the projects is contracted in US dollars or in currencies that are to a greater or lesser extent linked to the US dollar. Most of our major international competitors in the dredging industry also have cost structures largely based on the euro. This implies that exchange rate fluctuations do not have a material impact on our relative competitive position. In several market segments, particularly in Offshore Energy, there is competition from parties whose cost structures are not based on the euro, meaning that the competitive impact of currency fluctuations in these market segments is greater. However, on balance, exchange rate fluctuations only have limited impact on the company’s competitive position in these activities. TAX RISKS Boskalis operates in a large number of jurisdictions and is subject to a variety of taxes per jurisdiction. Tax legislation can be very complex, is subject to change and is often interpreted in different ways. Boskalis is therefore exposed to a variety of direct and indirect tax risks which could lead to double taxation, additional tax payments, penalties and interest payments. Significant judgement is required to determine the overall tax position. The company accounts for its taxes on the basis of internal analyses and judgements, supported by external advice. In the event of uncertain tax positions, the potential consequences are analyzed and accounted for in accordance with the applicable accounting standards. INTEREST RATE RISKS Our long-term financial liabilities are predominantly based on fixed long-term interest rates, meaning that our exposure to interest rate fluctuations on these is limited.

report of the board of management ANNUAL REPORT 2020 – BOSKALIS

Reconstruction of the N3-A16 junction near the city of Dordrecht, the Netherlands

Made with FlippingBook Publishing Software