Boskalis Annual Report 2020


FUEL PRICE RISKS In a substantial part of its activities, Boskalis is exposed to risks arising from changes in fuel prices. Fuel costs are hedged in a number of different ways. Where possible, contracts include fuel price variation clauses. Also, contracts are sometimes based on fuel being supplied by the client. In other cases, where the fuel price presents a substantial risk, exposure can be hedged by means of financial instruments, such as forward contracts or fixed fuel supply contracts. DERIVATIVES Financial derivatives are only used to hedge underlying currency risks, fuel cost risks or other risks where there is a physical underlying transaction. There is, however, a risk of losses arising from the unwinding or settlement of such financial derivatives due to cancellation of a contract or a substantial reduction in the scope of a contract. COMPLIANCE WITH LEGISLATION AND REGULATIONS As an international dredging and marine contracting and services expert, Boskalis is active in numerous countries, and therefore must deal with a wide range of diverse legislation and regulations. Some of the activities are managed by Boskalis local management, but in many countries intermediaries and/or local representatives are used in securing and executing projects. This combination of factors results in a heightened risk that relevant (local) legislation and regulations may not be fully complied with. Events of non-compliance can result in regulatory investigations, litigations and/or sanctions. These risks are as much as possible mitigated by the company’s internal risk management and control systems that include the Boskalis Code of Conduct as well as the Supplier Code of Conduct, which are reviewed and evaluated regularly. Intermediaries and/or local representatives are also contractually bound to comply with our codes of conduct. Entering into contracts with local intermediaries and/or representatives is subject to clearly defined procedures, including background checks. Furthermore, Boskalis has a Speak Up Policy in place and a confidential independent counselor to whom employees can report any suspected misconduct. PROPERTY DAMAGE AND THIRD-PARTY LIABILITIES Boskalis has taken out a broad package of insurances to cover against risks with respect to damage to its properties as well as third-party properties and potential other third-party liabilities. OTHER RISKS

avoiding potentially perverse incentives. In addition to the specific risk mitigation measures mentioned above, our internal risk management and control systems include the following main components: ‚ In the daily operations, the operational risk management and control is largely supported by a comprehensive system of quality assurance rules, procedures and systems, particularly regarding the acquisition and execution of projects (the aforementioned Boskalis Way of Working). ‚ In addition to audits by external certification bodies, Boskalis also performs regular internal audits under the auspices of the SHE-Q department to review the design and operational effectiveness of this system. SHE-Q is discussed at quarterly meetings between the Board of Management and the management of the business units, with the management of the SHE-Q department also participating. ‚ The daily management of the organization is based on short lines of communication and command. Speed, know-how and decisiveness are of the essence, both in the tendering phase and in project execution. Daily management is hands-on. ‚ The progress and development of the operating results and the financial position of individual projects and business units and the Company as a whole, as well as the operational and financial risks, are monitored by means of structured periodical reporting, analysis of the financial results and performance reviews at Board of Management and senior management levels. FINANCIAL REPORTING STRUCTURE Financial reporting at Boskalis is structured within a tight framework of budgeting, reporting and forecasting. A distinction is made between reports for internal and external use. External reporting at group level consists of an annual report, including financial statements audited by the external auditor, as well as a half-year report, containing summarized financial information, both consolidated and segmented. The external reports are based on the internal financial reporting, in accordance with EU-IFRS. Internal financial reporting consists of comprehensive consolidated periodic reports in which current developments are compared to the (cumulative) budgets and previous forecasts. In addition, each quarter we reiterate or update our forecast for the annual results and balance sheet positions at the end of the financial year. The budget is prepared every year by the Board of Management and approved by the Supervisory Board. Cash flows are closely monitored via a six months rolling forecast which is reported on a weekly basis. Internal financial reporting has a layered structure – in accordance with the internal allocation of management responsibilities – with consolidation taking place at successive levels, starting with the projects, through the business units and divisions, and resulting in consolidated group reports. The financial and operating results are analyzed and clarified at each of these levels. Project and contract managers are responsible for budgets, income statements and balance sheets for their projects or contracts, and these are drawn up in accordance with the applicable guidelines and instructions. In turn, business unit managers are responsible for the financial reporting of their respective business units. RISKS REGARDING FINANCIAL REPORTING


The internal risk management and control systems of Boskalis are based on the principles of effective management supervision at various levels in the organization and are tailored to the day-to-day working environment in which the company operates worldwide. One of the main foundations for risk management is the internal culture of the company, which is characterized by a high degree of transparency regarding the timely identification, evaluation and reporting of risks and a remuneration system that is geared to


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