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The US private placements and some of the cash and cash equivalents, short-term deposits and other
interest bearing loans have fixed interest rates.
Sensitivity analysis
In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on Group
earnings. In the long term, however, permanent changes in interest rates will have an impact on profit.
At the reporting date and taking into account the corresponding effective hedge instruments, the interest
rate profile of the Group’s interest-bearing financial instruments was:
2016
2015
FIXED RATE INSTRUMENTS
Financial assets
264,093
293,442
Financial liabilities
- 761,431
- 717,306
- 497,338
- 423,864
VARIABLE RATE INSTRUMENTS
Financial assets
701,238
500,278
Financial liabilities
- 1,188
- 245,661
700,050
254,617
A drop of 100 basis points, insofar as possible, in interest rates at 31 December 2016 would have no
material impact on the Group’s profit before income tax (2015: increase of approximately
EUR 0.9 million), with all other variables, in particular currency exchange rates, remaining constant. A rise
of 100 basis points in interest rates at 31 December 2016 would have increased the Group’s profit before
income tax by a maximum of EUR 7.0 million (2015: increase by a maximum of EUR 2.5 million), with all
other variables, in particular currency exchange rates, remaining constant.
Price risks
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 approved fuel
price risk management instruments. These include: delivery of fuel by the client, price escalation clauses,
fixed price supply contracts and financial derivatives (forward, future and swap contracts).
ON-BALANCE FINANCIAL INSTRUMENTS AND FAIR VALUE
28.2
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. Furthermore, the Group holds a
number of interest rate swaps. These are recognized under other derivatives.
The fair value of the 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 on 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 supposed to be equal to their book value.
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ANNUAL REPORT 2016 – BOSKALIS
FINANCIAL STATEMENTS 2016