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ANNUAL REPORT 2016 – BOSKALIS
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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 substantial reduction in the scope of a
contract.
OTHER RISKS
COMPLIANCE WITH LEGISLATION AND REGULATIONS
As an international dredging and marine contracting and services
expert Boskalis is active in numerous countries, and therefore has
to 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, which
are set out below. In addition, the company has a
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.
Furthermore, Boskalis has n place and a
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.
The above is an overview of what we currently consider to be
the most important strategic, operational, financial and other risks
we face in pursuing our business objectives. The overview is not
exhaustive. There may be other risks which we currently do not
consider to be significant, but which may manifest themselves
as such.
INTERNAL RISK MANAGEMENT AND CONTROL SYSTEMS
The internal risk management and control systems of Boskalis are
based on the principles of effective management control 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 control 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
avoiding potentially perverse incentives.
Given the hands-on nature of the company and the short lines of
communication, there are three important factors in assessing and
evaluating our internal risk management and control systems:
1. In the daily operations, the operational risk management and
control is largely supported by an extensive framework of
quality assurance rules, procedures and systems, in particular
regarding the acquisition and execution of contracts. These
include guidelines for responsibilities, powers and risk control.
The adequacy of this framework is reviewed regularly, also
considering the increasing diversity of the contracting and
project activities the company performs in accordance with its
strategy. In addition to audits by external certification
agencies, Boskalis also performs regular internal audits under
the auspices of the SHE-Q department. SHE-Q is discussed at the
quarterly meetings between the Board of Management and
the management of the business units, with the management
of the SHE-Q department also being present.
2. 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.
3. 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.
RISKS WITH REGARD TO FINANCIAL REPORTING
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 extensive consolidated
quarterly reports in which current developments are compared to
the quarterly (cumulative) budgets and previous forecasts. In
addition, each quarter we reiterate or update our forecast for the
annual results, including the cash flow and balance sheet positions
at the end of the financial year. The quarterly budgets are part of
the annual group budget, which is prepared every year by the
Board of Management and approved by the Supervisory Board.
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