Annual r eport 2002 Annual r eport 2002 - Boskalis

Financial Statements 2002
In principle, positions in foreign currencies are fully hedged, usually by means
of forward contracts. Financial derivatives (forward contracts, options, etc.) are
not used unless there is an underlying real transaction. In respect of controlling
interest risks, the premise is that, in principle, interest rates for long-term loans
payable are fixed for the entire maturity period. This is achieved by contracting
loans with a fixed interest rate or by using derivatives, such as interest rate swaps.
Given the nature of the activities and the corresponding strong fluctuations in
cash flows, the available cash funds are usually not tied up for periods longer
than one year. Royal Boskalis Westminster nv applies a strict acceptance and
hedging policy with regard to political and payment risks. In principle, payment
risks are hedged by means of bank guarantees, insurance, etc., except in the case
of credit-worthy, first-class debtors. These procedures and the geographical
diversification of the group companies’ activities reduce the risk carried by Royal
Boskalis Westminster nv with regard to credit concentration and market risks.
Financial instruments accounted for on the balance sheet. Financial instruments
accounted for under assets and liabilities are financial fixed assets, cash and
accounts receivable, as well as short- and long-term liabilities. The estimated
real value of these financial instruments resembles the nominal value.
Off-balance-sheet financial instruments. The market value of the off-balance-sheet
financial instruments as at 31 December 2002 reflects the unrealized result at
revaluation of the contracts against calculated forward exchange rates.
As at 31 December 2002 the unrealized positive result amounts to € 39 million
(2001: € 1 million negative). These unrealized results have been taken into account
in the determination of the book value of the underlying balance sheet items or
the estimate of the results for ongoing projects and acquired orders.
The nominal value is € 362 million (2001: € 264 million).
15. Commitments and contingent liabilities
The guarantee commitments as at 31 December 2002 amount to € 551 million
and can be specified as follows (x € 1 million):
Guarantees provided by third parties on behalf of: 2002 2001
• associated companies 30 42
• contracts and joint ventures 475 423
• lease obligations and other financial obligations 46 56
551 521
For the above guarantees outstanding at the end of 2002, counter-guarantees
have been provided to financial institutions for approximately € 551 million
(2001: approximately € 521 million). Two key group companies are jointly and
severally liable in respect of several guarantees. In respect of credit facilities,
it has been agreed that no further securities on existing tangible fixed assets will
be provided.
56
Annual Report 2002