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.

Boskalis holds several investments in joint ventures and associated companies and these holdings are intensively monitored. Shareholder and/or board meetings are held regularly, with Boskalis being represented in line with the size of its interest. Clear shareholder agreements have been concluded with the co-shareholders in such joint ventures regarding topics such as board and management representation, filling of management positions, strategy and policy, budget, financial reporting, the appointment of auditors, investments and financing. The policy is that such joint ventures are in principle financed without guarantees from the shareholders.

The Board of Management discusses the quarterly reports with the relevant business unit managers in formal quarterly meetings. These meetings are minuted. The consolidated group reports are discussed with the Supervisory Board on a quarterly basis.

The most important aspects of our financial reporting systems are set out in manuals, guidelines and procedures, all of which are available electronically. Staff are trained in how to apply accounting standards, guidelines and procedures. Internal audits to monitor and improve quality and discipline are conducted based on an annual audit plan and ad hoc examinations. Moreover, the quality of the financial control systems is evaluated regularly in the context of the activities of the external auditor. Findings concerning the quality of the financial control systems identified during the audit of the financial statements are reported by the external auditor in the Management Letter.

We apply a Financial Control Framework (FCF) that stipulates and documents the control requirements to help mitigate financial (reporting) risks. The updated COSO internal control framework serves as the main standard of reference for our FCF. The set-up of the electronic communication platform containing the FCF-documentation matches that of our WoW-system with the aim of optimizing its user-friendliness for our staff.

Internal audit function

In addition to the internal audits performed under the auspices of the SHE-Q department, Boskalis has an internal audit function that mainly focusses on the company’s management and financial reporting processes. It is guided by the International Standards for the Professional Practice of Internal Auditing and the Code of Ethics as published by The Institute of Internal Auditors.

The internal audit manager is accountable to the Board of Management, represented by the Chief Executive Officer for day to day operations and to the Audit Committee as part of its oversight role. Appointment and dismissal of the internal audit manager will be submitted to the Supervisory Board for approval, along with a recommendation by the Audit Committee.

On an annual basis the internal audit manager submits to the Board of Management and the Audit Committee a report on the activities performed in the year past, including the main findings, as well as a
risk based internal audit plan for the next year for their review and approval.

Based on the internal audit plan, the internal audit manager agrees with the Board of Management the specific audit subjects, the detailed scope of work and the allocation of resources. The internal
audit function’s performance relative to its plan are regularly communicated and discussed between the Internal Audit Manager and the Board of Management, represented by the Chief Financial Officer.

The internal audit function also periodically interacts with the company’s external financial auditor to share information on audit planning and progress as well as key findings and observations. The
internal audit function’s final reports are made available to the external auditor and management letters of the external auditor will be shared with the internal audit manager.

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