Annual report 2019

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salvage projects. For most of the contracting activities the most common type of contract is based on a fixed/lump sum price. In these cases the contractor’s price must take into account virtually all the operational risks as well as the costs and other risks associated with the procurement of materials and subcontractor services. In most cases it is not possible to charge clients for any unforeseen costs and the Group acts as contractor and principal of the engagement. Revenue from services rendered to third parties is primarily realized in the Offshore Energy (marine transport and other services) operational segment and in the joint ventures within the Towage & Salvage operational segment. The services are usually charged at day rates. Contracts are not included in the order book until agreement has been reached with the client. The Group estimates that 44% of the order book will be executed next year (31 December 2018: 40%). Actual execution depends on several factors, such as weather, soil, technical conditions, cooperation with subcontractors, the availability of cargo and other factors. 7. OTHER INCOME AND OTHER EXPENSES In 2019 other income includes the book results on the sale of SAAone PPP B.V. and share in SAAM Smit Towage (reference is made to note 5.3). This also includes book profits on the disposal property, plant and equipment for EUR 7.2 million (2018: EUR 7.1 million) and the gain on the acquisition of Bohlen & Doyen for EUR 1.0 million. The value of the order book equals the contract revenue of projects yet to be completed and services yet to be rendered at balance sheet date and amounts to EUR 4.7 billion (2018: EUR 4.3 billion).

Other expenses relates to book losses on the disposal of equipment, amounting to EUR 0.5 million (2018: EUR 2.5 million).

8. RAW MATERIALS, CONSUMABLES, SERVICES AND SUBCONTRACTED WORK As part of this line item costs related to short term leased equipment and low value leases are reported for an amount of EUR 1 million (2018: operational lease expenses EUR 29 million). Reference is made to notes 2.3, 3.33 and 27 on the changed accounting for operational leases.

9. PERSONNEL EXPENSES

2018

2019

Wages and salaries Social security expenses

- 352,013 - 39,278 - 1,542 - 41,133 - 433,966

- 374,373 - 43,543 - 1,728 - 41,626 - 461,270

Pension expenses for defined benefit pension plans Pension expenses for defined contribution pension plans

A number of senior managers participates in a long-term incentive plan based upon the development of the share price, which is settled on a cash basis. The fair value of the related liability for the year is included as part of the personnel expenses in the statement of profit or loss. The related charge for 2019 amounts to EUR 3.4 million (2018: EUR 1.6 million) and the corresponding liability is EUR 4.2 million (2018: EUR 4.6 million). For the remuneration of the Board of Management and the Supervisory Board refer to note 31.2. In 2019 expenses for reorganization were incurred for an amount of EUR 2.8 million. In 2018 reorganization expenses were incurred for an amount of EUR 6.8 million, which are fully reported under Raw materials, consumables, services and subcontracted work. 10. REVERSAL OF IMPAIRMENTS EVIDENCED BY A SALE TRANSACTION AND IMPAIRMENT CHARGES During 2019 the Group reversed two impairments for a total amount of EUR 40.1 million as a result of sale transactions. The Group reversed EUR 27.0 million related to the sale of an impaired vessel and EUR 13.1 million relating to the impairment on Kotug Smit Towage as a result of the finalization of the sale to Boluda Group (reference is made to note 5.4).

ANNUAL REPORT 2019 – BOSKALIS A L 9 -- BOSKALIS