Boskalis_Annual_Report_2016

83

accounted for within joint-ventures (2015: EUR 15 million). The presented Operating result (before impairment losses) in the table above shows a profit of EUR 384.6 million profit (2015: EUR 577.3 million profit) and does not include these impairment charges. In the table above the impairment losses are specified per operational segment. ƒ Also, EU-IFRS defines the Result of joint ventures and associated companies and these are presented as such in the statement of profit or loss showing a loss of EUR 82.9 million (2015: EUR 43.3 million profit). In the table above the Result of joint ventures and associates amounts to EUR 41.4 million profit (2015: EUR 46.4 million profit) and excludes both the impact of Fugro amounting to a loss of EUR 30.1 million (2015: EUR 3.4 million loss) as our share in the impairment loss of EUR 94.2 million (2015: zero) as reported by joint ventures. In the table above these are reported as separate line items, under Impact of Fugro and Impairment in losses in joint ventures, respectively. ƒ In accordance with the presentation of our share in the impairments recognized by joint ventures and associated companies in the management information on the line impairments, the EBITDA in the management information defined as operational results before depreciation, amortization and impairments is EUR 94 million higher compared to the consolidated financial statements (EBIT before depreciation, amortization and impairments as disclosed in the statement of profit or loss). On 1 July 2016 the Group obtained control of the maritime and offshore wind energy-related activities of VolkerWessels through the acquisition of 100% of the shares and voting rights in Stemat and VSI (Volker Stevin International) and the remaining 50% of the outstanding shares and voting rights in VBMS, expanding its share in VBMS from 50% to 100%. The acquisition of VBMS, Stemat and VSI also includes two large offshore projects. This transaction is classified as a business combination and is included as such in the consolidation. VBMS is a European leader with a strong market position in the field of the offshore installation of cables. Stemat offers specialist floating structures globally and features a diverse fleet including a cable laying ship and multi-purpose vessels. VSI is a specialist in building foundations and offshore marine structures. Prior to the business combination, the Group and VSI, in a 50% -joint venture, acquired two large offshore wind farm projects. The transaction enables the Group to further execute these two projects on a 100% basis. This business combination is a logical step in enhancing the services of the Group in its offshore activities, enabling the Group to serve its customers even better under complex conditions, with optimum deployment of people and equipment. The Group expects market and cost synergies through economies of scale, the use of best practices, an optimized branch network and combined purchasing opportunities. Since obtaining control on 1 July 2016, the offshore activities of VolkerWessels contributed EUR 292 million to Group revenue and EUR 14 million profit to Group net result. This excludes both transaction costs related to the acquisition and the result arising from the book profit from revaluation to fair value of the Group’s existing stake in VBMS at the date of acquisition. Management believes that had the acquisition taken place at the start of 2016, revenue for the reporting period would have totaled EUR 2,797 million and consolidated net Group result EUR 555 million (loss), respectively. In determining these amounts management assumed the same fair value adjustments as at the date of acquisition. Under IFRS this transaction is accounted for as a sale of the 50% share in VBMS and subsequent acquisition of a 100% subsidiary. The fair value of the 50% investment in VBMS (sold) amounted to EUR 55.7 million and is based on a business valuation by an external business valuator. As a result, the revaluation to fair value of the existing stake in VBMS resulted in a gain of EUR 39.8 million, of which EUR 8.8 million before tax relates to the recycling of the hedging reserve and accumulated currency translation differences (EUR 6.6 million after tax). This revaluation result is included in the ‘Holding & Eliminations’ segment (in the ‘Operational segments’ table in note 4.1). A legal reserve relating to these gains is recognized in equity. Revaluation of existing share in VBMS prior to business combination Up to and including 30 June 2016 the Group’s share of 50% in VBMS was recognized as a joint venture. 5. BUSINESS COMBINATIONS AND OTHER SIGNIFICANT TRANSACTIONS ACQUISITION OF OFFSHORE ASSETS AND ACTIVITIES OF VOLKERWESSELS 5.1

ANNUAL REPORT 2016 – BOSKALIS