Boskalis_Annual Report_2017

ANNUAL REPORT 2017 – BOSKALIS 136 RISK

OUR AUDIT APPROACH

KEY OBSERVATIONS

VALUATION FLOATING AND OTHER CONSTRUCTION EQUIPMENT (SEE NOTE 3.5, 3.7, 10 AND 16) Property, plant and equipment includes floating and other construction equipment amounting to EUR 2.5 billion as at In our audit approach we evaluated management’s assessment of impairment indications and we assessed the historical accuracy of management’s estimates.

We consider management’s assessment of impairment indicators as appropriate and the key assumptions and estimates to be within an acceptable range. We agree with management’s conclusion that no impairment is required in 2017. We further assessed that the required disclosures were appropriate.

31 December 2017, which represents 53% of the balance sheet total. Management performed an annual assessment whether there are indications of impairment of the floating equipment. In case of an impairment indication, an estimate is made of the recoverable amount of the assets concerned. This annual assessment is significant to our audit because this requires significant management judgments, such as future market and economic conditions. No material impairment charges were recognized in the profit and loss account of 2017 (2016: EUR 366.2 million). complex and requires significant management judgment with respect to future market and economic conditions, developments in revenue, margins, working capital levels and investments, which individually may have a material effect on the result of the calculation. Therefore it is significant to our audit. No impairment charges were recognized in the profit and loss account of 2017 (2016: EUR 382.3 million). UNCERTAIN TAX POSITIONS (SEE NOTE 3.28 AND 12) Boskalis operates in a range of jurisdictions subject to different tax regimes. The cross-border operations may result in estimation differences or disputes with national tax authorities. If management considers it probable that such disputes will lead to an outflow of resources, accruals have been formed accordingly. We therefore identified correct and complete recognition of accruals for uncertain tax positions as significant to our audit. VALUATION OF GOODWILL (SEE NOTE 3.5, 3.6, 10 AND 15) Goodwill amounts to EUR 0.3 billion as at 31 December 2017, which represents 5% of the balance sheet total. Management’s annual goodwill impairment test is considered

Furthermore, we evaluated the adequacy of the company’s disclosures regarding the valuation of these property, plant and equipment.

In our audit approach we evaluated the goodwill impairment testing model including the main assumptions used. This includes assessing the forecasted margins, working capital and investment levels and discount rate. The procedures performed include comparing assumptions to external data. Furthermore, we analysed sensitivities, compared the projected cash flows to budgets and management’s forecast and assessed the historical accuracy of management’s estimates. We included valuation experts in our team to assess the valuation models and parameters used and assist us with these procedures. Furthermore, we evaluated the adequacy of the company’s disclosures. In our audit approach, we tested the acceptability of the accruals formed in this estimation process. In doing so, we used tax specialists in reviewing the assumptions underlying the estimates and discussing them with management in the light of local tax rules and regulations. In connection with this, we also devoted attention to the substantiation of the estimated probability of the positions taken and details provided thereon by management.

We consider management’s key assumptions and estimates, used in the annual impairment test, to be within an acceptable range. We note that the Company concluded from its impairment tests that headroom for the CGU Offshore Energy is relatively limited and thus sensitive to changes in the assumptions. We agree with management’s conclusion that no impairment is required in 2017. We further assessed that the required disclosures were appropriate.

We assessed that the Company’s accounting policies were appropriately applied. Furthermore, we have assessed that management assumptions and estimates are within an acceptable range. We further assessed that the disclosure notes are appropriate.

In the previous year’s auditor’s report, ‘Accounting for business combinations’ was identifed as a key audit matter. Since the magnitude of business combinations in 2017 is limited, the topic ‘Accounting for business combinations’ is not a key audit matter in this year.