Boskalis Annual Report 2018

100 ANNUAL REPORT 2018 – BOSKALIS FINANCIAL STATEMENTS 2018 A UAL REP RT 2018 -- BOSKALIS FINANCIAL STATEMENTS 2018 100

Management projects cash flows based on past trends and estimates of future market developments, cost developments and investment plans. These projections also factor in market conditions, order book in hand, expected win rates of contracts and expected vessel utilization. Key assumptions in the calculation of value in use are the growth rate applied in the calculation of the terminal value and the discount rate used. Cash flows for the CGUs beyond five years are extrapolated using an estimated long-term growth rate of 1% (2017: 1%). The applicable growth rate does not exceed the long-term average growth rate which may be expected for the activities. The pre-tax discount rate used in the calculations per CGU are: Offshore Energy 8.9% (2017: 9.1%), Inland Infra 8.4% (2017: 9.0%), Salvage 6.7% (2017: 6.7%) and Dredging 8.2% (2017: 8.3%) and is determined by means of an iterative calculation using the projected post-tax cash flows, expected tax rate and a post-tax discount rate for each CGU. The Group has analyzed sensitivity to a reasonable possible change in the discounted expected future cash flows of the carrying amount, including goodwill, of the CGU (‘headroom’). The recoverable amounts for Inland Infra, Salvage and Dredging exceed the carrying amounts of the CGUs with significant headroom. In 2018 the Group incurred a non-cash goodwill impairment charge of EUR 154.9 million with regard to Offshore Energy. This charge is almost entirely related to current market circumstances that are not expected to materially improve in the foreseeable future, specifically with respect to the lower-end service segments of the offshore energy market. These market circumstances have resulted in a downward adjustment of the projected future cash flows for the Offshore Energy CGU. After recognizing the goodwill impairment charge the recoverable amount for Offshore Energy equals EUR 1.2 billion, based on a value in use calculation. 15.2 OTHER INTANGIBLE ASSETS Other intangible assets, which are identified and recognized at fair value in business combinations, consist of trade names, technology (including software) and favorable contracts. In December 2017 the Group decided to use Boskalis as the main trade name. Under IFRS this decision required an evaluation of the lifetimes and an impairment test of the value in use, which was performed by an external valuator. The test did not result in the recognition of an impairment charge and resulted in the harmonization of the remaining useful lives of trade names to 10 years. This change in accounting estimates had no material impact on the net result for 2017 and 2018.