Boskalis Annual Report 2018

103

The Group had earlier committed to a limited capital funding for SAAone Holding B.V., which was effected in October 2017. The loans, amounting to EUR 13.6 million in total, being part of the Group’s investment in SAAone Holding B.V, are included in interest in joint ventures in the table above. The interest income of EUR 1.2 million (2017: EUR 0.3 million) related to these loans is reported under share in result of joint ventures and associates. The 2018 share in result of joint ventures and associates amounts to EUR 7.8 million as disclosed in the table above. This includes EUR 20.6 million as the Group’s share in impairment charges accounted for by joint ventures and associates. In 2018 the Group incurred a non-cash impairment charge of EUR 190 million relating to towage joint ventures and associates due to deteriorated market conditions that are not expected to materially improve in the foreseeable future. The carrying value, as part of the required application of the equity method, includes goodwill resulting from the initial recognition of the investments. The recoverable amounts were determined, for each investment, based on the higher of the fair value less cost to sell and value in use calculations using discounted cash flow models. The values were determined based on 100% figures, taking into account net debt, and adjusted for our share. Fair values less cost to sell were based on EBITDA-multiplier models, determined with the assistance of an external valuator. Values in use were determined by discounting the expected future cash flows from the continued use of the investment. 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. Cash flows for the first period of these projections were based on management’s most recent forecasts. Key assumptions in the calculation of value in use of the investments are the growth rate applied in the calculation of the terminal value and the discount rate used. Cash flows beyond ten years are extrapolated using an estimated long-term growth rate of 1.0%-1.5%. The applicable growth rate does not exceed the long-term average growth rate which may be expected for the activities. The pre-tax discount rates used in the calculation range from 7.4%-10.4% and were determined through an iterative calculation using the projected post-tax cash flows, expected tax rate and a post-tax discount rate. If, for the joint ventures of which the recoverable amounts were determined based on value in use, the cash flow projections used in the value in use calculations would have been 3% lower, the Group would have recognized an additional impairment charge of EUR 7 million. If the estimated discount rates for these joint ventures would have been 1% higher than disclosed above, the Group would have recognized an additional impairment charge of approximately EUR 27 million.

The main joint ventures of the Group are:

Interest in joint ventures

2018

2017

ENTITY

COUNTRY OF INCORPORATION

Saam Smit Towage Brasil S.A.*

Brazil Brazil

50% 50% 50% 50% 50% 49% 49% 30% 50% 50% 17% 50%

50% 50% 50% 50% 50% 49% 49% 50% 50% 17% 50% -

Gardline Marine Sciences do Brasil SA

Lamnalco Marine

Cyprus

Ocean Marine Egypt S.A.E

Egypt

Asian Lift Pte. Ltd

Singapore Singapore Singapore

Keppel Smit Towage Pte Ltd

Maju Maritime Pte Ltd

Penta-Ocean / Hyundai / Boskalis JV PTE. Ltd Singapore

ACCN B.V.

The Netherlands The Netherlands The Netherlands United Kingdom

Kotug Smit Partnership B.V.

SAAone Holding B.V. Gardline Maritime Ltd.

*classified as held for sale as per year-end 2018 (see note 5.2)

The main associates of the Group are:

Interest in associates

2018

2017

COMPANY

COUNTRY OF INCORPORATION

Damietta for Maritime Services Company S.A.E. Egypt

31% 49%

31% 49%

Saam Smit Towage Mexico S.A. de C.V.*

Mexico

*classified as held for sale as per year-end 2018 (see note 5.2)

The voting rights in associates are equal to the ownership interests.

ANNUAL REPORT 2018 – BOSKALIS A L REP RT 2018 -- BOSKALIS