Boskalis Annual Report 2018

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3.2 CONSOLIDATION The Group consolidates companies over which control is exercised when the Group is exposed or has the right to variable returns from its involvement with the investee and has the ability to affect such returns. Subsidiaries are included in the consolidation for 100%, taking into account any minority interests. For joint operations the Group accounts for its specific rights and obligations. Joint ventures and associates are accounted for using the equity method. 3.2.1 SUBSIDIARIES Subsidiaries are included in the consolidation for 100% on the basis of existing control, taking into account any minority interests. The figures of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists if the Group has:  the ability to direct relevant activities through its voting power;  the right to variable returns from its involvement with the investee; and  the ability to use its power to affect such returns. In assessing whether the Group has acquired control, and whether such control exists in the sense that it has power over the investee, the Group takes into consideration voting rights, or similar rights in an entity, potential voting rights that are currently exercisable, and all other relevant facts and circumstances. If and when the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and any components of equity related to the subsidiary. Any resulting gain or loss is recognized in the statement of profit or loss. If the Group retains any stake in the former subsidiary, then such interest is measured at fair value at the date that control is lost. 3.2.2 JOINT OPERATIONS If the Group has joint control over and is entitled to the rights to the assets and is liable for the liabilities of the partnership, the partnership is classified as a joint operation. Such a joint control has been laid down in a contract and strategic decisions on financial and operational policy are taken by unanimous agreement. Joint operations mainly relate to project driven construction consortiums. Joint operations are included in the consolidated financial statements on a pro rata basis in accordance with the participation interest of the Group in the joint operation, also referred to as proportionate consolidation. 3.2.3 JOINT VENTURES AND ASSOCIATES The Group divides strategic investments into joint ventures and associates based on the type and degree of influence. Joint ventures are those entities over which the Group has joint control. Such joint control is laid down in a contract and strategic decisions on financial and operational policy are taken by unanimous agreement. The Group is only entitled to the net assets of the joint ventures.

rates, where there is uncertainty over income tax treatments under IAS 12. Under IFRIC 23 the key requirement is to question whether it is probable that the tax authorities will accept the tax treatment the Group has chosen under the assumption that tax authorities will have full knowledge of all relevant information in assessing a proposed tax treatment. When it is probable that the tax authorities will accept the tax treatment, the whole amount of the tax position determined should be recognized. When it is not probable that the tax treatment will be accepted by the tax authorities, the financial consequences of this uncertainty should be accounted for in the tax position. The Group can only reassess and change the recognized uncertain tax positions in case facts and circumstances on which the judgement or estimate was based change. Based on the analysis made, it is expected that there will be no impact on Group equity. The introduction of IFRIC23 is expected not to have a material impact on the results of the Group. 3. PRINCIPLES OF FINANCIAL REPORTING The principles of financial reporting subsequently disclosed are applied consistently for all periods included in these consolidated financial statements and have been applied consistently by the group companies. 3.1 FORMAT AND VALUATION The consolidated financial statements are presented in euros, the Group’s presentation currency. The consolidated financial statements are based upon historical cost to the extent that IFRS does not prescribe another accounting method for specific items. Preparing financial statements means that estimates and assumptions made by management partially determine the amounts recognized under assets, liabilities, revenue and costs. The estimates and assumptions are mainly related to the measurement of intangible assets (including goodwill), property, plant and equipment, joint ventures and associates, expected results on the completion of projects, pension liabilities, taxation, provisions and financial instruments. Judgements made by management within the application of IFRS which have a material effect on the financial statements are the qualifications of investments as group companies, joint operations, joint ventures or associates. Details are incorporated in the explanatory notes to these items. Other than the elements already explained in the explanatory notes to the financial statements, no critical valuation judgements relating to the application of the principles need further explanation. The estimates made and the related assumptions are based on management’s experience and understanding and the development of external factors that can be considered reasonable under the given circumstances. Estimates and assumptions are subject to alterations as a result of changes in facts and insights and may have different outcomes in different reporting periods. Any differences are recognized in the Statement of Financial Position, or the Statement of Profit or Loss, or the Statement of Other Comprehensive Income, depending on the nature of the item. Actual results may deviate from results reported previously on the basis of estimates and assumptions. Unless stated otherwise, all amounts in the notes to these financial statements are stated in thousands of euros.

ANNUAL REPORT 2018 – BOSKALIS AN AL REP RT 2018 -- BOSKALIS