Boskalis Annual Report 2018

94 ANNUAL REPORT 2018 – BOSKALIS FINANCIAL STATEMENTS 2018 A UAL REP RT 2018 -- BOSKALIS FINANCIAL STATEMENTS 2018 94 Property, plant and equipment Total impairment charges Towage & Salvage Total impairment charges

consumables, services and subcontracted work. In 2017 reorganization expenses were incurred for an amount of EUR 14.9 million mainly in connection with a head-office rationalization program, of which an amount of EUR 9.6 million is reported under personnel expenses and EUR 5.3 million under Raw materials, consumables, services and subcontracted work. For the restructuring of the Gardline Group an amount of EUR 9.2 million is recognized in 2017 which is fully reported under Raw materials, consumables, services and subcontracted work. 10. IMPAIRMENT CHARGES The Group reviewed the carrying amounts of goodwill, investments in joint ventures and associates and its non-financial assets that are subject to amortization and depreciation to determine whether events or a change in circumstances indicate that the carrying amount may not be recoverable. Accordingly, the recoverable amount has been estimated for goodwill allocated to Offshore Energy, for a number of Offshore Energy related vessels and for some Towage joint ventures and associates, and for certain assets within joint ventures and associates. This resulted in the recognition of the following non-cash impairment charges:

2018

2017

IMPAIRMENT CHARGES BY ASSET CATEGORY Intangible assets (goodwill)

- - - -

- 154,939 - 136,864 - 189,879 - 481,682

Investments in joint ventures and associates

Impairment charges according to the Consolidated Statement of Profit or Loss

Impairment charges accounted for within share in result of joint ventures and associates

- -

- 20,556 - 502,238

IMPAIRMENT CHARGES BY OPERATIONAL SEGMENT Offshore Energy

- - -

- 291,803 - 210,435 - 502,238

Offshore Energy In the first half year of 2018 the Group incurred non-cash impairment charges of EUR 292 million with regard to Offshore Energy. These charges are almost entirely related to market circumstances that are not expected to materially improve in the foreseeable future, specifically in the lower-end service-related 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 an EUR 154.9 million goodwill impairment charge the goodwill for Offshore Energy is nil. In light of the market situation described above the Group had already taken a number of vessels out of service and decided in the first half year of 2018 to take additional vessels out of service in the near future, with the intention to scrap. These vessels have been valued at scrap value (fair value less cost to sell). For a limited number of vessels and floating equipment that continue to be operated or may be sold, the recoverable amounts were, in the first half year, determined as the higher of the fair value less cost to sell (determined by an external valuator) and the value in use, calculated using discounted cash flow models. The pre-tax discount rates used in these calculations range from 7.3% to 7.9%. Towage & Salvage An impairment charge of EUR 190 million, of which EUR 88 million in the first half year of 2018, was recorded relating to the investment in four towage joint ventures and associates, including the impairment charge resulting from the reclassification of the partnership Saam Smit Towage to assets held for sale. Deteriorated market conditions, that are not expected to materially improve in the foreseeable future, have resulted in materially lower levels of expected future cash flows. Next to these impairment charges on the investments in joint ventures and associates, impairment charges accounted as part of share in result of joint ventures and associates amounted to EUR 21 million.