Boskalis Annual Report 2020


Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed.

These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Following the acquisition in January 2020 of Horizon Geosciences and Rever Offshore in December 2020 a new key audit matter “accounting for business combinations” has been defined.




RECOGNITION OF CONTRACT REVENUE AND VALUATION OF UNBILLED AND DEFERRED REVENUE (SEE NOTES 3.12, 3.22, 3.24, 6, 20, 26 AND 29) The contracting industry is characterised by contract risk with significant judgments involved in the assessment of contract financial Our audit procedures on contract revenue included an assessment of the company’s project We assessed that the Company’s revenue recognition accounting policies were appropriately applied and disclosed in accordance with the revenue recognition

control, substantive audit procedures and testing of management’s positions against underlying documentation. In the planning and execution of our audit we considered the impact of challenging market conditions on project results, both for on-going projects and projects in the orderbook. We tested the adequacy and support for cost-to-complete estimates and also tested management review for potential losses in projects in the orderbook for adequacy and completeness. We herewith considered developments noted at ongoing projects and assessed updated tender- and work budgets. Other substantive procedures comprised of testing contractual terms and conditions, including performance obligations, disputes, claims and variation orders, costs incurred, including local representatives’ fees, and forecasted cost to complete including progress measurement. We challenged management’s assumptions at the project and group management level. We discussed, also during online site visits, a range of financial and other risks, disputes and related estimation uncertainties with management and project staff, assessing whether these have been adequately addressed in the financial statements.

performance. Due to the COVID-19 pandemic and the sharp drop in the oil price market conditions remain challenging and cause pressure on project margins. Revenue and positive margin from contracting activities are recognised based on the stage of completion of individual contracts. Negative margins are recognized immediately when they are foreseen. The status of contracts is updated on a regular basis. In doing so, management is required to exercise significant judgment in their assessment of the valuation of contract variations, claims and liquidated damages; the completeness and accuracy of forecasts regarding costs to complete; and the ability to deliver contracts within forecast timescales. The potential final contract outcomes can cover a wide range. We considered management override of controls relating to significant judgments and assumptions involved. Changes in these judgments, and the related estimates, as contracts progress can result in material adjustments to revenue and margin, which can be both positive and negative. We also considered the risk of noncompliance with relevant law and regulations related to the acquisition of projects. We therefore identified correct and complete recognition of contract revenue and (negative) margin as significant to our audit.

accounting standard (IFRS 15). We verified that contract revenues, including claims and variation orders, meet the recognition criteria and are valued accurately and complete. Where applicable, losses were completely and accurately accounted for. Furthermore, we have assessed that management assumptions and estimates are within an acceptable range and that the disclosure notes are in accordance with IFRS. As part of our audit procedures with respect to compliance with laws and regulations related to acquisition of projects and local representatives’ fees, we assessed the adequacy of the Company’s policies and that these are adhered to.

VALUATION FLOATING AND OTHER CONSTRUCTION EQUIPMENT AND JOINT VENTURES (SEE NOTES 3.5, 3.7, 3.8, 10, 16, 17) Financial and tangible fixed assets, includes floating and other construction equipment and joint ventures, amount to EUR 2.6 billion as at 31 December 2020, which represent 57% of the balance sheet total. Boskalis undertook, in context of the COVID-19 pandemic and the sharp drop in the oil price, a critical review of the valuation of its floating and other construction equipment and joint ventures. We considered We evaluated management’s assessment of impairment indications, tested management’s assumptions used in the value in use calculations and we assessed the historical accuracy of management’s estimates. We observed market data on scrap values to evaluate the fair value less cost of disposal, where applicable.

We consider management’s assessment of impairment indicators as appropriate and the key assumptions and estimates used in the impairment tests to be within an acceptable range. We further assessed that the required disclosures were appropriate. We agree with management’s conclusion on the recorded impairment amount.

We involved our valuation experts to assess the valuation model and to evaluate the discount rate used, performed sensitivity analyses where considered necessary, and assessed the consistency of valuation methodologies applied. Furthermore, we evaluated the adequacy of the company’s disclosures regarding the impairments of these assets.

management override of controls relating to significant judgments and assumptions involved. Management performed impairment tests of the relating financial and tangible fixed assets. Impairment charges of EUR 184 million were recognized in the profit and loss account of 2020 (2019: EUR 0 million). These impairment tests are significant to our audit because this process is complex and requires significant management judgments, such as of future market and economic conditions.


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