Boskalis Annual Report 2020

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ANNUAL REPORT 2020 – BOSKALIS FINANCIAL STATEMENTS 2020 A NUAL REPORT 2020 -- BOSKALIS FI ANCIAL STAT MENTS 020 3.2.2 3.2.3 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. 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. 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. 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. 3.2.1

Shareholdings other than subsidiaries and joint ventures, where there is significant influence on the financial and operating policy, are recognized under associates. Significant influence is presumed to exist when the Group holds 20 percent or more of the voting power of another entity. The consolidated financial statements include the Group’s share in the result of associates, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date it ceases to exist (see note 3.8). If the ownership in a joint venture or associates is reduced, but joint control or significant influence is retained, dilution gains and losses arising from joint ventures and associates are recognized in the statement of profit or loss and only a proportionate share of the amount previously recognized in the statement of other comprehensive income is recycled to the consolidated statement of profit or loss, where appropriate. If the Group loses significant influence over or joint control of an investment, it derecognizes the carrying amount of that investment (including any goodwill included in the carrying amount) and recognizes any resulting gain or loss, including the recycling of amounts previously recognized in the statement of other comprehensive income, from this event in the consolidated statement of profit or loss. Any investment retained is recognized at fair value. CONSOLIDATION Intragroup receivables and payables, as well as intragroup transactions, finance income and expenses and unrealized results within the Group are eliminated in the preparation of the consolidated financial statements. The Group recognizes its share in the results on transactions that transfer assets and liabilities between the Company and its investments or between its investments, to the extent these are considered realized as transactions with third parties and its joint venture partners, using proportionate elimination. 3.2.4 ELIMINATION OF TRANSACTION UPON NON-CONTROLLING INTERESTS Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill at the acquisition date as:  the fair value of the consideration transferred; plus  the recognized amount of any non-controlling interests in the acquiree; plus  if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree (refer also note to 3.8); less  the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed. If the excess is negative (gain on acquisition), the Group reassesses the correctness and completeness of the identified assets acquired and liabilities assumed, and the appropriateness of underlying assumptions and measurement approaches applied for valuation purposes. After such 3.2.5 BUSINESS COMBINATION AND ACQUISITIONS OF