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probable to occur and present an exposure to variations in
cash flows that could ultimately affect reported net income.
The application of hedge accounting means that movements in
the market value of cash flow hedges not yet settled –
including results realized on the ‘rolling forward’ of existing
hedges as a result of differences between the duration of the
hedges concerned and the underlying cash flows – will be
directly added or charged to the hedging reserve in group
equity, taking into account the applicable taxation. If a cash
flow hedge either expires, is closed or is settled, or the hedge
relation with the underlying cash flows can no longer be
considered effective, the accumulated result will continue to be
recognized in group equity as long as the underlying cash
flow is still expected to take place. If and when the underlying
cash flow actually takes place, the accumulated result is
included directly in the statement of profit or loss. Movements
in the market value of cash flow hedges to which no hedge
accounting is applied (ineffective cash flow hedges and the
ineffective portion of effective cash flow hedges) are included
in the statement of profit or loss for the reporting period.
Results from settled cash flow hedges and movements in the
market value of ineffective cash flow hedges insofar these
relate to non-current receivables, loans and other borrowings
are recognized as finance income and finance expenses and
otherwise in the related items within operating result. The
purchase or sale of financial instruments is generally recorded
at transaction rate. Derivatives are stated at fair value;
attributable transaction costs are recognized in the Statement
of Profit or Loss as incurred. Subsequent to initial recognition,
derivatives are measured at fair value, and changes therein
are accounted for as described.
IMPAIRMENT
3.5
At each reporting date, the Group reviews the carrying
amounts of its non-financial assets (other than inventories and
deferred tax assets) to determine whether there is any
indication of impairment. If an indication of impairment exists,
then the recoverable amount of the asset is estimated.
Goodwill and intangible assets with an indefinite useful life
are tested annually for impairment.
The recoverable amount of an asset or cash-generating unit (or
group of units) is the higher of its value in use and its fair value
less costs of disposal. Value in use is based on the estimated
future cash flows, discounted to their present value using a pre-
tax discount rate that reflects the current market assessments,
the time value of money and the risks specific to the asset or
the cash-generating unit.
An impairment loss is recognized when the carrying amount of
an asset or the cash generating unit to which it belongs
exceeds its recoverable amount.
Impairment losses are recognized in the statement of profit or
loss. Impairment losses recognized in respect of cash
generating units are allocated first to reduce the carrying
amount of any goodwill allocated to cash-generating units
and, if required, subsequently to reduce the carrying amounts
of the other assets (of the cash-generating units) on a pro rata
basis.
An impairment loss on goodwill is not reversed. For other
assets, an impairment loss is reversed only to the extent that
the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation
or amortization, if no impairment loss had been recognized.
For financial assets measured at amortized cost the Group
considers evidence of impairment at both an individual asset
and a collective level. Assets that are not individually
significant are assessed for impairment on an aggregated
basis.
An impairment loss for financial assets is calculated as the
difference between its carrying amount and the present value
of the estimated future cash flows, discounted at the asset's
original effective interest rate. Losses are recognized in the
statement of profit or loss and are reflected in an allowance
account. If the amount of an impairment loss subsequently
decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized, then the
previously recognized impairment loss is reversed through the
statement of profit or loss.
An impairment loss in respect of a strategic investment
(accounted for using the equity method) is measured by
comparing the recoverable amount of the investment with its
carrying amount. An impairment loss is recognized in the
statement of profit or loss, and is reversed if there has been a
favorable change in the estimates used to determine the
recoverable amount.
INTANGIBLE ASSETS
3.6
Goodwill arises upon acquiring Group companies and joint
operations and is calculated as the difference between the
acquisition price and the fair value of the assets and liabilities
acquired, according to the accounting principles of Royal
Boskalis Westminster N.V. Goodwill is allocated to the
relevant cash-generating unit. These cash-generating units
represent the lowest level within the Group at which goodwill
is monitored for internal management purposes and not
exceeding the level of the Group’s operational segments.
Goodwill and other intangible assets are presented net of
accumulated amortization and accumulated impairment
losses. Amortization of trademarks valued at acquisition takes
place over 10 years, the amortization of customer portfolios
and contracts valued at acquisition takes place over 7 to 22
years.
Goodwill and intangible assets with an indefinite useful life
are not amortized, but are tested for impairment every year or
in case of an indication of impairment
(see note 3.5).In
respect of strategic investments, the carrying amount of
goodwill is included in the carrying amount of the investment.
Other intangible assets acquired in a business combination
are capitalized only when it is probable that future economic
benefits embodied in an asset, will flow to the Group and the
cost of the asset can be reliably measured. Other intangible
assets with a finite useful life are stated at cost less
accumulated amortization and accumulated impairment
losses.
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ANNUAL REPORT 2016 – BOSKALIS