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Cash flows in the first years are based on management’s approved budget for 2017 and the 2017-2019
corporate business plan. For all cash-generating units, these projections factor in market conditions, order
book in hand, expected win rates of contracts, expected vessel utilization, rates and revenues, expected
cost developments, investment plans and/or industry developments. For further considerations on cash flow
projections for the CGU Offshore Energy see below.
Key assumptions in the calculation of valuation in use are the growth rate applied to the calculation of the
terminal value and to the discount rate used. Cash flows for the CGUs beyond five years are extrapolated
using an estimated long-term growth rate of 1.0% (2015: 1.0%). The applicable growth rates do not
exceed the long-term average growth rate which may be expected for the activities. The pre-tax discount
rates used per CGU are: Offshore Energy 9.4% (2015: 9.4%), Inland Infra 9.6% (2015: 9.6%), Salvage
6.6% (2015: 7.0% ) and Dredging 9.0% (2015: 9.0%). The pre-tax discount rate used for each CGU to
discount the pre-tax cash flows for impairment testing is determined through an iterative calculation using
the projected post-tax cash flows, expected tax rate for the respective CGUs and a post-tax discount rate for
each CGU.
The Group has analyzed sensitivity to a reasonable possible change in the expected future cash flows over
the carrying amount, including goodwill, of the CGU (‘headroom’). The recoverable amounts for Inland
Infra, Salvage and Dredging exceed the carrying amounts of the CGUs with significant headroom.
The offshore activities acquired from VolkerWessels contributed to the revenue and results of Offshore
Energy. In some of our service-related offshore energy market segments there is a structural imbalance
between supply and demand, particularly within the heavy marine transport segment. This has put
utilization, rates and margins under pressure, resulting in a non-cash impairment both on the goodwill
included in the table above and on the vessels that operate at the lower end of the market
(see note 16).
The impairment to the recoverable value of the cash-generating unit Offshore Energy amounts to
EUR 382 million and is based on a value-in-use calculation
(see note 10). If the cash flow projections used
in the value-in-use calculations would have been 3% lower subsequent to 2017, the Group would have
recognized an additional impairment of EUR 38 million. If the estimated pre-tax discount rate for the CGU
Offshore Energy would have been 1% higher than disclosed above, the Group would have recognized an
additional goodwill impairment of approximately EUR 135 million.
OTHER INTANGIBLE ASSETS
15.2
Other intangible assets, which are identified and recognized at fair value during business combinations,
consist of tradenames, technology (including software) and favorable contracts. Intangible assets include
tradenames with an indefinite useful life for an amount of EUR 9.5 million (2015: EUR 9.5 million), which is
reviewed on a yearly basis for impairment. In 2016 no impairment was identified for other intangible
assets (2015: no impairments).
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ANNUAL REPORT 2016 – BOSKALIS
FINANCIAL STATEMENTS 2016