HAL Holding N.V. | Supervisory Board: Executive Board: |
The consolidated financial statements presented are those of HAL Trust (the \u2018Trust\u2019), a Bermuda trust formed in 1977, and its subsidiaries (the \u2018Group\u2019) as well as the interests in associates and joint ventures and were prepared in accordance with sections 14.2 and 14.3 of the Trust deed. HAL Trust shares are listed and traded on Euronext in Amsterdam. For the years presented, the Trust\u2019s only asset was all outstanding shares of HAL Holding N.V. (the \u2018Company\u2019), a Cura\u00e7ao corporation. Accordingly, the consolidated financial statements of the Trust are identical to those of HAL Holding N.V.
The consolidated financial statements of the Company were authorized for issue by the Supervisory Board of HAL Holding N.V. on March 29, 2023, and have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The consolidated financial statements have been prepared under the historical cost convention unless otherwise stated in the accounting policies. There were no changes in the accounting policies compared to previous year except as described below. Certain amounts in prior periods have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders\u2019 equity or earnings per Share, except as described in the recent accounting developments section below.
Om July 5, 2022, the Company obtained (de facto) control over Royal Boskalis N.V. (\u2018Boskalis\u2019). This acquisition had a significant impact on the 2022 financial statements. Reference is made to note 3.
On July 1, 2021, HAL completed the sale of its 76.72% ownership interest in the issued share capital of GrandVision to EssilorLuxottica . The total consideration for HAL\u2019s ownership interest amounted to \u20ac\u00a05.5 billion, resulting in a \u20ac\u00a03.5 billion net capital gain. As of July 30, 2019, the assets and liabilities of GrandVision were classified as held for sale and recognition of depreciation, amortization and impairment of non-current assets of GrandVision had been discontinued. The net results related to GrandVision for 2021 are presented in the consolidated statement of income as profit from discontinued operations, in accordance with IFRS 5, Non-current assets held for sale and discontinued operations. The consolidated cash flow statement, in so far it relates to 2021, fully includes the cash flows of GrandVision up to the moment of divestment. The movement schedules included in the notes to these consolidated financial statements in so far they relate to 2021 comprise all movements up to that date in relation to GrandVision to safeguard reconciliation with the consolidated statement of cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-458": { "value": "The consolidated financial statements presented are those of HAL Trust (the \u2018Trust\u2019), a Bermuda trust formed in 1977, and its subsidiaries (the \u2018Group\u2019) as well as the interests in associates and joint ventures and were prepared in accordance with sections 14.2 and 14.3 of the Trust deed. HAL Trust shares are listed and traded on Euronext in Amsterdam. For the years presented, the Trust\u2019s only asset was all outstanding shares of HAL Holding N.V. (the \u2018Company\u2019), a Cura\u00e7ao corporation. Accordingly, the consolidated financial statements of the Trust are identical to those of HAL Holding N.V.
The consolidated financial statements of the Company were authorized for issue by the Supervisory Board of HAL Holding N.V. on March 29, 2023, and have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The consolidated financial statements have been prepared under the historical cost convention unless otherwise stated in the accounting policies. There were no changes in the accounting policies compared to previous year except as described below. Certain amounts in prior periods have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders\u2019 equity or earnings per Share, except as described in the recent accounting developments section below.
Om July 5, 2022, the Company obtained (de facto) control over Royal Boskalis N.V. (\u2018Boskalis\u2019). This acquisition had a significant impact on the 2022 financial statements. Reference is made to note 3.
On July 1, 2021, HAL completed the sale of its 76.72% ownership interest in the issued share capital of GrandVision to EssilorLuxottica . The total consideration for HAL\u2019s ownership interest amounted to \u20ac\u00a05.5 billion, resulting in a \u20ac\u00a03.5 billion net capital gain. As of July 30, 2019, the assets and liabilities of GrandVision were classified as held for sale and recognition of depreciation, amortization and impairment of non-current assets of GrandVision had been discontinued. The net results related to GrandVision for 2021 are presented in the consolidated statement of income as profit from discontinued operations, in accordance with IFRS 5, Non-current assets held for sale and discontinued operations. The consolidated cash flow statement, in so far it relates to 2021, fully includes the cash flows of GrandVision up to the moment of divestment. The movement schedules included in the notes to these consolidated financial statements in so far they relate to 2021 comprise all movements up to that date in relation to GrandVision to safeguard reconciliation with the consolidated statement of cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-459": { "value": "The consolidated financial statements of the Company were authorized for issue by the Supervisory Board of HAL Holding N.V. on March 29, 2023, and have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The consolidated financial statements have been prepared under the historical cost convention unless otherwise stated in the accounting policies. There were no changes in the accounting policies compared to previous year except as described below. Certain amounts in prior periods have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders\u2019 equity or earnings per Share, except as described in the recent accounting developments section below.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-460": { "value": "The consolidated financial statements of the Company were authorized for issue by the Supervisory Board of HAL Holding N.V. on March 29, 2023, and have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The consolidated financial statements have been prepared under the historical cost convention unless otherwise stated in the accounting policies. There were no changes in the accounting policies compared to previous year except as described below. Certain amounts in prior periods have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders\u2019 equity or earnings per Share, except as described in the recent accounting developments section below.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-461": { "value": "The consolidated financial statements of the Company were authorized for issue by the Supervisory Board of HAL Holding N.V. on March 29, 2023, and have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The consolidated financial statements have been prepared under the historical cost convention unless otherwise stated in the accounting policies. There were no changes in the accounting policies compared to previous year except as described below. Certain amounts in prior periods have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders\u2019 equity or earnings per Share, except as described in the recent accounting developments section below.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-462": { "value": "Use of estimates and judgments
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported assets and liabilities and the disclosure on contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results ultimately may differ from those estimates. Estimates and judgments are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future period affected. Accordingly, it is reasonably possible that outcomes within the next financial year that are different from the assumptions could have an impact on the carrying amount of the asset or liability affected. Accounting policies that are critical to the financial statements presentation and that require complex estimates or significant judgment are described in the following notes:
Deemed control over quoted minority interests \u2013 consolidation section;
Useful life and residual value of property, plant and equipment \u2013 note 4;
Determination of lease terms and discount rates applied to lease contracts \u2013 note 6;
Valuation of intangible assets in acquisitions \u2013 note 3;
Progress and forecasted outcomes of construction and offshore contracting activities and related provisions for onerous contracts \u2013 notes 12 and 21;
Allowance for inventory obsolescence \u2013 note 13;
Recognition of carry-forward losses and tax provisions \u2013 notes 19 and 31;
Assumptions pension benefits \u2013 note 20;
Estimated impairment of non-financial, non-current assets \u2013 note 35.
Recent accounting developments
The material accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements as of and for the year ended December 31, 2021.
New and amended standards, interpretations and clarifications adopted by the Company
No new or amended standards and interpretations had significant impact on the Company\u2019s consolidated financial statements.
New standards, amendments and interpretations issued but not yet effective
There are no new standards, amendments to existing standards or new IFRIC interpretations that are not yet effective that are expected to have a significant impact on the Company.
Recent accounting developments
The material accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements as of and for the year ended December 31, 2021.
New and amended standards, interpretations and clarifications adopted by the Company
No new or amended standards and interpretations had significant impact on the Company\u2019s consolidated financial statements.
New standards, amendments and interpretations issued but not yet effective
There are no new standards, amendments to existing standards or new IFRIC interpretations that are not yet effective that are expected to have a significant impact on the Company.
Subsidiaries, which are those entities over which the Company is deemed to have control, are consolidated. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In certain circumstances, significant judgment is required to assess if the Company is deemed to have (de facto) control\u00a0over entities where the Company\u2019s ownership interest does not exceed 50%. Subsidiaries are consolidated from the date on which effective control is obtained and are no longer consolidated as from the date the effective control ceases.
The amounts reported by the subsidiaries are based on the Company\u2019s accounting policies. Intercompany transactions, balances and unrealized results on transactions between group companies are eliminated on consolidation. Unrealized results arising from transactions with joint arrangements and associates are eliminated to the extent of the interest of the Company in the equity.
Non-controlling interests are disclosed separately. Transactions with holders of non-controlling interests that do not result in a loss of control are accounted for as equity transactions \u2013 that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid or received and the relevant share acquired or disposed of the carrying value of net assets of the subsidiary is recorded in equity.
When the Company ceases to have control, any retained interest in the entity is re-measured at its fair value at the date when control is lost, with the change in the carrying amount recognized in the consolidated statement of income. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint arrangement or other financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified (\u201crecycled\u201d) to the consolidated statement of income.
Critical accounting estimates and judgments
In the preparation of these financial statements, management has applied significant judgment to assess if the Company is deemed to have (de facto) control over entities where the Company\u2019s ownership interest does not exceed 50%.
Although the Company\u2019s ownership interest in Vopak and Safilo is below 50%, IFRS requires these entities to be consolidated in these financial statements as the company is deemed to have control, as defined in IFRS 10 and more specifically in example 4 of the application guidance in appendix B of this standard, over these two entities. Vopak and Safilo are both publicly traded companies. Whereas HAL has board representation and, accordingly, may be considered to have significant influence over these entities, in the past neither operational nor strategic control was exercised. Moreover, Vopak and Safilo are, for example, not part of the Company\u2019s management reporting system which monitors the performance of the consolidated companies on a monthly basis. In addition, in view of its minority interest, the Company has no formal instruction rights with respect to Vopak and Safilo. The Company has a process in place to obtain information from Vopak and Safilo in order to prepare consolidated financial statements in accordance with IFRS. The Company does not, however, have access to the financial books and records, contracts and related information of Vopak and Safilo in order to independently verify that these are complete, valid and accurate.
Management performed an assessment with respect to the other minority-owned entities and asserted that (de facto) control was not deemed present for these entities. A list of the Company\u2019s principal subsidiaries and minority-owned entities is set out on page 121.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-567": { "value": "Subsidiaries, which are those entities over which the Company is deemed to have control, are consolidated. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In certain circumstances, significant judgment is required to assess if the Company is deemed to have (de facto) control\u00a0over entities where the Company\u2019s ownership interest does not exceed 50%. Subsidiaries are consolidated from the date on which effective control is obtained and are no longer consolidated as from the date the effective control ceases.
The amounts reported by the subsidiaries are based on the Company\u2019s accounting policies. Intercompany transactions, balances and unrealized results on transactions between group companies are eliminated on consolidation. Unrealized results arising from transactions with joint arrangements and associates are eliminated to the extent of the interest of the Company in the equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-569": { "value": "Functional and presentation currency
Items included in the financial statements of each of the Company\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (the \u2018functional currency\u2019). The consolidated financial statements are presented in euro, which is the Company\u2019s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognized in the consolidated statement of income, except when deferred in equity as qualifying hedges. Any hedge ineffectiveness is recognized in the consolidated statement of income as it arises.
Company\u2019s subsidiaries
The results and financial position of all the Company\u2019s subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position;
the income statement, the cash flow statement and all other movements in assets and liabilities are translated at average rates of exchange as a proxy for the transaction rate, or at the transaction rate itself if more appropriate;
all resulting exchange differences are recognized as a separate component of other comprehensive income.
On consolidation, exchange differences arising from the translation of net investments in foreign entities and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. Exchange differences on intra-group monetary assets or liabilities that are not part of a net investment in foreign entities are recognized in the consolidated statement of income. When a foreign operation is sold, exchange differences previously recognized through other comprehensive income are reclassified from equity (as a reclassification adjustment) to the consolidated statement of income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-570": { "value": "Functional and presentation currency
Items included in the financial statements of each of the Company\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (the \u2018functional currency\u2019). The consolidated financial statements are presented in euro, which is the Company\u2019s functional and presentation currency.
The consolidated statement of cash flows has been prepared using the indirect method. Cash flows denominated in foreign currencies are translated at average exchange rates, or at the transaction rate if more appropriate. The effect of exchange rates on cash and cash equivalents is presented separately. Cash flows related to discontinued operations have been fully included in the consolidated statement of cash flows and are further detailed in note 16.
Interest paid and interest and dividends received are classified as operating cash flows. Dividends paid are classified as financing cash flows. Cash flows arising from income taxes are classified as operating cash flows.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-466": { "value": "The Company\u2019s reportable segments are defined as follows:
Unquoted
Quoted minority interests
Real estate
Liquid portfolio
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources between segments and assessing the performance of the operating segments, is identified as the Executive Board. The reportable segments are defined based on differences in products and services as well as differences in the nature of the respective assets and the management thereof.
Unquoted relates to majority-owned companies as well as non-controlling minority interests in companies that derive their revenues from various products and activities such as dredging, (maritime) construction and maintenance, building materials, computer gaming equipment, orthopedic devices, office furniture, greenhouse projects, staffing, shipping and other products and activities. In July 2022, HAL obtained (de facto) control over Boskalis (refer to note 3) and, in accordance with earlier communicated intentions, the company was delisted as per November 9, 2022. Therefore, Boskalis has been included in the Unquoted segment in these financial statements as of the date of first consolidation.
The Quoted minority interests segment comprises both the Company\u2019s consolidated and unconsolidated minority interests in publicly traded entities. Boskalis was included in this segment until the date of first consolidation.
The Real estate segment relates to the development and rental of retail centers, multi-family properties and office buildings. This segment does not include the activities of the Company\u2019s construction companies.
The segment Liquid portfolio consists of financial assets, included in marketable securities, and cash-equivalent instruments generating interest, dividend and trading results.
Operating income (for the purpose of this report defined as earnings before interest, exceptional and non-recurring items of the optical retail and unquoted segment, taxes and amortization of intangible assets but including amortization of software) has been detailed on the following page.
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
Unquoted | 402.8 | 403.6 |
Quoted minority interests | 325.1 | 645.4 |
Real estate | 53.6 | 42.5 |
Liquid portfolio | (119.7) | 80.0 |
Optical retail (discontinued in 2021) | - | 464.5 |
Total operating income | 661.8 | 1,636.0 |
Reconciling items: | \u00a0 | \u00a0 |
- Discontinued operations (optical retail) | - | (464.5) |
- Amortization and impairment of intangibles | (459.8) | (129.4) |
- Capital gain on the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V. | - | 3,500.7 |
- Revaluation of previously held equity interest in Boskalis | 656.2 | - |
- Other | (51.3) | (77.6) |
Operating result as per the consolidated statement of income | 806.9 | 4,465.2 |
Financial expense, net | (125.7) | (119.1) |
Profit before tax as per the consolidated statement of income | 681.2 | 4,346.1 |
The \u201cother\u201d reconciling items represent mostly corporate overhead and exceptional items (excluding those of Vopak, Safilo, SBM Offshore and, for the first half of 2022, Boskalis). The segment Quoted minority interests includes the operating income (including exceptional items) of Vopak and Safilo and the Company\u2019s share in the net income of SBM Offshore and, for the first half of 2022, Boskalis. In the second half of 2022, Boskalis was included in the Unquoted segment.
The composition of depreciation and impairment expense on property, plant and equipment, right-of-use assets and investment properties by segment is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 378.1 | 205.9 |
Quoted minority interests | 797.6 | 403.8 |
Real estate | 2.3 | 2.0 |
Reconciling items | 1.7 | 1.6 |
| \u00a0 | 1,179.7 | 613.3 |
The reconciling items represent the corporate depreciation expense.
The composition of revenues by segment is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 7,625.9 | 5,008.4 |
Quoted minority interests | 2,478.4 | 2,204.9 |
Total continuing operations | 10,104.3 | 7,213.3 |
Discontinued operations (optical retail) | - | 1,891.1 |
| \u00a0 | 10,104.3 | 9,104.4 |
The composition of assets by segment is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 13,307.9 | 6,242.6 |
Quoted minority interests | 8,858.8 | 9,923.2 |
Real estate | 270.7 | 237.7 |
Liquid portfolio | 3,892.1 | 5,608.1 |
Reconciling items | 385.0 | 610.7 |
| \u00a0 | 26,714.5 | 22,622.3 |
The reconciling items represent corporate assets, including deferred tax, loans and pension benefit assets. The reconciling items also include an amount of \u20ac\u00a0250 million (2021: \u20ac\u00a0500 million) representing the part of the proceeds from the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V., which is held in escrow for potential liabilities of HAL under the sale and purchase agreement.
The composition of investments in associates and joint arrangements by segment is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 501.0 | 336.6 |
Quoted minority interests | 2,682.7 | 3,379.6 |
Real estate | 175.1 | 132.9 |
| \u00a0 | 3,358.8 | 3,849.1 |
The composition of capital expenditures by segment is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 521.0 | 180.8 |
Quoted minority interests | 404.0 | 526.8 |
Real estate | 10.9 | 28.7 |
Total continuing operations | 935.9 | 736.3 |
Discontinued operations (optical retail) | - | 75.3 |
| \u00a0 | 935.9 | 811.6 |
Capital expenditures consist of additions to property, plant and equipment, investment properties and other intangible assets that are not related to acquisitions.
The composition of liabilities by segment is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 6,442.9 | 3,411.6 |
Quoted minority interests | 4,385.3 | 4,325.2 |
Real estate | 3.1 | 1.9 |
Liquid portfolio | 0.3 | 0.3 |
Reconciling items | 645.1 | 77.1 |
| \u00a0 | 11,476.7 | 7,816.1 |
The reconciling items represent corporate debt (\u20ac\u00a0576 million, 2021: nil) and liabilities, including liabilities related to obligations to acquire equity instruments in certain subsidiaries from the management of these subsidiaries and deferred tax.
The composition of revenues by geographical area is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Europe | 6,671.3 | 5,150.5 |
USA & Canada | 1,270.4 | 1,049.1 |
Asia | 1,452.4 | 583.0 |
Other | 710.2 | 430.7 |
Total continuing operations | 10,104.3 | 7,213.3 |
Discontinued operations (optical retail) | - | 1,891.1 |
| \u00a0 | 10,104.3 | 9,104.4 |
The composition of property, plant and equipment, investment properties, right-of-use assets, intangible assets and investments in associates and joint ventures by geographical area is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Europe | 9,667.1 | 7,722.9 |
USA & Canada | 1,421.7 | 1,349.3 |
Asia | 4,004.4 | 2,141.6 |
Other | 1,197.3 | 1,235.2 |
| \u00a0 | 16,290.5 | 12,449.0 |
To increase transparency, exceptional items are disclosed separately when relevant. These items are exceptional, by nature, from a management perspective. Exceptional items may include impairments, reversals of impairments, additions to and releases from provisions for restructuring, gains on the sale of subsidiaries, joint arrangements and associates, any other significant provisions being formed or released and any significant changes in estimates.
Summary of exceptional items is as follows:
| \u00a0 | Notes | 2022 | 2021 |
|---|---|---|---|
Revaluation of the previously held equity interest in Boskalis | 656.2 | - | |
Impairments on terminal-related assets at Koninklijke Vopak N.V., net of reversals | (448.6) | (71.0) | |
Impairment of goodwill and other intangibles, net of reversals | (312.4) | - | |
Impairment of joint ventures and associates, net of reversals | (162.0) | - | |
Net capital gains on sale of subsidiaries and associates | \u00a0 | 104.8 | - |
Exceptional gain at Royal Boskalis N.V1 | \u00a0 | 27.0 | - |
Capital gains on sale of property, plant and equipment | \u00a0 | 16.5 | 7.2 |
Acquisition-related expenses | (10.2) | (7.0) | |
Restructuring | \u00a0 | (7.4) | (24.0) |
Other impairments, net of reversal | (4.0) | - | |
Impairments at Royal Boskalis N.V1 | \u00a0 | (7.1) | - |
Revaluation of repurchase obligations | \u00a0 | (1.3) | (21.4) |
Capital gain on the disposal of GrandVision N.V. | \u00a0 | - | 3,500.7 |
Lawsuit settlements Safilo (antitrust France) | \u00a0 | - | 17.0 |
Other | \u00a0 | 24.4 | (32.1) |
Effect on operating profit / (loss) | \u00a0 | (124.1) | 3,369.4 |
Revaluation of earn-out liabilities | 50.1 | 32.2 | |
Effect on profit / (loss) before income tax | \u00a0 | (74.0) | 3,401.6 |
Income tax on the above items | \u00a0 | (0.2) | 5.1 |
Effect on net profit / (loss) from continuing operations | \u00a0 | (74.2) | 3,406.7 |
Other exceptional items related to discontinued operations | \u00a0 | - | (0.4) |
Effect on net profit / (loss) | \u00a0 | (74.2) | 3,406.3 |
The exceptional items are disclosed separately in the notes, when relevant, in order to increase transparency.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of the business combination and the fair value of any contingent consideration to be transferred. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree is measured, on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets.
If the business combination is achieved in stages, the Company\u2019s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and the difference with the book value of the previously held equity interest is recognized in the consolidated statement of income. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired, is recorded as goodwill. If the total of the consideration transferred, the non-controlling interest recognized and the fair value of the previously held interest is less than the fair value of the net assets of the subsidiary acquired (\u2018badwill\u2019), the difference is directly recognized in the consolidated statement of income. Acquisition-related costs are expensed as incurred. Subsequent changes to the fair value of the contingent consideration classified as an asset or liability are recognized in the consolidated statement of income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Critical accounting estimates and judgments
When a company is acquired, a value is assigned to intangible assets such as trademarks and the customer relationships. The determination of the value at the time of acquisition and the estimated useful life are subject to judgment. Assumptions by management underlying the estimation of fair value include the future cash flows expected from the asset and discount rates. Useful life is estimated using past experience and relevant industry practices.
Acquisitions
Boskalis
Royal Boskalis N.V. (\u2018Boskalis\u2019) is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors, based in Papendrecht, the Netherlands. The company provides creative and innovative all-round solutions to infrastructural challenges in the maritime, coastal and delta regions of the world. With core activities such as coastal defense, riverbank protection and land reclamation, Boskalis is able to provide adaptive and mitigating solutions to combat the effects of climate change, such as extreme weather conditions and rising sea levels, as well as delivering solutions for the increasing need for space in coastal and delta regions across the world. The company facilitates the development of offshore energy infrastructure, including renewable wind energy. Boskalis is furthermore active in the construction and maintenance of ports, waterways, access channels and civil infrastructure. Boskalis has a versatile fleet of more than 500 vessels and floating equipment and approximately 10,000 employees, including associates.
Full-year revenues for\u00a02022 amounted to \u20ac\u00a03,578 million (2021: \u20ac\u00a02,957 million). Net income for 2022 amounted\u00a0to \u20ac\u00a0241 million (2021: \u20ac\u00a0151 million). At the end of 2022 the order book of\u00a0the company amounted to \u20ac\u00a06.1 billion\u00a0compared to \u20ac\u00a05.4 billion at the end of\u00a02021.
On June 24, 2022, HAL made an all-cash, voluntary offer for all issued and outstanding ordinary shares of Boskalis of \u20ac\u00a032.50 (cum-dividend) per share. The intention for this offer was announced on March 10, 2022. The offer, increased to \u20ac\u00a033.00 (cum dividend) on August 29, 2022, was declared unconditional on September 7, 2022. Following the post-acceptance period, the Company increased its shareholding in Boskalis through purchases in the open market and through tendered shares to 98.9% at the end of the year (2021: 45.54%). Since the announcement of the intended offer on March 10, 2022, HAL acquired shares in Boskalis. As a result of the increase in shareholding, HAL obtained de facto control over Boskalis on July 5, 2022, as the size of its shareholding provided HAL the practical ability to direct the relevant activities of Boskalis unilaterally, considering in particular that HAL could unilaterally adopt, approve or block any decisions with respect to Boskalis that required approval from the supervisory board of Boskalis, that HAL could unilaterally appoint, suspend or dismiss any member of the board of management and/or any member of the supervisory board or unilaterally block a binding nomination (a majority of two-thirds of the votes cast and representing more than half of the issued share capital being required) and that HAL did therefore at that point in time have the current and practical ability to direct the relevant activities of Boskalis. Until that date HAL did not have de facto control over Boskalis and the shares acquired in 2022 up to the de facto control date were accounted for as an investment in an associate in accordance with IAS 28, for an amount of \u20ac\u00a0348.8 million.
In accordance with IFRS, the equity interest in Boskalis that was held prior to obtaining control (classified as an associate and accounted for using the equity method) was revalued to fair value, as reflected by the share price at the date of obtaining de facto control. This resulted in a revaluation gain of \u20ac\u00a0656.2 million, included in share of results from associates and joint ventures (refer to note 25) and a subsequent charge to retained earnings of \u20ac\u00a054.8 million with respect to shares acquired, for an amount of \u20ac\u00a01,885.1 million, after the de facto control date, as this represented transactions with non-controlling interests. At year-end, a non-controlling interest remained of \u20ac\u00a047.1 million. The primary intangible assets recognized in the purchase price allocation include the Boskalis brand name and the order portfolio. In addition, the company\u2019s vessels and other real estate were revalued at market value. Goodwill was recognized in amount of \u20ac\u00a01,224.7 million, related to the knowledge of the workforce, the execution capabilities of the company and the expected growth and profitability of the company.
The total cash outflow during 2022 with respect to the acquisition of Boskalis amounted to \u20ac\u00a02,251.1 million and consisted of the acquisition of shares upto the (de facto) control date of \u20ac\u00a0348.8 million, the shares acquired at the (de facto) control date of \u20ac\u00a017.2 million and the shares purchased after the (de facto) control date of \u20ac\u00a01,885.1 million. The impact of these transactions on book values and results is included in the table below.
| \u00a0 | 2022 |
|---|---|
Book value of the associate at January 1, 2022 | 1,198.4 |
Shares acquired up to the (de facto) control date | 348.8 |
Other movements in the associate | 43.0 |
Total book value of the associate | 1,590.2 |
Revaluation of the associate | 656.2 |
Shares acquired at the (de facto) control date | 17.2 |
Book value of the controlling interest | 2,263.6 |
Book value of the non-controlling interest | 1,877.4 |
Book value of the subsidiary at the (de facto) control date | 4,141.0 |
| \u00a0 | \u00a0 |
Purchase of non-controlling interest | 1,885.1 |
Book value of acquired non-controlling interest | 1,830.3 |
Charged to retained earnings | (54.8) |
Ducky
In May 2022, Pro Gamers Group (64.5% HAL) completed the acquisition of DuckyChannel International Co., Ltd. (\u2018Ducky\u2019). Ducky develops and manufactures mechanical keyboards and had 2022 sales of \u20ac\u00a022.1 million. The intangible assets recognized are the Ducky trademark and goodwill of \u20ac\u00a031.5 million, related to the knowledge of the workforce and the expected growth and profitability of the company.
Details on the acquisitions performed during the year are as follows:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Cash paid | 17.2 | 46.8 | 68.3 | 132.3 |
Future consideration | - | - | 6.2 | 6.2 |
Equity instruments issued | - | - | 15.0 | 15.0 |
Fair value of previously held equity interests | 2,246.4 | - | - | 2,246.4 |
Fair value of net assets acquired | (2,916.4) | (15.3) | (50.5) | (2,982.2) |
Non-controlling interest recognized at fair value | 1,877.5 | - | (0.1) | 1,877.4 |
Goodwill | 1,224.7 | 31.5 | 45.5 | 1,301.7 |
Badwill (in consolidated statement of income) | - | - | (6.6) | (6.6) |
The goodwill on the acquisitions is not deductible for tax purposes.
Details of the net assets acquired are set out below:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Property, plant and equipment and investment properties | 2,984.5 | 0.1 | 21.6 | 3,006.2 |
Right-of-use assets | 128.9 | 0.2 | 3.5 | 132.6 |
Intangible assets | 414.7 | 10.3 | 12.3 | 437.3 |
Investments in associates and joint arrangements | 70.1 | - | - | 70.1 |
Other financial assets | 2.7 | 0.1 | 1.0 | 3.8 |
Deferred tax assets | 9.1 | - | 1.1 | 10.2 |
Other non-current assets | - | 0.2 | - | 0.2 |
Cash | 537.5 | 3.0 | 13.7 | 554.2 |
Assets held for sale | 233.2 | - | - | 233.2 |
Non-current debt | (373.6) | - | (4.1) | (377.7) |
Non-current provisions | (119.5) | - | - | (119.5) |
Lease liabilities | (133.6) | (0.2) | (3.4) | (137.2) |
Deferred tax liabilities | (139.3) | (2.1) | (5.8) | (147.2) |
Other non-current liabilities | - | - | (0.5) | (0.5) |
Current debt | (22.7) | - | (0.2) | (22.9) |
Accounts receivable | 415.1 | 2.7 | 16.8 | 434.6 |
Inventories | 150.2 | 4.4 | 15.1 | 169.7 |
Other current assets | 332.8 | - | 2.4 | 335.2 |
Contract assets | 386.6 | - | - | 386.6 |
Income tax payable | (128.2) | - | (0.9) | (129.1) |
Accounts payable | (224.1) | (1.9) | (9.5) | (235.5) |
Accrued expenses | (1,107.1) | - | (9.4) | (1,116.5) |
Contract liabilities | (430.3) | - | (0.6) | (430.9) |
Other current liabilities | (8.8) | (1.5) | (2.5) | (12.8) |
Current provisions | (61.7) | - | (0.1) | (61.8) |
Net working capital | (675.5) | 3.7 | 11.3 | (660.5) |
Non-controlling interest | (0.1) | - | - | (0.1) |
Fair value of net assets acquired | 2,916.4 | 15.3 | 50.5 | 2,982.2 |
The afore-mentioned acquisitions generated the following results in 2022, respectively would have generated the following results, should they have been consolidated for the full year:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Contribution to 2022 revenues | 1,968.0 | 12.0 | 77.3 | 2,057.3 |
Contribution to 2022 operating income | 147.0 | 4.2 | 9.8 | 161.0 |
Contribution to 2022 net income | 125.0 | 2.6 | 4.5 | 132.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
2022 full-year revenues | 3,578.2 | 22.1 | 156.2 | 3,756.5 |
2022 full-year operating income | 322.6 | 7.9 | 14.0 | 344.5 |
2022 full-year net income | 241.2 | 6.4 | 6.2 | 253.8 |
Acquisition costs charged to the other operating expenses, related to continuing operations, in the consolidated statement of income amounted to \u20ac\u00a010.2 million.
| \u00a0 | Total |
|---|---|
Cash paid for the above acquisitions1 | 132.3 |
Cash acquired in the above acquisitions | (554.2) |
Cash outflow due to acquisition of subsidiaries, net of cash acquired | (421.9) |
Acquisition of and investments in associates and joint arrangements | 894.7 |
Acquisition of Boskalis shares after the (de facto) control date | 1,885.1 |
Cash outflow due to acquisition of associates, joint arrangements and subsidiaries, net of cash acquired | 2,357.9 |
Divestments
Floramedia
On May 31, 2022, HAL sold its ownership interest in Floramedia Group B.V. (\u2018Floramedia\u2019). Floramedia is active in specialty printing, marketing and communication for the green sector. HAL became a shareholder in Floramedia via the acquisition of Mercurius Groep Holding B.V. in 1999.
Livit
On May 2, 2022, HAL completed the sale of its ownership interest in Orthopedie Investments Holding B.V. (\u2018Livit\u2019). Livit manufactures and sells orthopedic and other medical aids to end-customers. Livit operates a network of specialized care centers and fitting locations throughout the Netherlands and was acquired in 2007.
Vopak - Canada terminals
In May 2022, Vopak completed the earlier announced divestment of its 100% shareholding in Vopak Terminals of Canada Inc. and Vopak Terminals of Eastern Canada Inc. The total agreed transaction value including deferred consideration amounted to \u20ac\u00a0129 million (CAD 168 million). The sale generated net cash proceeds of \u20ac\u00a064.7 million in 2022. In May 2023, the remaining consideration of CAD 84 million will be received.
Vopak - India CRL terminal
In May 2022, Vopak transferred its full ownership of the CRL terminal in Kandla India to Aegis Vopak Terminals Ltd (refer to note 6). The purchase consideration, including deferred and contingent components, amounted to approximately \u20ac\u00a039.3million, with net cash proceeds in 2022 of \u20ac\u00a023.9 million.
MYLAPS
On July 8, 2022, HAL sold its ownership interest in MYLAPS B.V. (\u2018MYLAPS\u2019). MYLAPS is active in the development and production of identification and timing equipment for sports events.
Vopak - Vopak Agencies
In December 2022, Vopak completed the divestment of its 100% shareholding in Vopak Agencies B.V. and its 50% shareholding in Diize B.V. The purchase consideration amounted to \u20ac\u00a016.4 million and was received upon execution of the transaction.
The total capital gain on the above divestments of subsidiaries is \u20ac\u00a099.7 million and is included in other income.
The 2022 divestments of subsidiaries, associates and joint ventures resulted in the following cash flows:
| \u00a0 | Vopak | Other | Total |
|---|---|---|---|
Cash received from divestment of subsidiaries | 104.8 | 134.8 | 239.6 |
Cash sold in divestments of subsidiaries | - | (13.0) | (13.0) |
Net cash inflow resulting from divestment of subsidiaries | 104.8 | 121.8 | 226.6 |
Disposal of associates and joint arrangements, including capital repayments1 | 4.6 | 152.6 | 157.2 |
Cash inflow due to divestment of associates, joint arrangements and subsidiaries, net of cash sold | 109.4 | 274.4 | 383.8 |
Property, plant and equipment are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items (such as unrecoverable taxes and transport) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced parts is derecognized. All other repair and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life as follows: buildings 10-50 years, vessels and floating equipment 5-30 years, tank storage terminals 10-40 years and equipment and other 3-15 years. Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Critical accounting estimates and judgments
Property, plant and equipment of represent a substantial part of the total assets of the Company and the related depreciation forms a substantial part of the annual operating expenses. The useful life and residual value of these assets have a major impact on the measurement of property, plant and equipment. These estimates and assumptions are partly based on the expected useful productive lives, experiences related to similar assets, the maintenance history and the period during which the company has the economic benefits from the utilization of the assets
Movements for 2022 and 2021 are as follows:
| \u00a0 | Land and buildings | Vessels and floating equipment | Tank storage terminals | Equipment | Total |
|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,093.1 | 630.9 | 5,583.4 | 1,927.3 | 9,234.7 |
Cost value - under construction | 15.9 | 11.5 | 709.3 | 21.8 | 758.5 |
Accumulated depreciation and impairments | (453.4) | (188.7) | (2,791.9) | (1,442.7) | (4,876.7) |
Balance on January 1, 2021 | 655.6 | 453.7 | 3,500.8 | 506.4 | 5,116.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 81.5 | 17.1 | 431.0 | 159.5 | 689.1 |
Consolidation | 18.5 | - | - | 9.5 | 28.0 |
Disposals | (9.3) | - | (2.7) | (6.2) | (18.2) |
Depreciation and impairments, net of reversals | (35.6) | (34.1) | (301.9) | (107.1) | (478.7) |
Reclassification | (5.9) | - | (94.1) | (6.7) | (106.7) |
Reclassification to held for sale | (49.3) | - | (94.9) | (27.7) | (171.9) |
Exchange differences | 16.9 | 20.7 | 106.0 | 14.8 | 158.4 |
Balance on December 31, 2021 | 672.4 | 457.4 | 3,544.2 | 542.5 | 5,216.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,093.1 | 664.1 | 6,312.5 | 1,963.8 | 10,033.5 |
Cost value - under construction | 72.2 | 31.3 | 322.1 | 96.6 | 522.2 |
Accumulated depreciation and impairments | (492.9) | (238.0) | (3,090.4) | (1,517.9) | (5,339.2) |
Balance on December 31, 2021 | 672.4 | 457.4 | 3,544.2 | 542.5 | 5,216.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 63.7 | 343.4 | 340.8 | 126.9 | 874.8 |
Consolidation | 150.0 | 2,836.1 | - | 20.1 | 3,006.2 |
Disposals | (7.4) | (23.2) | (2.1) | (4.5) | (37.2) |
Depreciation and impairments, net of reversals | (58.2) | (174.9) | (677.1) | (110.3) | (1,020.5) |
Reclassification | (1.0) | (1.8) | (26.2) | (6.3) | (35.3) |
Exchange differences | 4.2 | (6.0) | 87.9 | 4.9 | 91.0 |
Balance on December 31, 2022 | 823.7 | 3,431.0 | 3,267.5 | 573.3 | 8,095.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,255.9 | 3,570.6 | 6,771.1 | 1,993.3 | 13,590.9 |
Cost value - under construction | 94.9 | 270.0 | 318.6 | 149.4 | 832.9 |
Accumulated depreciation and impairments | (527.1) | (409.6) | (3,822.2) | (1,569.4) | (6,328.3) |
Balance on December 31, 2022 | 823.7 | 3,431.0 | 3,267.5 | 573.3 | 8,095.5 |
Note 22 details information on pledges.
Investment properties are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the properties (such as unrecoverable taxes) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life (25-50 years). Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Movements for 2022 and 2021 are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
Cost value | 72.1 | 43.8 |
Accumulated depreciation and impairments | (4.1) | (1.8) |
Balance on January 1 | 68.0 | 42.0 |
| \u00a0 | \u00a0 | \u00a0 |
Investments | 10.9 | 28.7 |
Disposals | - | (0.4) |
Depreciation and impairments | (2.4) | (2.3) |
Balance on December 31 | 76.5 | 68.0 |
| \u00a0 | \u00a0 | \u00a0 |
Cost value | 79.7 | 72.1 |
Cost value - under construction | 3.3 | - |
Accumulated depreciation and impairments | (6.5) | (4.1) |
Balance on December 31 | 76.5 | 68.0 |
At year-end 2022 and 2021, the carrying value of the investment properties was a reasonable approximation of their fair value.
A right-of-use asset and a related lease liability are recognized for lease contracts that exceed a duration of twelve months, except when a contract relates to leases of low-value assets, payments are primarily based on variables such as revenue or when a lessor has a substantive substitution right. The latter contracts are expensed on a straight-line basis over the contract term.
The Company leases real estate properties (land and buildings) to house its retail stores, offices, logistical activities and storage terminal operations. Lease contracts are negotiated on an individual basis and, due to the geographical spread and the various business models of operating companies, contain a wide range of different terms and conditions.
The Company leases vessels and floating equipment in respect of its businesses of transporting liquefied gases and petrochemical products, dredging and offshore energy. These lease contracts are negotiated on an individual basis and may contain a wide range of different terms and conditions due to the international lessor base and the complex and varying nature of individual vessels.
The Company leases terminal-related assets, including storage assets, jetties and loading facilities. These lease contracts are also negotiated on an individual basis and contain a wide range of different terms and conditions due to geographical spread and specific nature of the assets.
The Company also leases trucks, passenger cars and machinery and equipment, including information and communication technology equipment. These contracts are insignificant compared to the total leased asset portfolio.
Right-of-use assets
At the commencement date of the lease contract, the right-of-use asset is measured at cost. This comprises the initial amount of the lease liability, adjusted for prepayments and lease incentives received, initial direct cost, estimated restoration and dismantling costs, where applicable. Depreciation is calculated using the straight-line method to write off the cost of each right-of-use asset from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The right-of-use assets are subject to impairment and adjusted for remeasurement of lease liabilities.
Lease liabilities
At the commencement date of the lease contract, the lease liability is measured at the present value of the lease payments over the lease term, discounted using the incremental borrowing rate. Payments include (in-substance) fixed payments, variable lease payments that depend on an index or rate, amounts expected to be payable under residual value guarantees, expected (early termination) penalties and amounts expected to be payable for the exercise of purchase options, when the Company is reasonably certain to exercise these. Contractual payments related to service costs are excluded from the measurement of lease liabilities in respect of terminal-related assets. Lease liabilities are subsequently measured at amortized cost using the effective interest method. A lease liability is remeasured when there is an adjustment to future lease payments arising from, for example, renegotiation of the lease contract, a change in index or rate, or in case of reassessment of the Company\u2019s expected exercise of options. A remeasurement of the lease liability is reflected as a corresponding adjustment to the right-of-use asset, with any excess over the carrying amount of the asset being recognized in the consolidated statement of income. Rent concessions occurring as a direct consequence of the COVID-19 pandemic are not assessed whether these are lease modifications and instead are accounted for as if they are not lease modifications. Accordingly, these concessions will be recorded as a reduction of the lease liability through the current income statement and not amortized over the term of the lease.
Lessor accounting
The Company subleases some of its right-of-use assets to franchisees or third parties. When substantially all the risks and rewards are transferred to the lessee, the sublease is classified as a finance lease, otherwise the sub-lease is an operating lease. When the sublease is classified as a finance lease, the right-of-use asset in the head lease is de-recognized and a lease receivable is recognized, with any difference being recorded in the consolidated statement of income. Subsequently, the interest income and interest expense are accrued on the lease receivable and lease liability respectively applying the effective interest method. Rental income from operating subleases is recognized in the consolidated statement of income, within other revenue.
COVID-19-related lease concessions
In 2020 and 2021, amendments to IFRS 16 were issued under which rent reductions are recognized directly in the consolidated income statement when the change in lease payments does not result in higher consideration, only lease payments in 2020 and up to June 30, 2022, are reduced and there are no substantial changes to other terms and conditions of the lease. A substantial change is considered to be present if the scope of the lease or the lease term is amended. The Company elected to apply this amendment and exercised judgment to determine if rent reductions met the above requirements.
Critical accounting estimates and judgments - lease terms
The lease term comprises of the non-cancellable period agreed in the lease contract and the periods covered by renewal or termination options that are reasonably certain to be exercised. Significant renewal and termination options primarily relate to the lease of real estate. Renewal and termination options are assessed at the lease commencement date and subsequently, if there is a change in circumstances within the control of the Company. When assessing renewal and termination options, considerations include the quality and performance of the leased asset and the extent of leasehold improvements undertaken, potential relocation and termination expense including penalties and potentially favorable extension terms and long-term customer contracts related to the leased asset.
Critical accounting estimates and judgments - discount rates
In absence of interest rates implicit in the lease contracts, the Company applies the incremental borrowing rate (IBR) as the discount rate to determine the lease liabilities. The IBR is an approximation of the rate that a lessee would pay to attract the required funding to purchase the asset over a similar term, with similar security and in a similar economic environment. The IBR is determined as the sum of a reference rate, a credit risk premium and a country risk premium. The calculation of the IBR takes into account the currency of the lease contract, the lease term, the type of leased asset, the country and the credit quality of the lessee. A single IBR may be applied to a portfolio of leases within a country, which are similar in nature and lease term.
Movements in the right-of-use assets are as follows:
| \u00a0 | Land and buildings | Vessels and floating equipment | Equipment and other | Total |
|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 982.6 | 72.2 | 118.2 | 1,173.0 |
Accumulated depreciation and impairments | (120.2) | (21.0) | (40.2) | (181.4) |
Balance on January 1, 2021 | 862.4 | 51.2 | 78.0 | 991.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
New lease contracts | 57.9 | 27.7 | 40.7 | 126.3 |
Consolidation | 13.0 | - | 0.5 | 13.5 |
Depreciation and impairments continuing operations | (80.0) | (19.2) | (33.1) | (132.3) |
Reclassification | 0.4 | - | (0.9) | (0.5) |
Reclassification to held for sale | (106.7) | - | (3.9) | (110.6) |
Reassessment and remeasurement | 112.7 | (29.5) | 1.7 | 84.9 |
Exchange differences | 25.5 | 3.1 | 0.7 | 29.3 |
Balance on December 31, 2021 | 885.2 | 33.3 | 83.7 | 1,002.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,084.7 | 67.4 | 146.7 | 1,298.8 |
Accumulated depreciation and impairments | (199.5) | (34.1) | (63.0) | (296.6) |
Balance on December 31, 2021 | 885.2 | 33.3 | 83.7 | 1,002.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
New lease contracts | 75.7 | 21.2 | 38.5 | 135.4 |
Consolidation | 76.0 | 39.1 | 17.5 | 132.6 |
Depreciation and impairments | (95.7) | (22.7) | (38.4) | (156.8) |
Reclassification to held for sale | (57.2) | - | (3.3) | (60.5) |
Reassessment and remeasurement | 43.6 | (0.6) | 0.5 | 43.5 |
Exchange differences | 14.4 | 2.1 | 0.4 | 16.9 |
Balance on December 31, 2022 | 942.0 | 72.4 | 98.9 | 1,113.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,221.2 | 91.3 | 181.9 | 1,494.4 |
Accumulated depreciation and impairments | (279.2) | (18.9) | (83.0) | (381.1) |
Balance on December 31, 2022 | 942.0 | 72.4 | 98.9 | 1,113.3 |
In 2022, variable payments of \u20ac\u00a07.4\u00a0million (2021: \u20ac\u00a05.1 million) related to on-balance lease contracts were included in operating expenses. Leases with an original duration of less than 12 months and leases for which the leased asset was of low value were included in the 2022 other operating expenses for \u20ac\u00a026.6 million, respectively \u20ac\u00a05.6 million (2021: \u20ac\u00a014.7 million, respectively \u20ac\u00a05.0 million). The total cash outflow for leases in 2022 amounted to \u20ac\u00a0222.3 million (2021: \u20ac\u00a0352.4 million), of which none (2021: \u20ac\u00a0188.0 million) related to discontinued operations.
Movements in the lease liabilities for 2022 and 2021 are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 1,072.5 | 1,053.1 |
New lease contracts | 135.4 | 126.3 |
Consolidation | 137.2 | 12.9 |
Accrued interest continuing operations | 31.2 | 27.7 |
Accrued interest discontinued operations | - | 10.1 |
Payments | (182.7) | (327.6) |
Rent reductions | - | (6.1) |
Reclassification to held for sale | (60.7) | 77.2 |
Reassessment and remeasurement | 41.9 | 69.4 |
Exchange differences and other | 20.5 | 29.5 |
Balance on December 31 | 1,195.3 | 1,072.5 |
| \u00a0 | \u00a0 | \u00a0 |
Current lease liabilities | 150.6 | 123.4 |
Non-current lease liabilities | 1,044.7 | 949.1 |
Balance on December 31 | 1,195.3 | 1,072.5 |
The consolidated lease liability as at December 31, 2022, relates mainly to Vopak (\u20ac\u00a0648.6 million, 2021: \u20ac\u00a0711.3 million). The weighted-average incremental borrowing rate applied to this portfolio was 3.2% (2021: 3.1%).
Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets.
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is carried at cost less accumulated impairments. Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 35. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Movements for goodwill and other intangibles are as follows:
| \u00a0 | Goodwill | Software | Trade- | Customer relationships | Other | Total |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,225.6 | 399.3 | 420.6 | 421.5 | 152.0 | 2,619.0 |
Accumulated amortization and impairments | (693.6) | (236.4) | (168.4) | (179.1) | (60.4) | (1,337.9) |
Balance on January 1, 2021 | 532.0 | 162.9 | 252.2 | 242.4 | 91.6 | 1,281.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 597.7 | 76.0 | 0.3 | - | 17.5 | 691.5 |
Consolidation | - | 8.3 | 204.4 | 234.8 | 20.5 | 468.0 |
Purchase price accounting adjustments | 5.7 | - | - | - | - | 5.7 |
Disposals | - | (0.9) | - | - | 0.1 | (0.8) |
Amortization and impairments | - | (39.7) | (28.7) | (22.6) | (38.4) | (129.4) |
Reclassification | (1.4) | (20.5) | 23.7 | - | - | 1.8 |
Reclassification to held for sale | (25.9) | (30.7) | 0.9 | (0.2) | (1.8) | (57.7) |
Exchange differences and other | 25.4 | 2.6 | 13.8 | 7.0 | 4.2 | 53.0 |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,282.4 | 452.9 | 646.8 | 664.2 | 188.1 | 3,234.4 |
Accumulated amortization and impairments | (148.9) | (294.9) | (180.2) | (202.8) | (94.4) | (921.2) |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 1,301.7 | 32.5 | 0.3 | - | 17.4 | 1,351.9 |
Consolidation | - | 0.7 | 369.4 | 7.2 | 60.0 | 437.3 |
Disposals | - | (0.2) | (0.1) | - | - | (0.3) |
Amortization and impairments | (312.1) | (39.9) | (46.5) | (32.5) | (28.8) | (459.8) |
Reclassification | - | (0.9) | - | - | - | (0.9) |
Reclassification to held for sale | (18.0) | (2.8) | - | - | (1.5) | (22.3) |
Exchange differences and other | 11.7 | 1.8 | 10.3 | 1.8 | 1.7 | 27.3 |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 2,533.2 | 487.6 | 1,028.2 | 673.1 | 245.8 | 4,967.9 |
Accumulated amortization and impairments | (416.4) | (338.4) | (228.2) | (235.2) | (103.3) | (1,321.5) |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
The 2022 increases in trademarks and other intangibles (order book) mainly relate to Boskalis (refer to note 3). Information on impairment testing and impairments is included in note 35.
Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
The movements of investments accounted for using the equity method are set out below.
| \u00a0 | Associates | Joint ventures | Total |
|---|---|---|---|
Share of net assets | 2,017.8 | 1,056.3 | 3,074.1 |
Goodwill | 310.9 | 74.2 | 385.1 |
Balance on January 1, 2021 | 2,328.7 | 1,130.5 | 3,459.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 6.7 | 145.0 | 151.7 |
Consolidation | 0.4 | - | 0.4 |
Disposals | (17.3) | (1.0) | (18.3) |
Share of results - real estate | - | 42.3 | 42.3 |
Share of results - discontinued operations | 3.1 | (0.3) | 2.8 |
Share of results - other | 223.8 | 160.8 | 384.6 |
Share of other comprehensive income | 67.5 | 9.4 | 76.9 |
Dividends | (114.7) | (178.4) | (293.1) |
Reclassification | (0.2) | (2.1) | (2.3) |
Reclassification to held for sale | 3.1 | (26.1) | (23.0) |
Impairments | - | (43.5) | (43.5) |
Exchange differences | 35.3 | 82.8 | 118.1 |
Other | (6.7) | - | (6.7) |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 2,209.6 | 1,252.7 | 3,462.3 |
Goodwill | 320.1 | 66.7 | 386.8 |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 644.2 | 319.7 | 963.9 |
Consolidation | 10.8 | 59.3 | 70.1 |
Disposals | (47.4) | (2.5) | (49.9) |
Share of results - real estate | - | 50.0 | 50.0 |
Share of results - other | 893.4 | 143.9 | 1,037.3 |
Share of other comprehensive income | 191.6 | 46.7 | 238.3 |
Dividends | (141.2) | (188.1) | (329.3) |
Impairments | (165.8) | - | (165.8) |
Impairments reversal | - | 3.8 | 3.8 |
Reclassification1 | (2,262.5) | - | (2,262.5) |
Reclassification to held for sale | (1.5) | (77.8) | (79.3) |
Exchange differences | 8.4 | 29.3 | 37.7 |
Other | (4.6) | - | (4.6) |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 1,418.3 | 1,540.3 | 2,958.6 |
Goodwill | 236.8 | 163.4 | 400.2 |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
The amounts recognized in the statement of financial position comprise:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Publicly traded | 804.9 | 1,796.2 |
Other | 2,553.9 | 2,052.9 |
| \u00a0 | 3,358.8 | 3,849.1 |
Vopak - PT2SB
In March 2020, a fire took place at an anchor client of PT2SB (25% Vopak) in Malaysia, leading to a subsequent closure of the facility. Following another incident in 2022, the refinery is only expected to resume operations in the first half of 2023. At December 31, 2022, PT2SB has reported \u20ac\u00a0173 million in net accounts receivable from this client (December 2021: \u20ac\u00a088 million). The refinery closure impacted the client\u2019s liquidity position, which may impact PT2SB\u2019s financial performance in 2023.
Investments
Prodrive Technologies
On February 17, 2022, HAL completed the acquisition of 31.45% of the shares in Prodrive Technologies Group B.V. (\u2018Prodrive Technologies\u2019). The company is active in the research, development and manufacturing of high-tech electronics, software and mechatronic products and systems. Prodrive Technologies provides solutions for, among others, the semiconductor, medical and electric mobility industries. As part of the notional purchase price allocation procedures an amount of \u20ac\u00a093.7 million was recognized as goodwill, which was part of the inititial carrying value of this associate. In the fourth quarter of 2022 an impairment of \u20ac\u00a0129.6 million was recorded on this associate (refer to note 35) and a related earn-out liability of \u20ac\u00a019.0 was released.
Real estate joint ventures
The gross investment in joint ventures belonging to the real estate segment increased by \u20ac\u00a085 million during 2022.
Vopak - Aegis
In the second quarter of 2022, Vopak acquired a 49% shareholding in the Aegis Vopak Terminals Ltd. entity (joint venture) and a 24% shareholding in the Hindustan Aegis LPG Ltd. entity (associate). The acquisition-date fair value of the consideration transferred amounted to \u20ac\u00a0226.3 million, of which \u20ac\u00a0174.2 million was paid in cash and \u20ac\u00a052.1 million is contingent upon the completion of certain projects (\u20ac\u00a032.6 million) and exceeding certain revenue targets in 2025 (\u20ac\u00a019.5 million). The company is still working on the notional purchase price allocation for these transactions and expects to finalize this within twelve months after acquisition date.
Divestments
Vopak - Diize
In December 2022 Vopak divested 50% of its shareholding in Diize B.V. The remaining 50% of the former subsidiary was retained and classified as a joint venture.
Vopak - ThaiTank terminal
In December 2022, Vopak recorded an exceptional gain of \u20ac\u00a05.2 million related to the dilution of 14% of its equity interest in ThaiTank Terminal Ltd. After the dilution, Vopak continues to hold an equity interest of 35% that continues to be classified as a joint venture.
Vopak - German LNG terminal
As a result of the divestment of the 33.3% shareholding in the German LNG Terminal GmbH, an impairment reversal of \u20ac\u00a03.8 million was recorded within exceptional items (refer to note 35). This reversal partially offsets the impairment of \u20ac\u00a010.8 million recognized in 2021. Contingent proceeds dependent on the final investment decision of the project amounted to \u20ac\u00a08.9 million. As at the reporting date respective conditions were not yet met.
Quoted associate(s)
The difference between the market value of the Company\u2019s share in its publicly traded associate SBM Offshore N.V. (2021: including Boskalis) and the book value is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Market value | 606.0 | 2,061.2 |
Book value | 804.9 | 1,796.2 |
| \u00a0 | (198.9) | 265.0 |
Real estate joint ventures
The financial position of the U.S. real estate joint ventures included in the real estate segment can be summarized as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Properties in operation and under construction | 554.5 | 477.1 |
Project debt | (339.6) | (322.5) |
Non-controlling interest | (39.8) | (21.6) |
HAL equity share | 175.1 | 133.0 |
The real estate portfolio consisted at the end of 2022 of 16 joint ventures of which 2 were invested in office buildings and 14 in residential real estate. The total (expected) cost of the real estate portfolio amounted to $ 1,138.1 million (\u20ac\u00a01,062.5 million) as of December 31, 2022 (2021: $\u00a0987.8 million, \u20ac\u00a0867.5 million). HAL\u2019s total equity commitment for these projects amounts to $ 306.2 million (\u20ac\u00a0285.9 million, 2021: $\u00a0289.1 million, \u20ac\u00a0253.9 million) of which $\u00a080.0 million (\u20ac\u00a074.7 million) was not yet spent as of December 31, 2022 (2021: $\u00a080.4 million, \u20ac\u00a070.6 million). As certain properties are under construction, the income statements of these joint ventures on a 100% basis are not significant in relation to these financial statements. Revenues for 2022 amounted to \u20ac\u00a030.0 million (2021: \u20ac\u00a021.2 million).
Principal associate
As of 2022, the principal (non-consolidated) associate of the Company is SBM Offshore N.V. (\u2018SBM Offshore\u2019) in which the Company has a 22.88% ownership interest. SBM Offshore is incorporated in the Netherlands and is listed on Euronext Amsterdam. The company designs, builds, installs and operates offshore floating facilities for the offshore energy industry.
Set out below is the summarized financial information for SBM Offshore. This summary is based on publicly available information.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Current | \u00a0 | \u00a0 |
Cash and cash equivalents | 683.0 | 1,021.0 |
Other current assets | 8,388.0 | 5,395.0 |
Total current assets | 9,071.0 | 6,416.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities (excluding trade payables) | 1,883.0 | 1,899.0 |
Other current liabilities (including trade payables) | 1,720.0 | 1,299.0 |
Total current liabilities | 3,603.0 | 3,198.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current | \u00a0 | \u00a0 |
Assets | 6,818.0 | 6,795.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities | 6,898.0 | 6,090.0 |
Other liabilities | 474.0 | 387.0 |
Total non-current liabilities | 7,372.0 | 6,477.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-controlling interest | 1,517.0 | 957.0 |
| \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,397.0 | 2,579.0 |
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Revenue | 4,913.0 | 3,747.0 |
Depreciation, amortization and impairment | (189.0) | (88.0) |
Financial income | 12.0 | 3.0 |
Financial expense | (385.0) | (304.0) |
Profit / (loss) before tax | 660.0 | 543.0 |
Profit / (loss) after tax for owners of parent | 450.0 | 400.0 |
Other comprehensive income for owners of parent | 526.0 | (51.0) |
Total comprehensive income for owners of parent | 976.0 | 349.0 |
Reconciliation of the summarized financial information for SBM Offshore:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Net assets January 1 | 2,579.0 | 2,556.0 |
Profit / (loss) for the period | 450.0 | 400.0 |
Other comprehensive income | 526.0 | (51.0) |
Transactions with owners | (158.0) | (326.0) |
Net assets December 31 | 3,397.0 | 2,579.0 |
| \u00a0 | \u00a0 | \u00a0 |
| \u00a0 | \u20ac\u00a0'm | \u20ac\u00a0'm |
Interest in SBM Offshore (22.88%, 2021: 22.88%) | 736.0 | 530.0 |
Intangible assets recognized in purchase price allocation | 25.9 | 27.3 |
Goodwill | 43.0 | 40.5 |
Book value | 804.9 | 597.8 |
We refer to note 43 with respect to summarized financial information on associates and joint ventures of Vopak.
For the accounting policies for derivative financial instruments, reference is made to note 37. At initial recognition, the Company classifies its non-derivative financial assets as \u201cmeasured at amortized cost\u201d or as \u201cmeasured at fair value\u201d (either through profit or loss or other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 36). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor\u2019s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 36.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 36), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
The specification is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Investments in unquoted equity securities | 94.0 | 83.6 |
Loans to associates and joint ventures | 5.2 | 8.0 |
Other loans | 95.6 | 95.8 |
Finance lease receivable | 131.9 | 131.2 |
Escrow | 250.0 | 500.0 |
Other | 68.8 | 47.6 |
| \u00a0 | 645.5 | 866.2 |
The escrow comprises of an amount of \u20ac\u00a0250 million (2021: \u20ac\u00a0500 million) representing the part of the proceeds from the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V. that is held in escrow until July 3, 2023, for potential liabilities of HAL under the sale and purchase agreement. The funds held in escrow carry 0% interest for HAL. The category \u201cother\u201d includes long-term deposits and receivables. For additional information on derivatives reference is made to note 37.
The other financial assets can be further specified as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Non-current | 360.0 | 588.9 |
Current | 285.5 | 277.3 |
| \u00a0 | 645.5 | 866.2 |
Amounts included in the cash flow statement comprise:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Loans provided to associates and joint ventures | (6.3) | (3.5) |
Repayment of loans by associates and joint ventures | - | 38.0 |
Other | 245.5 | (25.1) |
Proceeds from/(investments in) other financial assets in the statement of cash flows | 239.2 | 9.4 |
The category \u201cother\u201d mainly relates to the receipt of \u20ac\u00a0250 million from the afore-mentioned escrow.
The accounting policies applied to marketable securities and deposits are the same as those applied to other financial assets (note 9). Marketable securities are measured at fair value through profit or loss except for certain fixed income securities which are measured at fair value through other comprehensive income.
Marketable securities consist of equity securities amounting to \u20ac\u00a0521.2 million (2021: \u20ac\u00a0418.7 million) and fixed-income securities amounting to \u20ac\u00a02,839.7 million (2021: \u20ac\u00a03,741.3 million). The fixed-income securities mainly include corporate investment-grade bonds, with an average S&P credit rating of A, an average duration of 1.1 year and an average yield to maturity of 3.43%. The portfolios were on average 41% invested in BBB-rated bonds, 40% in A-rated bonds, 10% in AA-rated bonds and 9% in AAA-rated bonds. On average, the portfolio matures for 55% within 1 year, 41% within 1-3 years and 4% within 3-5 years. The emerging market exposure of the portfolios was 4% of the total value. The average amount invested per security was \u20ac\u00a04 million.
Trade receivables are initially recognized at the transaction price and subsequently measured at amortized cost using the effective interest method, less a provision for impairment. Trade receivables that include a significant financing component are initially recognized at fair value plus any directly related transaction costs. A provision for impairment is established based on the expected loss model (refer to note 36) with application of the simplified approach. The amount of the provision is the difference between the assets\u2019 carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Additions to and releases from the provision are recognized in the consolidated statement of income.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Trade receivables | 1,502.3 | 1,042.5 |
Allowance for doubtful accounts | (78.5) | (64.6) |
| \u00a0 | 1,423.8 | 977.9 |
The ageing analysis of the trade receivables that are past due, net of provision for impairment, is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Up to 3 months | 249.0 | 178.2 |
Between 3 and 6 months | 27.3 | 24.3 |
Between 6 and 9 months | 13.5 | 10.6 |
Over 9 months | 32.9 | 19.8 |
| \u00a0 | 322.7 | 232.9 |
Movements on the provision for impairment of trade receivables are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | (64.6) | (68.4) |
Consolidation | (39.2) | (2.4) |
Addition to allowance | (31.2) | (15.3) |
Utilized during the year | 37.9 | 18.2 |
Released | 20.0 | 3.7 |
Reclassification to held for sale | 0.3 | 0.4 |
Other movements | (1.7) | (0.8) |
Balance on December 31 | (78.5) | (64.6) |
There was no indication at the reporting date that these receivables will not be recovered, other than as already provided for. The fair value of the receivables approximates their carrying value.
Information on pledges is included in note 22.
A construction contract is a contract specifically negotiated for the construction of an asset, including (residential) real estate, greenhouse projects, technical facilities, civil and maritime infrastructure and development projects for which a contract with a customer is present. Development projects for which there is not yet a contract with a customer are included within inventories (refer to note 13). Offshore service contracts are specifically negotiated contracts for (sub-sea) marine services, including heavy transport, inspections and surveys. The timing of invoicing and cash collection may result in unbilled revenue, accounts receivable and deferred revenue with respect to these contracts. Amounts are generally invoiced based on contractual terms, either at periodic intervals or upon achievement of contractual milestones, and for each contract a net position is included in the statement of financial position. In the event that billing occurs subsequent to revenue recognition, unbilled revenue is recognized (as an asset). In the event that payments are received from customers in advance of revenue recognition, deferred revenue is recognized (as a liability).
A provision for onerous contracts is recognized when the remaining unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The provisions taken for onerous contracts related to construction and offshore service contracts are included in note 21. The provision is measured based on the expected incremental and directly related costs of fulfilling the contract.
The order book includes future revenues from projects that have been signed and, for framework contracts, for which work packages have been agreed with clients. This includes mainly projects that are in progress but not yet completed and to a lesser extent projects acquired but not yet in progress at the reporting date.
For information on revenue recognition for construction and offshore service contracts reference is made to note 23.
Critical accounting estimates and judgments
The expected outcome of a construction or offshore service contract is periodically estimated. If the contract is expected to be profitable and the contract revenue highly probable, contract revenue and costs are recognized based on the progress of the project over time, generally by reference to the percentage-of-completion method. When a contract is not estimated to be profitable, the realized loss, determined based on the progress of the project, is recognized in the consolidated statement of income immediately. The expected future losses are included in a provision for onerous contracts (refer to note 21) that is charged against the consolidated statement of income.
There is a robust process in place to determine both progress and forecasted outcomes of construction and offshore service contracts. This process builds on decentralized estimates by project managers that are thoroughly discussed with and reviewed by experienced staff and management at various levels of the organization, including comparative analyses with earlier projections and project budgets. There is inherent estimation uncertainty in this process and actual outcomes of projects may deviate from the forecasted outcomes, affecting revenue and results.
Unbilled revenue and deferred revenue related to construction and offshore contracting activities for which there is a contract with a customer are as follows.
| \u00a0 | Dec. 31, 20221 | Dec. 31, 20212 |
|---|---|---|
Unbilled revenue | 372.4 | 70.6 |
Deferred revenue | (584.5) | (160.3) |
| \u00a0 | (212.1) | (89.7) |
The unbilled revenue and deferred revenue balances are expected to be mainly recognized in 2023 as the Company does not pre-finance projects longer than one year and regular invoicing of installments applies.
The order book with regards to construction and offshore service projects for which a signed contract is in place amounts to \u20ac\u00a07.9 billion (2021: \u20ac\u00a01.9 billion). The increase is primarily the result of the acquisition of Boskalis. These revenues are expected to be realized mainly over the next three years. The Company does not use the practical expedient to exclude performance obligations in contracts with an original expected duration of one year or less.
Inventories are stated at the lower of cost and net realizable value. Cost is generally determined using the weighted-average cost method. Cost comprises direct costs and a proportion of attributable production overheads, but excludes interest expense. Net realizable value is the estimated selling price less the estimated costs necessary to make the sale.
Project development includes land positions, related building rights and capitalized property development costs related to projects for which a signed customer contract is not yet in place.
Critical accounting estimates and judgments
Finished goods are regularly subjected to specific assessment tests to identify damaged, slow moving or obsolete inventory, taking into consideration past experience, historic results and the probability of sale under normal market conditions. Based on these analyses, management asserts judgment to determine the write-downs required to reduce the value of the inventory to its net realizable value.
The composition of the inventories is set out below.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Raw materials | 261.5 | 189.4 |
Work in progress | 60.0 | 67.1 |
Spare parts | 93.9 | 16.9 |
Finished goods | 725.0 | 700.5 |
Project development (including land and building rights) | 120.8 | 118.0 |
Stock in transit | 12.9 | 16.3 |
Provision on inventory | (140.4) | (140.8) |
| \u00a0 | 1,133.7 | 967.4 |
The cost of inventory, services and subcontracted work recognized as an expense amounts to \u20ac\u00a04,792.6 million (2021: \u20ac\u00a02,883.5 million). The total write-down of inventories recognized as an expense amounts to \u20ac\u00a014.3 million (2021: \u20ac\u00a07.2 million).
Information on pledges is included in note 22.
Other current assets generally include prepayments relating to the following year and other receivables to be received within 12 months.
The composition of the other current assets is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Prepaid vendors | 418.0 | 81.6 |
VAT receivable | 82.3 | 57.0 |
Supplier bonus receivable | 46.5 | 40.9 |
Income tax receivable | 116.9 | 54.2 |
Other receivables | 234.6 | 181.6 |
| \u00a0 | 898.3 | 415.3 |
Cash and cash equivalents comprise unrestricted bank balances and liquid investments with a maturity of three months or less.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Cash | 1,707.3 | 1,496.4 |
Cash equivalents | 336.6 | 760.0 |
Cash and cash equivalents | 2,043.9 | 2,256.4 |
Cash equivalents include time deposits with a maturity of less than three months. Cash and cash equivalents in amount of \u20ac\u00a0103.0 million (2021: \u20ac\u00a08.3 million) was held by project-driven construction consortia (joint operations).
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately \u00adbefore classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is \u00adupdated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
A discontinued operation is a component of the Company\u2019s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
At the reporting date the composition of total assets held for sale and related liabilities was as follows.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Property, plant and equipment | 71.4 | 131.2 |
Right-of-use assets | 4.0 | 22.4 |
Intangible assets | - | 37.4 |
Investments in associates and joint arrangements | 228.3 | 26.5 |
Other non-current assets | - | 1.4 |
Current assets | - | 7.7 |
Total assets held for sale | 303.7 | 226.6 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current liabilities | 42.3 | 43.6 |
Current liabilities | - | 6.6 |
Total liabilities related to assets held for sale | 42.3 | 50.2 |
| \u00a0 | \u00a0 | \u00a0 |
Total net assets held for sale | 261.4 | 176.4 |
In May 2022, Vopak completed the divestment of its Canadian terminals (refer to note 3). At year-end 2021, the net assets held for sale for these terminals amounted to \u20ac\u00a0104.6 million. Also in May 2022, Vopak completed the divestment of its CRL terminal in Kandla, India, (refer to notes 3 and 8). At year-end 2021, the net assets held for sale for this terminal amounted to \u20ac\u00a037.5 million. In December 2022, Vopak completed the divestment of its 100% shareholding in Agencies B.V. and its 50% shareholding in Diize B.V.
On February 7, 2022, a joint venture in which HAL had an 85.5% equity interest sold an apartment building in Bellevue, a suburb of Seattle, consisting of 279 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a075 million and a pre-tax capital gain of \u20ac\u00a050 million. This apartment building was included in assets held for sale at year-end 2021 for \u20ac\u00a026.5 million. On May 2, 2022, HAL completed the sale of its ownership interest in Orthopedie Investments Holding B.V. (\u2018Livit\u2019).On May 31, 2022, HAL sold its ownership interest in Floramedia Group B.V. (\u2018Floramedia\u2019). On July 8, 2022, HAL sold its ownership interest in MYLAPS. Refer to note 3 for details on these divestments. On August 16, 2022, a joint venture in which HAL had a 90% equity interest sold an apartment building in Beacon Hill, a neighborhood in southeast Seattle, consisting of 139 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a027 million and a pre-tax capital gain of \u20ac\u00a013 million.
Vopak - Pacific Canada project
In the fourth quarter of 2022, Vopak has classified capitalized development costs, a right-of-use asset and a related lease liability as held for sale. These relate to the Pacific Canada Project that Vopak is developing, for which a sales transaction is expected to be closed in 2023.
Boskalis - Lamnalco
As a result of obtaining control over Boskalis, the company also obtained an indirect investment in the joint venture Smit Lamnalco. Taking into account the earlier announcement by Boskalis that it was reviewing its position as shareholder in the joint venture, HAL considered this investment as \u201cheld for sale\u201d in its purchase price allocation. At the end of 2022, Smit Lamnalco is carried at a value of \u20ac\u00a0228.3 million in the books of HAL. If Smit Lamnalco were to be divested for a different amount, this would lead to a capital gain or loss in the books of HAL.
The other assets held for sale refer to land and buildings and related mortgages.
The movement in the net asset held for sale during periods are as follows.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 176.4 | 2,293.3 |
Consolidation | 233.2 | - |
Addition | 95.5 | 585.8 |
Disposal | (238.7) | (2,702.7) |
Exchange differences | (5.0) | - |
Balance on December 31 | 261.4 | 176.4 |
When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.
The issued and fully paid up share capital at December 31, 2022, consists of 88,598,887 shares of which 6,337 are held as treasury stock by the Company.
Movements in the number of shares were as follows:
x 1,000 | Issued shares | Treasury shares |
|---|---|---|
Balance on January 1, 2021 | 85,385.1 | 73.5 |
Sale and transfer of treasury shares | - | (27.0) |
Stock dividend and purchase of treasury shares | 1,344.6 | 44.5 |
Shares granted | - | (65.0) |
Balance on December 31, 2021 | 86,729.7 | 26.0 |
| \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2022 | 86,729.7 | 26.0 |
Sale and transfer of treasury shares | - | (20.2) |
Stock dividend and purchase of treasury shares | 1,869.2 | 0.5 |
Balance on December 31, 2022 | 88,598.9 | 6.3 |
x 1,000 | Dec. 31, 2022 |
|---|---|
Authorized shares | 90,000.0 |
Outstanding shares | 88,592.6 |
Par value (HAL Holding N.V.) (in euro) | 0.02 |
Share capital (in millions of euro) | 1.8 |
The treasury shares referred to are HAL Trust Shares held by HAL Holding N.V. and are not expected to be cancelled. Each share has one voting right.
A 2021-related dividend of \u20ac\u00a0494.2 million (excluding dividend on treasury shares) or \u20ac\u00a05.70 per Share was distributed on June 17, 2022 (2021: \u20ac\u00a0200.5 million or \u20ac\u00a04.70 per Share), of which \u20ac\u00a0247.1 million in cash and \u20ac\u00a0247.1 million in Shares. Shareholders received one new Share for 46.4 existing Shares held. The calculation of the 2021 earnings per Share has been adjusted to take account of this stock dividend (in accordance with IAS 33.64).
The conversion ratio was determined based on the volume-weighted average share price of HAL Trust Shares traded on Euronext in Amsterdam during the period May 23, 2022, through June 10, 2022. Accordingly, 1,869,174 Shares were issued on June 17, 2022.
Other reserves include the cumulative valuation reserve, the cash flow hedge reserve and the cumulative currency translation reserve.
The cumulative valuation reserve includes the unrealized results, net of tax, on financial assets classified as fair value through other comprehensive income.
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place.
The cumulative currency translation reserve includes all exchange differences resulting from the translation of the financial statements of foreign entities. It also includes the exchange differences on liabilities and the effective currency component of fair value changes of derivative financial instruments, net of tax, to the extent that they are part of an effective net investment hedge relationship.
In millions of euro | Cumulative valuation reserve | Cash flow hedge reserve | Cumulative currency translation reserve | Total other reserves |
|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2021 | 20.8 | (137.2) | (156.7) | (273.1) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Change in fair value of financial assets at fair value through other comprehensive income | 16.7 | - | - | 16.7 |
Translation of foreign subsidiaries, including share of associates and joint arrangements1 | - | - | 317.5 | 317.5 |
Effective portion of hedging instruments, including share of associates and joint arrangements | - | 12.8 | - | 12.8 |
Reclassification | - | 19.8 | - | 19.8 |
Balance on December 31, 2021 | 37.5 | (104.6) | 160.8 | 93.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Change in fair value of financial assets at fair value through other comprehensive income | (13.5) | - | - | (13.5) |
Translation of foreign subsidiaries, including share of associates and joint arrangements | - | - | 63.4 | 63.4 |
Effective portion of hedging instruments, including share of associates and joint arrangements | - | 159.1 | - | 159.1 |
Reclassification | - | 30.1 | - | 30.1 |
Other | - | 0.7 | - | 0.7 |
Balance on December 31, 2022 | 24.0 | 85.3 | 224.2 | 333.5 |
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of the cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place. The table below provides an overview of the estimated maturity profile of the cash flow hedge reserve.
Use of cash flow hedge reserve | \u00a0 |
|---|---|
< 1 year | 49.4 |
1-5 years | 12.1 |
> 5 years | 23.8 |
| \u00a0 | 85.3 |
Deferred tax is recognized using the liability method on taxable temporary differences between the tax base and the accounting base of items included in the consolidated financial statements. Temporary differences are not provided if they relate to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit or differences relating to investments in subsidiaries, associates and joint ventures to the extent that the reversal of the temporary differences are controlled by the Company and it is probable that they will not reverse in the foreseeable future. Withholding tax and any other tax due for unremitted earnings of subsidiaries are not recognized as deferred tax liability unless there is an intention to distribute these earnings in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, at the year end. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax is recognized in the consolidated statement of income unless it relates to items recognized through other comprehensive income.
Tax assets and liabilities are offset when there is a legally enforceable right to set off the recognized amounts and that there is an intent to either settle on a net basis, or to realize the asset and settle the liability simultaneously.
Critical accounting estimates and judgments
Deferred tax assets, including those arising from carry-forward losses, are recognized if it is likely that taxable profits will be available against which losses can be set off. Management exercises judgment to establish the extent to which expected future profits substantiate the recognition of a deferred tax asset.
The movement in deferred tax assets and liabilities during the period is set out on the next page.
| \u00a0 | Carry-forward losses | PP&E | Leases | Intangibles | Inventories | Other | Offset | Total |
|---|---|---|---|---|---|---|---|---|
Assets | 57.4 | 14.6 | 199.5 | 3.7 | 22.7 | 65.2 | (267.2) | 95.9 |
Liabilities | - | (187.2) | (186.3) | (115.4) | (7.8) | (131.1) | 267.2 | (360.6) |
Balance on January 1, 2021 | 57.4 | (172.6) | 13.2 | (111.7) | 14.9 | (65.9) | - | (264.7) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Credited/(charged) to net income - continued operations (restated) | 24.4 | (33.1) | 1.1 | 12.5 | (16.5) | 1.6 | - | (10.0) |
Credited/(charged) to net income - discontinued operations | (2.2) | (0.6) | (1.0) | (0.8) | 0.6 | 2.3 | - | (1.7) |
Credited/(charged) to OCI | - | - | - | 0.1 | - | (17.4) | - | (17.3) |
Acquisitions and purchase price accounting adjustments | 2.2 | (0.1) | (0.2) | (104.1) | (0.3) | (9.7) | - | (112.2) |
Divestitures | - | 11.9 | - | - | - | (4.5) | - | 7.4 |
Other | - | - | - | - | - | (1.0) | - | (1.0) |
Reclassifications to held for sale | 0.4 | 0.3 | 1.8 | 0.9 | (0.6) | 6.1 | - | 8.9 |
Reclassifications | 0.5 | 0.8 | (0.2) | (0.1) | - | (0.9) | - | 0.1 |
Exchange differences | 4.2 | (8.8) | - | (3.9) | 1.7 | (4.5) | - | (11.3) |
Balance on December 31, 2021 | 86.9 | (202.2) | 14.7 | (207.1) | (0.2) | (93.9) | - | (401.8) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 86.9 | 23.9 | 218.4 | 10.9 | 22.9 | 61.7 | (295.9) | 128.8 |
Liabilities | - | (226.1) | (203.7) | (218.0) | (23.1) | (155.6) | 295.9 | (530.6) |
Balance on January 1, 2022 | 86.9 | (202.2) | 14.7 | (207.1) | (0.2) | (93.9) | - | (401.8) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Credited/(charged) to net income - continued operations | (12.8) | 49.8 | (79.3) | 21.6 | 5.9 | (6.9) | - | (21.7) |
Credited/(charged) to OCI | - | - | - | - | - | (26.3) | - | (26.3) |
Acquisitions and purchase price accounting adjustments | 2.8 | (61.3) | (0.3) | (90.6) | 1.5 | 10.9 | - | (137.0) |
Divestitures | (6.5) | (1.8) | (0.1) | 0.4 | - | 0.1 | - | (7.9) |
Other | - | - | - | - | - | 2.7 | - | 2.7 |
Reclassifications | - | (0.2) | 0.5 | (5.4) | 2.1 | 3.0 | - | - |
Exchange differences | 4.4 | (10.4) | 0.6 | (4.9) | 1.0 | (4.7) | - | (14.0) |
Balance on December 31, 2022 | 74.8 | (226.1) | (63.9) | (286.0) | 10.3 | (115.1) | - | (606.0) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 74.8 | 19.0 | 140.5 | 7.5 | 33.5 | 43.5 | (231.1) | 87.7 |
Liabilities | - | (245.1) | (204.4) | (293.5) | (23.2) | (158.6) | 231.1 | (693.7) |
Balance on December 31, 2022 | 74.8 | (226.1) | (63.9) | (286.0) | 10.3 | (115.1) | - | (606.0) |
The portion of the deferred tax liabilities that is expected to be recovered within 12 months amounts to \u20ac\u00a030.3 million (2021: \u20ac\u00a020.3 million). The portion of the deferred tax assets that is expected to be recovered within 12 months amounts to \u20ac\u00a034.8 million (2021: \u20ac\u00a032.7 million).
Unused tax losses for which deferred tax assets have not fully been recognized are as follows:
Expiration | 2022 | 2021 |
|---|---|---|
2022 | - | 1.9 |
2023 | 4.2 | 0.8 |
2024 | 5.7 | 0.2 |
2025 | 10.9 | 5.2 |
2026 | 12.7 | 4.5 |
2027 and further years | 105.7 | 50.5 |
No expiration date | 1,632.1 | 867.6 |
Total continuing operations | 1,771.3 | 930.7 |
Discontinued operations | - | - |
| \u00a0 | 1,771.3 | 930.7 |
The increase in the unused tax losses for which deferred tax assets have not fully been recognized is due to the impairments in Botlek and Europoort at Vopak that did not lead to recognition of deferred tax assets as insufficient profits are expected to be available as well as the first time consolidation of Boskalis.
Deferred tax assets for which the utilization is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences amount to \u20ac\u00a087.7 million (2021: \u20ac\u00a0128.8 million).
Deferred tax assets of \u20ac\u00a042.9 million (2021: \u20ac\u00a077.7 million) relate to entities that suffered a loss in either the current or the preceding period.\u00a0Their recognition is supported by projections of future taxable income and deferred tax liabilities against which they can be offset. Unused tax losses with no expiration date include tax losses relating to acquired entities. These tax losses relate to business models that were different than the activities of the entity at the moment of acquisition. This is an important reason for the fact that these losses have not (fully) been valued.
Unused tax credits for which deferred tax assets have not been fully recognized are not significant.
The Company has both defined benefit and defined contribution plans.
Defined benefit plans
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension charges for defined benefit plans are based on actuarial calculations and calculated in accordance with the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated statement of income so as to spread the regular costs over the service lives of employees in accordance with the advice of independent qualified actuaries who carry out a full valuation of the plans every year. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related liability. The plan assets are measured at fair value. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Current and past service costs, interest components and administrative costs are recognized immediately in the consolidated statement of income. A net defined benefit asset is only recognized to the extent the surplus in the pension plan can be realized during the life of the plan, through refund or reduced future contributions, or at the settlement of the plan.
Defined contribution plans
A defined contribution plan is a pension plan under which the Company pays contributions to a publicly or privately administered pension insurance plan on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Critical accounting estimates and judgments
The defined benefit obligation is determined on the basis of assumptions for future developments in variables such as salary increase, price index increase, life expectancy and discount rate. All assumptions are assessed at the reporting date. Changes in the assumptions may significantly affect the liabilities and pension costs under the defined benefit plans. The weighted average of these assumptions as well as sensitivities of key assumptions are disclosed in this note.
The net amounts recognized in the statement of financial position for pension benefits are as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Pension benefit assets | 55.3 | 58.5 |
Pension benefit liabilities | (109.7) | (105.0) |
| \u00a0 | (54.4) | (46.5) |
The net pension benefit liability consists of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Present value of funded obligations | (404.6) | (450.2) |
Fair value of plan assets | 422.4 | 496.0 |
Impact from asset ceiling | (19.4) | (26.4) |
Surplus/(deficit) of funded obligations | (1.6) | 19.4 |
Present value of unfunded obligations | (52.8) | (65.9) |
Total defined benefit plans | (54.4) | (46.5) |
Net asset/(liability) in the statement of financial position | (54.4) | (46.5) |
Pension benefit liabilities
The pension liabilities of \u20ac\u00a0109.7 million mainly relate to pension plans at Boskalis (\u20ac\u00a048.9 million), primarily a closed insured pension plan in the Netherlands, and a pension plan of Westag (\u20ac\u00a022.4 million), a subsidiary of Broadview Holding B.V. , in Germany. Also included are two Formica pension plans in the United Kingdom with a net liability of nil.
Westag plan
The pension plan of Westag is unfunded and payments are made from Westag\u2019s operating cash flow. Participants are insured against the consequences of old age, disability and death. The pension plan is closed to new participants. The defined benefit liability is calculated based on expected, salary-independent, old-age and disability pension payments per full year of staff membership in the company.
Pension supervision in Germany
The Westag pension plan operates under the German Pension Reform Act and is overseen by the Federal Financial Supervisory Authority BaFin.
Boskalis plans
This primarily relates to a closed insured pension plan in the Netherlands, for which future cash inflows consist of the company\u2019s entitlement to excess returns achieved by the insurance company and future cash outflows for premiums for price indexation of insured pensions. The net defined benefit obligation for this pension plan is based on an estimate of this future cash outflow for premiums. The company\u2019s entitlement to excess returns is not accounted for as an asset. Both the annual income from excess returns and expense for premiums for price indexation continue to be recognized through the statement of other comprehensive income. Therefore the expected impact of the defined benefit pension plans on future statements of profit or loss is not significant.
Formica plans United Kingdom
At December 31, 2022, the assets of certain plans at Formica (\u20ac\u00a0109.6 million) exceeded the obligations of the plans (\u20ac\u00a093.8 million) by \u20ac\u00a015.8 million. The surplus in these pension plans has not been recognized since it is not possible to recognize any economic benefit from refunds or reductions in future contributions. Both plans are closed for new entrants and the future benefit accrual has been frozen with effect of August 31, 2018, when a defined contribution plan was introduced. The benefits of the existing members were not affected by the closure of the scheme. The pension plans provide benefits upon retirement (based on final pay), death, disability and termination. Both plans are operated by separate pension trustees.
Pension supervision in the United Kingdom
The Formica plans operate under the regulatory framework of the Pensions Act 2004, as overseen by The Pensions Regulator. According to a 2018 UK High Court ruling, most UK defined benefit plans are expected to be required to provide additional benefits to their participants regarding guaranteed minimum pensions. This is expected to affect one of the plans and an estimated 1.5% allowance was applied in calculating the defined benefit obligation.
Pension benefit assets
The pension benefit assets of \u20ac\u00a055.3 million relate fully to a surplus of a pension fund in the Netherlands (the \u2018pension fund\u2019) that insures its participants against the consequences of old age, death and disability. The Company and its employees currently do not pay contributions to these pension plans. The pension fund has the legal structure of a foundation. The (actuarial) risks related to the pension plan consist of demographic risks (primarily life expectancy) and financial risks (primarily discount rate, future increases in salaries, and return on plan assets) and are regularly reviewed by the board of the pension fund. The board of the pension fund is the most senior governing body of the pension fund and is composed of equal numbers of employer and employee representatives (including pensioners). Modification of the pension plan requires the approval of the Company. The minimum required funding level for the pension fund is 104%. The pension fund had a funded level of 197% at year-end 2021. The funding level at December 31, 2022, was preliminary calculated at 194%. The pension asset is calculated, in accordance with IFRIC 14, as the lower of the surplus and the present value of the future service cost using assumptions (including the discount rate) consistent with those used to determine the defined benefit obligation, taking into account minimum funding requirements.
Pension supervision in the Netherlands
Pension funds in the Netherlands are overseen by the Authority for the Financial Markets (AFM) and the Dutch Central Bank (DNB). An annual report including an actuarial review on the plan is prepared in accordance with legal requirements. Additional reports are prepared periodically in accordance with IFRS requirements.
Multi-employer plans
Multi-employer pension plans are defined benefit plans classified as defined contribution, as the information received from these plans is not detailed per employee and per company. In case of a deficit in the multi-employer plans, future pension premiums may increase. There are no multi-employer plans for which the Group is significant in respect to the total plan. Certain multi-employer plans have indicated they have no reliable and consistent basis on which to attribute the pension obligations, plan assets and the absolute and relative share of the Group in the fund and on which to allocate income and expenses to the individual member companies of these pension funds. As a result, appropriate calculations for these defined benefit plans cannot be preformed and they are recognized in these financial statements as a defined contribution plan.
The movement in the net provision for defined benefit plans is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | (46.5) | (89.8) |
Pension charge defined benefit plans continuing operations | (12.7) | (11.5) |
Pension charge defined benefit plans discontinued operations | - | (5.1) |
Consolidation | (39.9) | (0.5) |
Contributions | 8.3 | 7.4 |
Remeasurement effects | 32.7 | 54.8 |
Benefits paid for unfunded plans | - | 0.9 |
Reclassification to held for sale | - | (6.9) |
Plan amendments, settlements and curtailments | 0.9 | - |
Exchange differences and other | 2.8 | 4.2 |
Balance on December 31 | (54.4) | (46.5) |
In 2022, the remeasurement effects of \u20ac\u00a032.7 million are primarily the result of higher discount rates and lower returns on plan assets. In 2021, the remeasurement effects of \u20ac\u00a054.8 million were primarily the result of higher returns on plan assets.
The amounts recognized in the consolidated statement of income are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Current service costs | 11.2 | 9.9 |
Interest expense/(income) | 0.1 | 0.5 |
Plan amendments, settlements and curtailments | - | 0.1 |
Administrative costs | 0.9 | 0.8 |
Total defined benefit costs | 12.2 | 11.3 |
Other costs | 112.2 | 79.3 |
Pension charges related to continuing operations | 124.4 | 90.6 |
Other costs mainly include costs related to defined contribution plans and multi-employer plans classified as defined contribution plans, as referred to above.
Movements in the defined benefit obligation, for both funded and unfunded plans, and plan assets and related asset ceilings, are as follows:
| \u00a0 | Plan assets | \u00a0 | Obligation | \u00a0 | Asset ceiling | |||
|---|---|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | \u00a0 | 2022 | 2021 | \u00a0 | 2022 | 2021 |
Balance on January 1 | 496.0 | 467.9 | \u00a0 | 516.1 | 535.6 | \u00a0 | 26.4 | 22.1 |
Consolidation | 72.7 | 0.2 | \u00a0 | 112.6 | 0.7 | \u00a0 | - | - |
Service cost | - | - | \u00a0 | 11.2 | 9.8 | \u00a0 | - | - |
Interest income | 10.2 | 7.7 | \u00a0 | - | - | \u00a0 | - | - |
Interest expense | - | - | \u00a0 | 10.3 | 8.1 | \u00a0 | - | - |
Pension charges related to discontinued operations | - | 1.4 | \u00a0 | - | 6.5 | \u00a0 | - | - |
Employer contributions | 8.3 | 7.4 | \u00a0 | - | - | \u00a0 | - | - |
Return on plan assets (excluding amounts included in interest income) | (142.6) | 35.2 | \u00a0 | - | - | \u00a0 | - | - |
Experience adjustments | - | - | \u00a0 | 25.5 | (2.9) | \u00a0 | - | - |
Change in financial assumptions | - | - | \u00a0 | (199.5) | (12.4) | \u00a0 | (6.2) | 2.3 |
Change in demographic assumptions | - | - | \u00a0 | 4.9 | (6.6) | \u00a0 | - | - |
Plan amendments, settlements and curtailments | - | (12.9) | \u00a0 | - | (12.8) | \u00a0 | - | - |
Benefits paid | (21.6) | (17.5) | \u00a0 | (25.6) | (24.6) | \u00a0 | - | - |
Reclassification | - | - | \u00a0 | 0.1 | (1.5) | \u00a0 | - | 0.1 |
Reclassification to held for sale | - | (15.0) | \u00a0 | - | (6.5) | \u00a0 | - | - |
Exchange differences and other | (0.6) | 21.6 | \u00a0 | 1.8 | 22.7 | \u00a0 | (0.8) | 1.9 |
Balance on December 31 | 422.4 | 496.0 | \u00a0 | 457.4 | 516.1 | \u00a0 | 19.4 | 26.4 |
The Company expects to contribute \u20ac\u00a021.3 million to defined benefit plans in 2023. The increase mainly relates to expected indexation of certain pension benefits.
The expected maturity analysis of undiscounted pension benefits is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Less than 1 year | 21.7 | 18.8 |
1-2 years | 23.7 | 19.0 |
2-5 years | 64.8 | 60.3 |
> 5 years | 970.8 | 708.5 |
| \u00a0 | 1,081.0 | 806.6 |
The principal weighted-average assumptions used were:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Discount rate/return on assets | 4.66% | 1.79% |
Future inflation rate | 2.76% | 2.46% |
Future salary increases | 2.72% | 2.47% |
Life expectancy in years: | \u00a0 | \u00a0 |
Age 65 for men | 18.8 | 20.3 |
Age 65 for women | 21.1 | 22.8 |
Age 65 in 20 years for men | 20.3 | 22.0 |
Age 65 in 20 years for women | 22.5 | 24.4 |
The latest available mortality tables were used. The discount rates used in the determination of defined benefit obligations and pension charges are based on high-quality corporate bonds (AA- rated) with a duration matching the duration of the pension benefit liabilities.
Plan assets include as of December 31, 2022:
| \u00a0 | Level 1 | Level 2 | Level 3 | Total | Total (%) |
|---|---|---|---|---|---|
Equity instruments | 141.9 | 14.0 | - | 155.9 | 36.9% |
Debt instruments | 54.0 | 78.4 | 0.1 | 132.5 | 31.4% |
Cash and cash equivalents | 15.0 | - | - | 15.0 | 3.6% |
Other | 1.2 | 1.7 | 116.1 | 119.0 | 28.1% |
| \u00a0 | 212.1 | 94.1 | 116.2 | 422.4 | 100.0% |
The amounts in level 3 mainly relate to insurance policies that provide coverage for the related pension obligations.
Plan assets included as of December 31, 2021:
| \u00a0 | Level 1 | Level 2 | Level 3 | Total | Total (%) |
|---|---|---|---|---|---|
Equity instruments | 174.4 | 25.4 | - | 199.8 | 40.3% |
Debt instruments | 36.8 | 152.2 | 0.1 | 189.1 | 38.1% |
Cash and cash equivalents | 19.3 | - | - | 19.3 | 3.9% |
Other | 5.0 | 2.1 | 80.7 | 87.8 | 17.7% |
| \u00a0 | 235.5 | 179.7 | 80.8 | 496.0 | 100.0% |
The sensitivity of the defined benefit obligation to changes in the weighted-average principal assumptions is as follows:
| \u00a0 | \u00a0 | Impact on obligation | |
|---|---|---|---|
| \u00a0 | Change | Increase | Decrease |
Discount rate/return on assets | 1.00% | (44.4) | 55.2 |
Future inflation rate | 1.00% | 30.4 | (28.2) |
Future salary increases | 0.25% | 1.9 | (1.8) |
Life expectancy | 1 year | 12.6 | N/A |
The plan liabilities are calculated using a discount rate set with reference to high-quality corporate bond yields. If plan assets underperform this yield, this will create a deficit. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans\u2019 bond holdings. The majority of the plans\u2019 obligations are to provide benefits for the lifetime of the members, therefore increases in life expectancy will result in an increase in the plans\u2019 liabilities.
A provision is recognized for a present legal or constructive obligation as a result of past events, when it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made (for onerous contracts refer to note 12). Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
The composition and movements in provisions is as follows:
| \u00a0 | Environmental | Employee related | Claims & regulatory | Onerous contracts | Warranty | Other | Total |
|---|---|---|---|---|---|---|---|
Balance on January 1, 2021 | 21.0 | 29.0 | 35.1 | 21.5 | 17.3 | 39.4 | 163.3 |
Addition to provision | 5.6 | 23.0 | 2.5 | 2.2 | 12.1 | 9.8 | 55.2 |
Consolidation | - | - | - | 3.5 | 0.2 | 0.2 | 3.9 |
Utilized during the year | (2.2) | (22.6) | (3.8) | (16.3) | (9.3) | (9.5) | (63.7) |
Released | (0.6) | (3.0) | (20.0) | (3.5) | (0.7) | (2.9) | (30.7) |
Net addition related to discontinued operations | - | 6.0 | (10.3) | - | 0.4 | 0.5 | (3.4) |
Reclassification to held for sale | (2.7) | (5.9) | 10.3 | - | (0.4) | (0.5) | 0.8 |
Exchange differences | 0.5 | - | - | - | 0.2 | - | 0.7 |
Reclassifications and other movements | - | (0.5) | - | - | - | (3.5) | (4.0) |
Balance on December 31, 2021 | 21.6 | 26.0 | 13.8 | 7.4 | 19.8 | 33.5 | 122.1 |
Current | 8.4 | 15.6 | - | 0.4 | 3.6 | 23.9 | 51.9 |
Non-current | 13.2 | 10.4 | 13.8 | 7.0 | 16.2 | 9.6 | 70.2 |
Balance on December 31, 2021 | 21.6 | 26.0 | 13.8 | 7.4 | 19.8 | 33.5 | 122.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Addition to provision | 14.3 | 9.7 | 4.9 | 39.2 | 64.6 | 5.3 | 138.0 |
Consolidation | 1.4 | 8.3 | 1.6 | 69.2 | 56.5 | 4.4 | 141.4 |
Utilized during the year | (4.9) | (15.3) | (8.1) | (33.2) | (20.7) | (8.0) | (90.2) |
Released | (0.3) | (5.4) | - | (0.2) | (0.9) | (0.9) | (7.7) |
Reclassification to held for sale | - | (0.7) | - | - | (0.2) | - | (0.9) |
Exchange differences | 0.1 | 0.1 | - | 0.5 | 0.3 | 0.2 | 1.2 |
Reclassifications and other movements | - | (0.1) | 14.3 | 35.7 | 5.3 | (13.7) | 41.5 |
Balance on December 31, 2022 | 32.2 | 22.6 | 26.5 | 118.6 | 124.7 | 20.8 | 345.4 |
Current | 5.7 | 7.7 | 7.9 | 66.7 | 80.2 | 15.1 | 183.3 |
Non-current | 26.5 | 14.9 | 18.6 | 51.9 | 44.5 | 5.7 | 162.1 |
Balance on December 31, 2022 | 32.2 | 22.6 | 26.5 | 118.6 | 124.7 | 20.8 | 345.4 |
Environmental
The environmental provisions primarily relate to historical contaminations of locations where Vopak terminals are located.
Onerous contracts
The increase in provision for onerous contracts is mainly due to the consolidation of Boskalis. The provision relates primarily to construction and offshore services contracts (refer to note 12).
Warranty
Warranty provisions relate to multiple projects, mainly at Boskalis.
Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Debt and other financial liabilities is comprised of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Debt | 5,025.7 | 3,731.4 |
Other financial liabilities | 177.3 | 133.4 |
| \u00a0 | 5,203.0 | 3,864.8 |
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Non-current debt and other financial liabilities | \u00a0 | \u00a0 |
Mortgage loans | 464.3 | 272.7 |
Private placements | 1,899.5 | 2,054.2 |
Other loans | 592.7 | 590.3 |
Total non-current debt | 2,956.5 | 2,917.2 |
Non-current other financial liabilities | 150.2 | 119.7 |
Total non-current debt and other financial liabilities | 3,106.7 | 3,036.9 |
| \u00a0 | \u00a0 | \u00a0 |
Current debt and other financial liabilities | \u00a0 | \u00a0 |
Bank overdrafts | 1,193.4 | 709.7 |
Current portion of long-term debt | 874.9 | 103.1 |
Other loans | 0.9 | 1.4 |
Total current debt | 2,069.2 | 814.2 |
Current other financial liabilities | 27.1 | 13.7 |
Total current debt and other financial liabilities | 2,096.3 | 827.9 |
| \u00a0 | \u00a0 | \u00a0 |
Total debt and other financial liabilities | 5,203.0 | 3,864.8 |
Mortgage loans are secured by mortgages and pledges on vessels, real estate, inventory and receivables with a corresponding carrying value of \u20ac\u00a0632.1 million (2021: \u20ac\u00a0492.1 million). These are non-possessory pledges, which means that only in case of default under the mortgage loan agreements, the lender will have the right to sell the vessels, real estate or inventory and receive the cash flows from the receivables. The other loans are secured\u00a0to an amount of \u20ac\u00a0847.7 million (2021: \u20ac\u00a0958.6 million) by non-possessory pledges on machinery and equipment, receivables, inventories and other current assets.
The debt position relates for \u20ac\u00a02,359.7 million (47.0%) to Vopak (2021: \u20ac\u00a02,287.2 million, 61.3%). This debt mainly consists of unsecured private placements in the U.S. and Asian markets. The average remaining maturity at the end of 2022 was 4.3 years (2021: 4.7 years).
Current bank debt includes amounts drawn by HAL Holding N.V. at two banks for a total amount of \u20ac\u00a0576 million. These loans are collateralized by fixed-income securities included in the marketable securities and need to be repaid prior to December 31, 2023. The loan/commitment-to-value covenant ratio of 70% was met during 2022.
The summary of debt per currency is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Euro | 3,132.3 | 1,795.0 |
U.S. dollar | 1,533.0 | 1,407.2 |
Singapore dollar | 139.6 | 139.8 |
Other currencies | 220.8 | 389.4 |
| \u00a0 | 5,025.7 | 3,731.4 |
For 100% of the bank debt, the applicable covenants were complied with or waived during 2022 (2021: 100%). The table below provides details on certain company-specific covenants that applied in 2022.
| \u00a0 | Debt | Required | Actual |
|---|---|---|---|
Boskalis | 392.3 | \u00a0 | \u00a0 |
Maximum net debt:EBITDA ratio | \u00a0 | 3.00 | (0.70) |
Minimum interest cover ratio | \u00a0 | 4.00 | 42.00 |
Vopak | 2,359.7 | \u00a0 | \u00a0 |
Maximum senior net debt:EBITDA ratio | \u00a0 | 3.75 - 4.00 | 2.65 |
Minimum interest cover ratio | \u00a0 | 3.50 | 8.40 |
Other | 2,273.7 | \u00a0 | \u00a0 |
Total debt | 5,025.7 | \u00a0 | \u00a0 |
Included in other financial liabilities is the obligation to acquire equity instruments in certain subsidiaries from the management of these subsidiaries and liabilities related to share-based payment plans for an aggregate amount of \u20ac\u00a083.3 million (2021: \u20ac\u00a058.9 million), of which \u20ac\u00a067.6 million (2021: \u20ac\u00a042.9 million) is included as non-current liabilities. Reference is made to note 34 on share-based compensation.
Also included are obligations related to options on non-controlling interest and deferred/contingent payments with respect to acquisitions for \u20ac\u00a079.1 million (2021: \u20ac\u00a059.6 million) and other liabilities of \u20ac\u00a015.0 million (2021: \u20ac\u00a014.9 million). These liabilities expire during 2023 through 2025. In 2020, Safilo entered into reciprocal option agreements with a view to acquiring the non-controlling interest in Blenders and Priv\u00e9 Revaux. In 2022, these options were revalued for an update to the business plans, leading to a \u20ac\u00a031.2 million revaluation gain and a reduction of the liability. In 2022, the CEO and certain other employees of Priv\u00e9 Revaux resigned and, pursuant to the contractual terms, Safilo early exercised its call option on their non-controlling interest in the company in exchange for a nominal amount. As a result, the ownership interest in Priv\u00e9 Revaux increased from 64.2% to 82.8%.
The fair value of debt and other financial liabilities is disclosed in note 36.
Revenue is recognized in the period in which the performance obligation from the underlying contract has been satisfied. In most sales transactions this is at the point in time when control over a product or service has been transferred to the customer. Revenue is shown net of sales tax, value-added tax, discounts, rebates, expected returns and amounts collected on behalf of third parties. A contract with a customer may comprise of multiple distinct performance obligations that require separation. In general, the total consideration under the contract is allocated to performance obligations based on stand-alone selling prices. The timing of revenue recognition depends on the type of performance obligation, as described below.
Sale of goods
The group operates physical retail stores and webstores in the Quoted minority interests and Unquoted segments. Sales on a wholesale basis are present in the Quoted minority interest and Unquoted segments. Revenue is recognized when the product is sold to the customer and control over the product has been transferred to the customer in return for (a right to) payment.
For retail sales, revenue recognition generally coincides with the physical transfer of the product to the customer. Revenue is then recognized at the transaction price, gross of (credit card) fees payable for the transaction which are recorded in selling cost. For rights issued under a customer loyalty program, through vouchers and by way of other future discounts or awards, a contract liability is incurred as a reduction to revenue. Revenue is further reduced and a refund liability is recognized for applicable rights of return. An asset reflecting the right to returned goods is recognized, reducing the cost of sales, at the carrying amount of those goods, net of expected refurbishment cost for returns that are not scrapped. In general, when a replacement product is not an acceptable alternative, the transaction price is refunded. An expected-value calculation based on accumulated experience is used to determine the amounts recognized as a refund liability. Where loyalty programs are in place, revenue allocated to the awards is recognized based on (anticipated) expiration and when the awards are redeemed.
For wholesale and franchise sales the timing of revenue recognition depends on when the products are delivered, with full discretion by the customer or franchisee over the sales channel and price to re-sell the products. Revenue recognition depends on individual customer terms and may occur when the products have been shipped or delivered to a specific location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or objective evidence has been obtained that all criteria for acceptance have been satisfied. Volume incentives apply to various wholesale contracts and reduce related revenues. Depending on the contract, these incentives are either paid at the end of the contract period as a rebate, or provide a right to a discount in the next contractual period. In case of rebates, a refund liability is recorded at the time of the transaction, as a reduction to revenue. The group periodically reviews the expected transaction price for the goods and services provided under the contract and adjusts the revenues from the contract and the refund liability accordingly. Discounts to be provided in future periods based on current year sales are considered a separate performance obligation, reducing current year revenue, and are recognized as a contract liability. The contract liability is recognized as revenue in the consolidated statement of income based on (anticipated) expiration and when the discounts are redeemed. A receivable is recognized for wholesale deliveries when payment has become unconditional. No element of financing is deemed present as payment terms are consistent with market practice. Any prepayments by customers are not considered revenue but are accounted for as contract liabilities.
Obligations to provide a refund under the standard warranty terms are recognized as a provision. Where warranties exceed these standard terms either in time, extent or through the inclusion of (additional) services it is recognized as distinct performance obligation and part of revenues is allocated and recognized over the period covered by the extended warranties. Extended warranties are considered services to be rendered and included under contract liabilities until revenue is recognized.
Provision of services
The group provides storage services in its Quoted minority interest segment and a range of other services, including shipping, staffing and financial services, in its Unquoted segment. Revenue from providing services is recognized in the period in which the services are rendered. Tank storage rentals, including minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period when these services are rendered, as clients simultaneously consume and benefit from the services at the moment that these are rendered. Revenues from excess throughputs and other services are recognized in the period in which they are provided.
For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, based on costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in the consolidated statement of income in the period in which the circumstances that give rise to the revision become known by management. Contracts for the rendering of services typically do not exceed a duration of twelve months, except for framework agreements for which prices are variable or periodically renegotiated.
Modifications of property, plant and equipment paid upfront by customers are accounted for as a contract liability and recognized in the consolidated statement of income over the contractual period on a straight-line basis.
In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered exceed the payment, depending on the specific terms of the contract, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized. If the contract includes an hourly fee, revenue is recognized in the amount to which there is a right to invoice. No element of financing is deemed present as payment terms are consistent with market practice.
License revenues
Franchise rights are accounted for as rights to access the franchisor\u2019s intellectual property. Any fixed fee allocated to those rights is generally recognized over the term of the franchise agreement. Franchise fees that are based on a percentage of sales are recognized at the time of the sale. Access to (digital) content is recognized over time for subscription contracts and at a point in time for usage-based contracts. License revenues are presented within rendering of services.
Construction and offshore contracting activities
The group provides (integration of) goods and services through its construction and offshore contracting businesses in the Unquoted segment, including housing, greenhouse, civil infrastructure and maritime construction. Revenue and results from the these businesses are determined by reference to the latest estimate of the total selling price of the contract, after taking into account claims that have been accepted by the client or that derive from enforceable rights, are highly probable to lead to revenue and can be reliably measured. Such revenue is recognized over time, using the percentage-of-completion method, using a completion rate determined by reference to estimated cost of completed works (input method) and reviewed against progress of the works.
Recognition of revenues and results for property development activities commences only when a contract with a customer for the (further) development and sale of such property has been signed. These contracts generally involve the delivery of both land and buildings. Revenues related to (further) development of the land and the construction of buildings are recognized as set out above. Revenues and results from sale of the land positions are realized at the signing date if the land is transferred to the buyer directly, or through inclusion of land and land-related expenses in the cost basis for determination of project completion, if it remains an integral part of the project under development.
Construction, development and offshore services contracts of the group are frequently subject to variation orders that affect the scope and/or price of the contract and that amend existing performance obligations. Variation orders that are highly probable, cannot be reversed and for which payment is legally enforceable constitute contract modifications. These modifications are accounted for through a cumulative catch-up adjustment.
A provision for onerous contracts is formed against operating expenses when future contract losses are known and can be reliably measured. Additional information on judgement and estimates in relation to construction, development and offshore services contracts are included in note 12.
The Company\u2019s 2022 revenue can be disaggregated as follows:
2022 | Europe | USA & Canada | Asia | Other | Total | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | \u00a0 | \u00a0 | \u00a0 | ||||
Sale of goods | 3,179.3 | 878.5 | 302.5 | 254.5 | 4,614.8 | 1,072.4 | 3,542.4 |
Construction and offshore contracting activities | 1,977.1 | 91.5 | 630.3 | 60.4 | 2,759.3 | - | 2,759.3 |
Provision of services | 1,466.0 | 286.3 | 507.8 | 387.1 | 2,647.2 | 1,341.6 | 1,305.6 |
| \u00a0 | 6,622.4 | 1,256.3 | 1,440.6 | 702.0 | 10,021.3 | 2,414.0 | 7,607.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from other sources | 48.9 | 14.1 | 11.8 | 8.2 | 83.0 | 64.4 | 18.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue | 6,671.3 | 1,270.4 | 1,452.4 | 710.2 | 10,104.3 | 2,478.4 | 7,625.9 |
The Company\u2019s 2021 revenue can be disaggregated as follows:
2021 | Europe | USA & Canada | Asia | Other | Total | Optical retail | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||
Sale of goods | 3,337.8 | 976.2 | 549.3 | 371.3 | 5,234.6 | - | 2,163.8 | 3,070.8 |
Construction and offshore contracting activities | 1,271.7 | 55.3 | 9.2 | 34.2 | 1,370.4 | - | - | 1,370.4 |
Provision of services | 527.9 | 8.8 | 15.6 | 11.6 | 563.9 | - | - | 563.9 |
| \u00a0 | 5,137.4 | 1,040.3 | 574.1 | 417.1 | 7,168.9 | - | 2,163.8 | 5,005.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from other sources | 13.1 | 8.8 | 8.9 | 13.6 | 44.4 | - | 41.1 | 3.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue from continuing operations | 5,150.5 | 1,049.1 | 583.0 | 430.7 | 7,213.3 | - | 2,204.9 | 5,008.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from discontinued operations | 1,747.9 | 35.6 | - | 107.6 | 1,891.1 | 1,891.1 | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue | 6,898.4 | 1,084.7 | 583.0 | 538.3 | 9,104.4 | 1,891.1 | 2,204.9 | 5,008.4 |
Expected future revenues from continuing operations can be specified as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Future revenues expected to be realized in one year | 3,898.6 | 1,284.8 |
Future revenues expected to be realized between one and two years | 2,242.9 | 436.5 |
Future revenues expected to be realized between two and five years | 1,453.3 | 158.4 |
Future revenues expected to be realized beyond five years | 274.1 | - |
Future revenues in order book | 7,868.9 | 1,879.7 |
Future revenues from current projects | 2,405.4 | 1,102.6 |
Future revenues in order book primarily relates to housing, greenhouse, civil infrastructure and maritime construction, office furniture and industrial businesses. Future revenues from current projects mainly relate to the unfulfilled part of extended (service-type) warranties and construction contracts.
The table below provides a reconciliation of the contract liabilities for the periods presented.
| \u00a0 | Deferred revenue construction and offshore service contracts | Other deferred revenues | Customer prepayments | Total |
|---|---|---|---|---|
Balance on January 1, 2021 | 81.6 | 73.3 | 28.5 | 183.4 |
Payments received | 628.5 | 62.8 | 93.6 | 784.9 |
Consolidation | 13.3 | - | - | 13.3 |
Increase from new contracts with customers | 1.0 | - | - | 1.0 |
Recognized as revenue in current period | (564.1) | (73.4) | (60.6) | (698.1) |
Exchange differences and other | - | 3.2 | 4.8 | 8.0 |
Balance on December 31, 2021 | 160.3 | 65.9 | 66.3 | 292.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2022 | 160.3 | 65.9 | 66.3 | 292.5 |
Payments received | 730.1 | 104.3 | 51.5 | 885.9 |
Consolidation | 430.3 | 0.5 | - | 430.8 |
Increase from new contracts with customers | - | - | 0.2 | 0.2 |
Recognized as revenue in current period | (781.1) | (90.9) | (87.7) | (959.7) |
Reclassification | 42.9 | 4.3 | (2.6) | 44.6 |
Exchange differences and other | 2.1 | 3.1 | 1.9 | 7.1 |
Balance on December 31, 2022 | 584.6 | 87.2 | 29.6 | 701.4 |
The amounts due to customers relate mainly to construction contracts (refer to note 12).
Income from marketable securities and deposits includes realized and unrealized capital gains and losses, impairment losses, interest, dividends and management fees.
Capital gains and losses represent the change in market value of the marketable securities. Interest income on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest rate method. Dividends are recognized when the right to receive payment is established.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Net capital gains / (losses) | (179.0) | 85.3 |
Interest income / (expense) | 40.8 | (13.6) |
Dividends | 21.2 | 8.7 |
Management fees | (2.7) | (0.4) |
| \u00a0 | (119.7) | 80.0 |
Associates and joint ventures are accounted for using the equity method, which involves recognition in the consolidated statement of income the Company\u2019s share of the net result of the associate or joint venture. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Share of results1 | 381.2 | 384.6 |
Revaluation upon gaining control | 656.2 | - |
Impairments | (165.8) | (43.5) |
Reversal of impairments | 3.8 | - |
Continuing operations | 875.4 | 341.1 |
Discontinued operations | - | 2.8 |
| \u00a0 | 875.4 | 343.9 |
The revaluation gain in 2022 related to the revaluation of the previously held equity interest of the Company in Boskalis upon gaining de facto control over the company (refer to note 3).
For details on impairments, reference is made to note 35.
The Company develops, leases and sells residential, retail and office properties in its Real estate segment. Revenue from (operating) lease activities is recognized on a straight-line basis over the lease term. Capital gains from property sales are recognized at the transaction price agreed in the contract when control over the property has been transferred to the buyer. Revenue is recognized at the point in time when the legal title has passed to the buyer and the consideration becomes due.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Capital gains | 63.7 | 50.0 |
Rental and residential income | 8.1 | 7.4 |
Share of results from real estate joint ventures | (13.7) | (7.7) |
| \u00a0 | 58.1 | 49.7 |
The \u20ac\u00a063.7 million capital gains relates to the sale of two real estate assets that were held by joint ventures within in the Real estate segment (refer to note 16).
The 2022 net other income of \u20ac\u00a0127.8 million relates mainly to the capital gains realized on the sale of the Company\u2019s interests in MYLAPS, Livit and Floramedia, capital gains and losses on sale of subsidiaries by Vopak, capital gains realized on the disposal of property, plant and equipment, negative goodwill realized in acquisitions and a capital gains on the dilution of an associate by Vopak. Reference is made to note 3 for further details on negative goodwill and disposals and note 8 for the dilution result on associates. The 2021 net other income of \u20ac\u00a03,512.6 million related mainly to the capital gain realized on the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V.
Short-term employee benefits
Wages, salaries, social security contributions, annual leave, sickness absenteeism, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognized as an expense as the related service is provided by the employee of the Company. A liability is recognized for the amount expected to be paid under short-term cash bonus plans if there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Termination benefits
Termination benefits are recognized as an expense when the Company and its subsidiaries are committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognized as an expense if an offer has been made of voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period they are discounted to their present value.
Share-based compensation
The compensation cost for share-based payment plans is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period). Refer to note 34 for more details on share-based payment plans.
Participation by management of unquoted subsidiaries
Management of certain subsidiaries own non-controlling interests in the capital of these subsidiaries. With respect to certain subsidiaries, the Company has the conditional obligation to acquire these equity instruments for cash. Obligations to acquire non-controlling interest are fair valued, generally, based on a multiple of EBITA less net debt, with measurement differences recorded as employee expense in the consolidated statement of income in accordance with IAS19. Multiples applied are either contractually determined or, generally, in accordance with those applied in the section on estimated value of the subsidiaries and associates.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Wages and salaries | 1,586.6 | 1,277.5 |
Social security costs | 217.8 | 189.2 |
Pension costs | 124.4 | 90.6 |
Other | 162.0 | 148.5 |
Continuing operations | 2,090.8 | 1,705.8 |
Discontinued operations | - | 659.8 |
Total | 2,090.8 | 2,365.6 |
The number of persons employed by the Company and its subsidiaries at the end of 2022 was 31,144 (2021: 27,443) on a full-time equivalent basis.
Operating expenses, including marketing and information and communication technology, are recognized in the consolidated statement of income when incurred.
Other operating expenses include the following:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Marketing and publicity | 215.4 | 172.6 |
Staffing expenses Atlas Professionals | 145.4 | 157.8 |
Information and communication technology | 137.8 | 115.7 |
Royalty expenses | 59.4 | 55.3 |
Housing | 44.3 | 26.3 |
Other | 937.0 | 688.3 |
Continuing operations | 1,539.3 | 1,216.0 |
Discontinued operations | - | 285.5 |
Total | 1,539.3 | 1,501.5 |
Research and development costs expensed, included in other, amounted to \u20ac\u00a029.3 million (2021: \u20ac\u00a025.1 million). Expenses recognized in the consolidated statement of income in respect of low-value asset leases and short-term leases amounted to \u20ac\u00a032.2 million and in respect of variable lease payments \u20ac\u00a07.4 million was expensed (2021: \u20ac\u00a019.7 million, respectively \u20ac\u00a05.1 million).
Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (\u2018earn-out\u2019 liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
Interest income and expense on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest method.
Financial income and expense include:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Financial expense | 272.2 | 209.3 |
Other financial income | (146.5) | (90.2) |
Net finance costs continuing operations | 125.7 | 119.1 |
Net finance costs discontinued operations | - | 17.4 |
| \u00a0 | 125.7 | 136.5 |
Financial expense includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest expense on lease liabilities | 31.9 | 28.6 |
Other interest expense | 167.2 | 121.3 |
Exchange differences, net of hedges1 | 42.0 | 43.2 |
Derivatives, not included in hedge accounting | 14.7 | - |
Other | 16.4 | 16.2 |
Continuing operations | 272.2 | 209.3 |
Discontinued operations | - | 18.4 |
| \u00a0 | 272.2 | 227.7 |
Other financial income includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest income | 5.5 | 2.4 |
Exchange differences | 77.9 | 46.3 |
Derivatives, not included in hedge accounting | 2.8 | 7.6 |
Revaluation of options on non-controlling interests | 31.2 | 27.4 |
Revaluation of earn-out liabilities | 18.9 | - |
Other | 10.2 | 6.5 |
Continuing operations | 146.5 | 90.2 |
Discontinued operations | - | 1.0 |
| \u00a0 | 146.5 | 91.2 |
The revaluation of options on non-controlling interests relates to the revaluation of reciprocal put and call options concluded by Safilo with respect to the non-controlling interest in Blenders and Priv\u00e9 Revaux (refer to note 22). The revaluation of earn-out liabilities relates to the release of an earn-out liability in relation to Prodrive (refer to notes 8 and 35).
The current income tax charge is calculated on the basis of the tax law enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries have operations, taking into account tax-exempt income and tax losses carried forward. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretations. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Income tax is recognized in the consolidated statement of income unless it relates to items recognized in the consolidated statement of comprehensive income or in the consolidated statement of changes in equity. Where the final outcome of tax-related provisions is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Critical accounting estimates and judgments
Significant judgment is required in determining the worldwide provision for income tax, as subsidiaries are subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain. Provisions for anticipated tax audit issues are recognized based on management\u2019s estimates of whether additional taxes will be due.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Current income taxes | 163.6 | 154.8 |
Deferred income taxes | 21.7 | 10.0 |
Income tax from continuing operations | 185.3 | 164.8 |
Income tax from discontinued operations | - | 43.2 |
| \u00a0 | 185.3 | 208.0 |
Income taxes differ from the theoretical amount that would arise using the domestic tax rates applicable to profits of taxable entities in the countries concerned, as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Profit before income tax from continuing operations | 681.2 | 4,346.1 |
Less: after-tax share of results from associates and joint ventures | (875.4) | (341.1) |
Less: non-taxable other income (sale of subsidiaries and associates) | (127.8) | (3,512.6) |
Adjusted profit before income tax | (322.0) | 492.4 |
Income tax expense | 185.3 | 164.8 |
Effective tax rate (%) on continuing operations | (57.5) | 33.5 |
| \u00a0 | 2022 | 2021 | ||
|---|---|---|---|---|
Composition | Amount | % | Amount | % |
Weighted-average statutory tax rate | (93.9) | 29.2 | 120.5 | 24.5 |
Goodwill impairment | 76.1 | (23.6) | - | - |
Recognition of tax losses1 | 176.0 | (54.7) | 22.7 | 4.6 |
Non-taxable income | (37.8) | 11.7 | (21.1) | (4.3) |
Non-deductible expenses | 69.7 | (21.6) | 29.0 | 5.9 |
Adjustment tax provisions and PY adjustments | (4.9) | 1.5 | 15.3 | 3.1 |
Rate changes | 0.1 | - | (1.6) | (0.3) |
Effective tax (rate) on continuing operations | 185.3 | (57.5) | 164.8 | 33.5 |
Impact from discontinued operations | - | \u00a0 | 43.2 | \u00a0 |
Effective tax | 185.3 | \u00a0 | 208.0 | \u00a0 |
The 2022 effective tax rate is affected by a non-tax deductible goodwill impairment of \u20ac\u00a0312 million and non-tax deductible exceptional losses at Vopak of \u20ac\u00a0463 million. Excluding these items the effective tax rate was 40.8%.
The impairments in Botlek and Europoort at Vopak did not lead to recognition of deferred tax assets as insufficient taxable profits are expected to be available. This explains to a large extent, together with a derecognition of deferred tax assets in the Dutch fiscal unity of Vopak, the effect of recognition of tax losses in the above table.
The effect of non-taxable income in the above table primarily relates to non-taxable financial income (revaluation of earn-out liabilities and options on non-controlling interests) and income subject to tonnage tax.
The effect of non-deductible expenses primarily relates to a decrease of the value of the fixed-income portfolio (included in marketable securities) of \u20ac\u00a0147 million which is non-tax deductible and expenses which are non-tax deductible under local tax law. This explains to a large extent the increase in the (revised) effective tax rate from 33.5% to 40.8%
Taxes recognized in other comprehensive income:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
On changes in the fair value of financial assets measured through other comprehensive income | - | 0.4 |
On changes in the fair value of cash flow hedges | (19.2) | (3.7) |
On translation and related hedges | - | (2.4) |
On changes in defined benefit obligations | (7.1) | (12.8) |
| \u00a0 | (26.3) | (18.5) |
Earnings per Share for profit attributable to the owners of parent are calculated by dividing the profit attributable to the owners of parent by the time-weighted average number of outstanding Shares. The calculation of the previous year earnings per Share is adjusted to take into account the stock dividend paid in the current year, in respect of the previous year, in accordance with IAS\u00a033.64.
The calculation of the time-weighted average number of outstanding shares is as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Issued and outstanding Shares at January 1 | 86,704 | 85,312 |
Sale and transfer of treasury shares | 11 | 16 |
Purchase of treasury shares | - | (14) |
Dividend paid in stock | 1,009 | 722 |
Average number of outstanding Shares at December 31 | 87,724 | 86,036 |
There was no dilutive effect on earnings per Share in the years presented.
| \u00a0 | Notes | 2022 | 2021 |
|---|---|---|---|
Profit before taxes from continuing operations | \u00a0 | 681.2 | 4,346.1 |
Profit before taxes from discontinued operations | \u00a0 | - | 443.1 |
Depreciation and impairments | 1,022.9 | 481.0 | |
Depreciation and impairments right-of-use assets | 156.8 | 132.3 | |
Amortization and impairments | 459.8 | 129.4 | |
Badwill recognized on acquisitions | (6.6) | - | |
(Profit)/loss on sale of other financial assets and marketable securities | 24 | 179.0 | (85.3) |
Fair value gain on remeasurement of previously held equity interest | 25 | (656.2) | - |
Results from associates and joint ventures, net of impairments | 8, 25 | (269.2) | (386.2) |
(Profit)/loss on sale of property, plant, equipment and investment properties | 27 | - | (0.1) |
Profit on assets and liabilities held for sale | 27 | (121.3) | (3,510.7) |
Net financial expense | 30 | 125.7 | 136.5 |
Other movements in provisions and pension benefits | \u00a0 | 16.8 | (149.6) |
Dividend from associates and joint ventures | \u00a0 | 313.2 | 291.8 |
Changes in working capital | \u00a0 | (114.2) | 30.2 |
Cash generated from operating activities | \u00a0 | 1,787.9 | 1,858.5 |
Changes in working capital, excluding exchange differences and the effect of acquisitions:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Accounts receivable | 4.2 | (106.1) |
Inventories | (2.2) | (151.2) |
Other current assets | (55.3) | 68.5 |
Accounts payable / accrued expenses | (60.9) | 219.0 |
| \u00a0 | (114.2) | 30.2 |
The Company and its subsidiaries operate a number of equity-settled and cash-settled share- based compensation plans. Under the plans these entities receive services from employees as consideration for respectively ordinary shares of the respective entity or for the cash equivalent to the value of the underlying ordinary shares of the respective entity.
For equity-settled share-based compensation plans, the fair value is determined at the date of grant and expensed in the consolidated statement of income with a corresponding adjustment directly in equity. For cash-settled share-based compensation plans, the fair value is determined at the date of the grant and is re-measured at each reporting date until the liability is settled.
The compensation is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period).
Expenses related to share-based compensation consist of:
| \u00a0 | 2022 | 2021 |
|---|---|---|
HAL Holding N.V. | \u00a0 | \u00a0 |
Share Plan1 | 3.3 | 2.5 |
Vopak | \u00a0 | \u00a0 |
Long-Term Share Plans1 | 3.3 | 7.8 |
Long-Term Cash Plans2 | 0.7 | 0.7 |
Safilo | \u00a0 | \u00a0 |
Stock Option Plans1 | 0.7 | - |
Unquoted subsidiaries | \u00a0 | \u00a0 |
Cash Plans2 | 24.6 | 25.3 |
| \u00a0 | 32.6 | 36.3 |
Liabilities recognized in relation to cash-settled share-based compensation are comprised of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Vopak | \u00a0 | \u00a0 |
Long-Term Cash Plans | 0.7 | 2.7 |
Unquoted subsidiaries | \u00a0 | \u00a0 |
Cash Plans | 82.6 | 56.2 |
| \u00a0 | 83.3 | 58.9 |
The current part of this liability of \u20ac\u00a015.7 million (2021: \u20ac\u00a016.0 million) is included under current other financial liabilities and the non-current part of \u20ac\u00a067.6 million (2021: \u20ac\u00a042.9 million) under non-current other financial liabilities.
The HAL Supervisory Board has the power to grant Executive Board members shares HAL Trust.
The granted, unvested shares can be summarized as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Outstanding shares on January 1 | 65 | 20 |
Granted | - | 65 |
Vested | - | (20) |
Outstanding shares on December 31 | 65 | 65 |
The Supervisory Board resolved, on November 19, 2014, to grant each of Messrs. A.A. van \u2018t Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of 19,500 shares HAL Trust. These shares vested in 2019 and are restricted until November 19, 2024.
On May 18, 2016, the Supervisory Board resolved to grant Mr. M.F. Groot, chairman of the Executive Board, 20,000 shares HAL Trust, under the condition precedent that he was still employed with the Company on June 1, 2021. These shares vested on June 1, 2021, and are restricted until June 1, 2026.
The Supervisory Board granted on September 5, 2021, to Messrs. M.F. Groot, A.A. van 't Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of respectively 25,000, 20,000 and 20,000 shares HAL Trust. These shares will vest on September 5, 2024 and are restricted until September 5, 2031.
Long-Term Share Plans (LTSP)
The LTSPs reward participants for the increase in Vopak\u2019s earnings per share (Vopak\u2019s EPS) performance during a three-year performance period, from their respective start dates in 2020, 2021 and 2022 at a pre-set Vopak EPS target. If a considerable, ambitious improvement in Vopak\u2019s EPS has been achieved during the three-year performance period, a long-term remuneration will be awarded. The 2019 LTSP was vested and settled during 2022.
The conditional awards granted under the LTSPs 2020-2022 can be summarized as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Outstanding conditional awards on January 1 | 344 | 315 |
Granted | 177 | 134 |
Forfeited | - | (6) |
Exercised | (27) | - |
Settled | (93) | (99) |
Outstanding conditional awards on December 31 | 401 | 344 |
The weighted-average fair value of the equity-settled LTSP awards granted in 2022 of \u20ac\u00a025.14 (2021: \u20ac\u00a035.60) has been determined based on Vopak\u2019s share price at the grant date.
Cash plans
The cash plans provide eligible participants with a right to participate in unlisted subsidiaries\u2019 growth in EBITA, subject to meeting the applicable vesting conditions. Obligations with respect to these plans are fair valued, generally, based on a multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates.
Assets that have an indefinite useful life are tested for impairment annually, while all non-current assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss on non-financial assets is recognized in the consolidated statement of income for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and an asset\u2019s value in use. Goodwill is allocated to groups of cash-generating units (CGU\u2019s) for the purpose of impairment testing. A CGU is in no event larger than the operating segment it belongs to.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s 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 discontinued operations, impairment testing requires management to determine whether the carrying value of the discontinued operation does not exceed the fair value less cost of disposal.
The recoverable amounts in impairment testing are determined based on the value in use and fair value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples\u00a0is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The primary impairment test for the Company relates to annual goodwill impairment testing. Property, plant and equipment as well as joint ventures and associates are reviewed and, when required, tested.
Critical accounting estimates and judgments
The recoverable amounts in impairment testing are determined based on the value in use and fair
value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and (terminal) growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The following impairment losses, net of reversals, are recognized:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Property, plant and equipment | 451.5 | 60.2 |
Investment properties | - | 0.1 |
Goodwill | 312.1 | - |
Other intangibles | 0.3 | 16.3 |
Right of use assets | 1.1 | - |
Investments in associates and joint arrangements | 162.0 | 43.5 |
| \u00a0 | 927.0 | 120.1 |
Impairment losses by segment are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 445.5 | 1.0 |
Quoted minority interests | 481.5 | 119.1 |
| \u00a0 | 927.0 | 120.1 |
Impairment losses, net of reversals, are included as follows in the consolidated statement of income:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Amortization and impairment of intangible assets | 312.3 | 16.3 |
Depreciation and impairment of property, plant, equipment, right-of-use assets and investment properties | 452.7 | 60.3 |
Share of results of associates and joint arrangements | 162.0 | 43.5 |
| \u00a0 | 927.0 | 120.1 |
All impairments are included in the exceptional items (note 2).
Property, plant and equipment
With respect to Vopak, in performing the impairment test, Vopak management made an assessment of whether cash-generating units (CGU) will be able to generate positive net cash flows that are sufficient to support the value of the intangible assets, property, plant and equipment and financial assets included in the cash-generating unit. For value-in-use calculations, the assessment is based on estimates of future expected cash flows on the basis of the budget for the coming year and two subsequent plan years, which form the basis for a 15-year discounted cash flow model. For oil-related assets, the assessment is impacted by the energy transition and the forecast period is extended from a 15-year period to include the period in which the energy transition is expected to take place. Key assumptions applied are the expected occupancy, the estimated storage rate per cubic meter (for revenues not covered by long-term contracts), sustaining capital expenditures, expected (decreasing) growth rates (where relevant based on most recent IEA energy transition scenarios) and the estimated terminal value, together with the applied discount rates. The discount rates are based on long-term government bonds, adjusted for a risk premium and specific country risks. The equity market risk premium was assumed 6.5% by Vopak management (2021: 6.5%). There is significant uncertainty towards the impact of the energy transition on the projected cash flows and these remain subject to continuous review and monitoring by Vopak management.
Vopak management has assessed that the value in use for a very limited number of terminals is lower than the carrying amount. For these individual terminals, the fair value less cost of disposal was calculated. Fair value less cost of disposal calculations are primarily based either on comparable market multiples and/or (indicative non-) binding bids or discounted cash flow models from the perspective of a willing buyer in an orderly transaction. When the fair value less cost of disposal of a terminal is based on (preliminary) offers received from interested parties (level 2 fair value), Vopak management has assessed that these offers are a good reflection of the fair value of the terminals concerned and assessed whether it is probable that these terminals will be sold in the near future resulting in a situation where the carrying amount will be recovered principally through a sale instead of through continued use. The value in use and fair value less cost of disposal assessments may change over time, amongst others due to changes in the business environment and/or outcomes of decisions taken by management, and when applicable could result in (reversal of) impairment. For impaired CGUs the recoverable amount from the value-in-use calculation exceeded the estimated fair value less cost of disposal. The pre-tax discount rates used for the value-in-use assessment of impaired cash-generating units ranged from 6.5% to 12.1% (2021: 9% to 9.2%) reflecting the current market assessments for the relevant geographical locations. The Vopak share of the recoverable amount of the impaired cash-generating units in total is \u20ac\u00a0858 million.
2022
Vopak - Europoort terminal
For the cash-generating unit Europoort an impairment of \u20ac\u00a0240.0 million was recognized in the first half of 2022. By accelerating into new energies and repurposing some of its assets, the terminal will reduce its capacity by 2030 and will use the available land for new energy investments. Over time, this will reduce Vopak\u2019s exposure to oil assets in line with its ambition to increase the relative exposure of industrials, gas and new energies. Transition in the energy markets is expected to impact the long-term revenue prospects of Europoort, in addition to current dynamics related to inflation pressure, utility prices, labor and material costs. The combined impact of these items caused the CGU\u2019s carrying amount to exceed its recoverable amount, leading to an impairment.
Vopak - Botlek terminal
In the first half of 2022, an impairment of \u20ac\u00a0190.0 million was recorded for the cash-generating unit Botlek. The Botlek CGU is performing below Vopak\u2019s minimum return levels, which is driven by lower revenue projections in addition to challenging conditions related to, among others, inflation pressure, utility prices and labor costs.
Vopak - Colombia terminals
In the fourth quarter of 2022, an impairment of \u20ac\u00a017.1 million was recorded for the cash-generating unit. The decrease in recoverable value is primarily related to the business environment in which the terminals currently operate and forecasted competition.
Vopak - cancelled projects
Vopak recorded an impairment of \u20ac\u00a01.7 million on a business development project for the Belgium terminal Eurotank due to Vopak\u2019s decision to discontinue the project.
2021
Vopak Bahia las Minas terminal - Panama
In the first half year of 2021, an incremental impairment was recognized for the Vopak Bahia las Minas terminal in Panama for the amount of \u20ac\u00a071.0 million, of which \u20ac\u00a055.1 million related to property, plant and equipment and \u20ac\u00a015.9 to other intangible assets. This impairment is the result of a further deteriorating business environment and lower occupancy rates.
Goodwill
Unquoted
Goodwill for the unquoted segment has been tested for impairment losses at a level that reflects the way the operations are managed and with which the goodwill would naturally be associated. Management reviews the unquoted business performance on an entity level. Goodwill is also monitored on this level.
The recoverable amount of cash-generating units is generally determined based on the calculation of their value in use. These calculations use cash flow projections covering a five-year period. Cash flows beyond this five-year period are extrapolated using an estimated growth rate of nil. In 2022 the value-in-use method was applied to 51.7% of the goodwill tested (2021: all). For 48.3% (2021: none) of the goodwill tested, the fair value less cost of disposal was used, this related to Pro Gamers Group. These percentages do not take into account the goodwill related to the Boskalis acquisition, discussed below.
Key assumptions used for value-in-use calculations are included as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted investments | \u00a0 | \u00a0 |
Weighted-average increase in revenues | 6.6% | 5.9% |
Weighted-average gross margin | 54.5% | 56.0% |
Weighted-average pre-tax discount rate | 15.6% | 13.1% |
Growth rate beyond year five | 0.0% | 0.0% |
For impairment tests using fair value less cost of disposal calculations the key assumptions have been individually disclosed, below.
Impairment testing during the year resulted in impairment charges on the goodwill of Pro Gamers Group of \u20ac\u00a0312.1 million (HAL share \u20ac\u00a0200.0 million), in the Unquoted segment. This was primarily the result of a contraction of the markets for graphical cards and other computer components, the significant increase of container freight prices and a decrease in sales as a result of the war in Ukraine, combined with a significant increase in the weighted-average cost of capital, as risk-free rates, debt spreads and beta for the peer group experienced a sharp increase. The recoverable value of \u20ac\u00a0510.2 million was based on a five-year discounted cash flow model using a pre-tax WACC of 15.94% and a terminal growth rate of 1.5%, applying the fair value less cost of disposal method.
The valuation models include certain assumptions with respect to revenue growth, margin development, discount rates and terminal growth rates. A negative development of 2% in these assumptions would result in a potential (further) impairment charge on goodwill for the Unquoted segment as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
2% lower increase in revenues | 97.8 | 2.5 |
2% increase in the discount rate | 88.4 | 11.5 |
2% lower gross margin | 241.0 | 18.7 |
If the cash flows beyond the five-year period were extrapolated using an estimated growth rate of 2%, the value in use of the cash-generating units within the Unquoted segment that indicated a potential impairment in the above sensitivity analyses would increase by \u20ac\u00a0352.7 million (2021: \u20ac\u00a037.6 million).
The goodwill recognized as a result of the Boskalis transaction in 2022 (refer to note 3) was tested by comparison of the performance since acquisition with the business enterprise valuation underlying the purchase price allocation. The business enterprise valuation was based on a five-year discounted cash flow model using a weighted-average pre-tax WACC of 11.1% and a 1.6% terminal growth rate. No impairment was recognized.
Quoted
Vopak and Safilo are both listed entities. At the year-end 2022 the stock\u00a0market value of the ownership interest in Safilo exceeded its carrying value by \u20ac\u00a0105.4 million. At the end of 2022, the stock\u00a0market value of the ownership interest in Vopak exceeded its carrying value by \u20ac\u00a0170.0 million. These stock market values qualify as level 1 in the fair value hierarchy.
The goodwill at the level of Safilo (\u20ac\u00a034.9 million) has been tested on a single cash-generating unit basis using a five-year projection based on the financial projections for the period 2023-2027, which confirm the main goals and strategies as defined in the 2023-2027 business plan. This value-in-use model includes a weighted-average cost of capital (WACC) of 10.12% and a 2.07% terminal growth rate beyond the explicit forecast period (2021: 7.93%, respectively 1.90%). Applying alternative scenarios with a 30% decrease of EBITDA or with an increase of the WACC by 3.0% also does not lead to impairment.
Other intangibles
The total amount of impairments recognized on other intangibles was \u20ac\u00a00.3 million (2021: \u20ac\u00a016.3 million). There were no reversals of impairment (2021: nil).
Associates and joint arrangements
2022
Prodrive Technologies
At year-end 2022, an impairment of \u20ac\u00a0129.6 million was recognized on the associate Prodrive Technologies. An impairment trigger was recognized due to a combination of supply chain challenges, cost inflation and personnel shortages, which caused the company to fall behind on its expected revenues and results. In addition, discount rates increased significantly as a result of macro-economic factors, further deteriorating the net present value of the company\u2019s future cash flows. The key assumptions applied in the impairment test included a weighted-average cost of capital of 12.2% and a terminal-growth rate after the 10-year forecast period of 1.9%. The fair value less cost of disposal was calculated at \u20ac\u00a081.0 million. An earn-out liability of \u20ac\u00a018.9 million related to the investment in Prodrive was reduced to nil, which led to the recognition of a gain within other financial income (refer to note 30).
Vopak - Colombia LNG terminal
In the second quarter an impairment was recognized for Vopak\u2019s SPEC LNG terminal in Colombia for an amount of \u20ac\u00a036.2 million. Mainly due to unusual weather conditions in recent years, which have brought a significant amount of rain in Colombia, hydropower has been available as the main source of power, which resulted in a reduced utilization of Vopak\u2019s Floating Storage and Regasification Unit (FSRU). In addition, the tight FSRU market associated with the war in Ukraine is leading to the opportunity to reduce FSRU costs becoming remote. As a result of the above there is a decrease in dividend expectations, leading to impairment.
Vopak - German LNG terminal
As a result of Vopak\u2019s divestment of its 33.3% shareholding in the German LNG Terminal GmbH, in the first half of 2022 an impairment reversal of \u20ac\u00a03.8 million was recorded. This reversal partially offsets the 2021 impairment discussed below.
2021
Vopak LNG terminal project - Germany
After a strategic review, Vopak decided to discontinue its active participation in the German LNG project joint venture, leading to an exceptional loss of \u20ac\u00a010.8 million recognized in the third quarter of 2021.
Vopak LNG Terminal Altamira - Mexico
Due to a new commercial agreement in place for the LNG Terminal Altamira in Mexico, the major assets in this joint venture are now held under a finance lease arrangement. As a result, the carrying amount of the joint venture increased significantly and exceeded its recoverable amount resulting in an impairment of the goodwill balance for an amount of \u20ac\u00a032.7 million.
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
The following tables provide an analysis of the Company\u2019s financial instruments per line item, stating the classification of the instruments, their fair value and their level within the fair value hierarchy:
December 31, 2022 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 551.5 | - | 551.5 | 551.5 |
- Unquoted equity securities | 3 | 94.0 | - | - | 94.0 | 94.0 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 518.4 | 518.4 | 518.4 |
- Quoted debt securities | 1 | 33.5 | - | 2,806.2 | 2,839.7 | 2,839.7 |
- Unquoted equity securities | 2 | - | - | 2.8 | 2.8 | 2.8 |
Derivatives | 2 | - | - | 98.8 | 98.8 | 98.8 |
Other current assets | \u00a0 | - | 281.1 | - | 281.1 | 281.1 |
Receivables | \u00a0 | - | 1,423.8 | - | 1,423.8 | 1,423.8 |
Cash | \u00a0 | - | 2,043.9 | - | 2,043.9 | 2,043.9 |
Total financial assets | \u00a0 | 127.5 | 4,300.3 | 3,426.2 | 7,854.0 | 7,854.0 |
December 31, 2021 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 782.6 | - | 782.6 | 782.6 |
- Unquoted equity securities | 3 | 83.6 | - | - | 83.6 | 83.6 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 415.7 | 415.7 | 415.7 |
- Quoted debt securities | 1 | 47.7 | - | 3,693.6 | 3,741.3 | 3,741.3 |
- Unquoted equity securities | 2 | - | - | 3.0 | 3.0 | 3.0 |
Derivatives | 2 | - | - | 45.6 | 45.6 | 45.6 |
Other current assets | \u00a0 | - | 222.5 | - | 222.5 | 222.5 |
Receivables | \u00a0 | - | 977.9 | - | 977.9 | 977.9 |
Cash | \u00a0 | - | 2,256.4 | - | 2,256.4 | 2,256.4 |
Total financial assets | \u00a0 | 131.3 | 4,239.4 | 4,157.9 | 8,528.6 | 8,528.6 |
December 31, 2022 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,956.5 | - | 2,956.5 | 3,215.0 |
- Current debt | 2 | \u00a0 | 2,069.2 | - | 2,069.2 | 2,069.2 |
- Other financial liabilities | 2 | \u00a0 | 15.0 | - | 15.0 | 15.0 |
- Other financial liabilities | 3 | \u00a0 | - | 162.4 | 162.4 | 162.4 |
Lease liabilities | 2 | \u00a0 | 1,195.3 | - | 1,195.3 | 1,195.3 |
Derivatives | 2 | \u00a0 | - | 20.5 | 20.5 | 20.5 |
Accounts payable | \u00a0 | \u00a0 | 1,317.0 | - | 1,317.0 | 1,317.0 |
Total financial liabilities | \u00a0 | \u00a0 | 7,553.0 | 182.9 | 7,735.9 | 7,994.4 |
December 31, 2021 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,917.2 | - | 2,917.2 | 3,201.0 |
- Current debt | 2 | \u00a0 | 814.2 | - | 814.2 | 814.2 |
- Other financial liabilities | 2 | \u00a0 | 14.9 | - | 14.9 | 14.9 |
- Other financial liabilities | 3 | \u00a0 | - | 118.5 | 118.5 | 118.5 |
Lease liabilities | 2 | \u00a0 | 1,072.5 | - | 1,072.5 | 1,072.5 |
Derivatives | 2 | \u00a0 | - | 17.2 | 17.2 | 17.2 |
Accounts payable | \u00a0 | \u00a0 | 1,040.6 | - | 1,040.6 | 1,040.6 |
Total financial liabilities | \u00a0 | \u00a0 | 5,859.4 | 135.7 | 5,995.1 | 6,278.9 |
Valuation techniques used to value level 2 financial instruments include, for unquoted securities, quoted market prices or dealer quotes for similar instruments. Derivatives and debt instruments are valued using present value calculations of estimated future cash flows, based on observable yield curves and forward exchange rates. These calculations include credit spreads based on recent borrowing contracts and observable credit information on counterparties.
Level 3 financial instruments include contingent considerations that are remeasured based on the achievement of agreed business targets, taking into account the effect of discounting.
There were no transfers between levels 1, 2 and 3 during the period.
A reconciliation of level 3 financial liabilities for the period is given below:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 118.5 | 141.6 |
Additions | 69.5 | 16.4 |
Consolidation | 19.7 | - |
Settlements | (26.1) | (35.6) |
(Gains)/losses through income continuing operations | (25.9) | (8.9) |
Exchange differences | 6.7 | 5.0 |
Balance on December 31 | 162.4 | 118.5 |
Derivatives are measured at fair value with any related transaction costs expensed as incurred. Reference is made to the accounting policies in note 36 on fair value measurement. The treatment
of changes in the fair value of derivatives depends on their use, as explained below.
Cash flow hedge
Derivatives held to hedge the uncertainty in timing or amount of future forecasted cash flows are
classified as being part of cash flow hedge relationships. For effective hedges, gains and losses
from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are recycled in the consolidated statement of income at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, or if the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of income immediately.
Net investment hedge
The Company applies hedge accounting to certain investments in foreign operations. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. In the event of disposal or partial disposal of an interest in a foreign operation either through sale or as a result of a repayment of capital, the cumulative exchange difference is recognized in the consolidated statement of income.
Fair value hedge
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Company designates the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk being hedged, with changes going to the consolidated statement of income. Gains and losses on the corresponding derivative are also recognized in the consolidated statement of income. The amounts recognized are offset in income to the extent that the hedge is effective. When the relationship no longer meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortized using the effective interest method.
Derivatives for which hedge accounting is not applied
Derivatives not classified as hedges are carried at fair value with changes being recognized in the consolidated statement of income.
Derivatives are classified as follows in the statement of financial position:
| \u00a0 | Assets | \u00a0 | Liabilities | ||
|---|---|---|---|---|---|
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 | \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
Equity derivatives | - | - | \u00a0 | (0.2) | (0.6) |
Fuel derivatives | 2.3 | - | \u00a0 | (0.4) | - |
Interest rate derivatives | 9.9 | 0.2 | \u00a0 | (1.0) | (5.6) |
Currency derivatives | 86.6 | 45.4 | \u00a0 | (18.9) | (11.0) |
| \u00a0 | 98.8 | 45.6 | \u00a0 | (20.5) | (17.2) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current | 75.6 | 9.8 | \u00a0 | (18.0) | (11.6) |
Non-current | 23.2 | 35.8 | \u00a0 | (2.5) | (5.6) |
| \u00a0 | 98.8 | 45.6 | \u00a0 | (20.5) | (17.2) |
For an overview of the movements in the cash flow hedge reserve in equity, reference is made
to note 18. Information on fair value measurement of derivatives is included in note 36, disclosure on financial risk management, including hedging, is provided in note 38.
The Company is exposed to credit risk, liquidity risk and market risk. Market risk primarily relates to movements in exchange rates, interest rates and the market value of investments in equity securities.
Financial risk management activities are carried out both on a central level and on the level of individual subsidiaries and controlled minority interests (Vopak and Safilo). For managing these risks, both derivative and non-derivative financial instruments are used.
Risks related to discontinued operations are not included in this paragraph as these assets are held for sale and there is a high probability that the assets will be recovered through a sale rather than through continuing use.
Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations, including committed credit facilities extended to the Company. Credit risk on trade receivables, finance lease receivables and contract assets is generally monitored and managed on the level of each subsidiary and on the level of the controlled minority interests. These receivables generally have short payment periods, reference is made to note 11 for more information on trade receivables and note 12 for more information on contract assets.
Credit risk with respect to bonds, loans, derivatives, other financial instruments, cash and cash equivalents and credit facilities is managed by the Company for the Real estate and Liquid portfolio segments. Debt securities are mainly managed by external asset managers. The mandate to these managers stipulate that only investments in highly liquid, investment-grade bonds with an average S&P credit rating of A is allowed. These portfolios have a maximum average duration of two years. The Company mitigates its credit risk on cash and cash equivalents by spreading these assets over highly rated counterparties, applying regularly reviewed counterparty exposure limits that take into account their credit rating. A similar approach applies to credit facilities. The credit risk on the aforementioned financial instruments with respect to the other segments is managed by the respective subsidiary or controlled minority interest. The expected credit losses recognized in the consolidated statement of income for these financial instruments is insignificant for both years presented. There was no indication as at the statement of financial position date that these financial instruments will not be recovered, other than as already provided for.
The maximum exposure to credit risk is the carrying value of the consolidated financial assets, excluding equity securities, which can be specified by segment as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 3,076.4 | 1,582.0 |
Quoted minority interests | 885.2 | 807.5 |
Real estate | 28.7 | 18.0 |
Liquid portfolio | 3,370.9 | 5,189.4 |
Other | 250.0 | 500.0 |
| \u00a0 | 7,611.2 | 8,096.9 |
The category other comprises an amount of \u20ac\u00a0250 million (2021: \u20ac\u00a0500 million) representing the part of the proceeds from the sale of GrandVision N.V. that is held in escrow, at BGL BNP Paribas S.A., for potential liabilities of HAL under the sale and purchase agreement. This amount is held in escrow until July 3, 2023.
These financial assets can be further specified as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Loans | 100.8 | 103.8 |
Trade receivables | 1,423.8 | 977.9 |
Contract assets | 372.4 | 70.6 |
Marketable securities and deposits | 2,839.7 | 3,741.3 |
Derivative financial instruments | 98.8 | 45.6 |
Other financial assets | 450.7 | 678.8 |
Other current assets | 281.1 | 222.5 |
Cash and cash equivalents | 2,043.9 | 2,256.4 |
| \u00a0 | 7,611.2 | 8,096.9 |
Cash and cash equivalents can be specified by segment as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 1,396.1 | 633.3 |
Quoted minority interests | 111.5 | 172.4 |
Real estate | 5.1 | 2.6 |
Liquid portfolio | 531.2 | 1,448.1 |
| \u00a0 | 2,043.9 | 2,256.4 |
For the Liquid portfolio and Real estate segments, cash and cash equivalents were held by counterparties with the following short-term Standard & Poor\u2019s credit ratings:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
A-1+ | 75.7 | - |
A-1 | 362.7 | 1,441.1 |
A-2 | 86.0 | - |
Not rated | 11.9 | 9.6 |
| \u00a0 | 536.3 | 1,450.7 |
The bonds held in the Liquid portfolio can be disaggregated based on their Standard & Poor\u2019s (equivalent) credit ratings as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
AAA | 255.5 | 322.9 |
AA+, AA, AA- | 295.2 | 492.1 |
A+, A, A- | 1,113.3 | 1,426.2 |
BBB+, BBB, BBB- | 1,175.3 | 1,499.7 |
CCC | 0.4 | 0.4 |
| \u00a0 | 2,839.7 | 3,741.3 |
The Company is not exposed to any significant concentration of credit risk.
Liquidity risk is the risk that the financial obligations associated with financial instruments and off-balance sheet commitments cannot be met.
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. The Company has no ability to transfer cash (or other assets) from the entities belonging to the segment Quoted minority interests that may be consolidated in these financial statements (i.e. Vopak and Safilo).
The approach to managing liquidity at the level of the Company is to ensure, as far as possible, that there will be sufficient liquidity to meet liabilities when due, both under normal and stressed conditions, without incurring unacceptable losses or risk damaging the Company\u2019s reputation. The Company seeks to mitigate liquidity risk through its cash reserves held in the Liquid portfolio segment and committed credit facilities entered into at corporate level. Reference is made to the table on cash and cash equivalents per segment above. At the end of 2022, unused committed credit facilities were available to an amount of \u20ac\u00a02,161.8 million (2021: \u20ac\u00a01,565.9 million).
The following tables categorize the consolidated, undiscounted cash flows of non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining lifetime of the contract at the end of the reporting periods. The financial guarantee contracts are contingent liabilities.
| \u00a0 | December 31, 2022 | |||
|---|---|---|---|---|
| \u00a0 | < 1 year | 1-2 years | 3-5 years | > 5 years |
Non-derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Redemption of debt | 2,069.2 | 499.6 | 1,316.7 | 1,157.3 |
Redemption of other financial liabilities | 27.1 | 83.2 | 67.0 | - |
Interest payments | 168.0 | 120.0 | 235.9 | 197.0 |
Payments on lease liabilities | 175.2 | 268.7 | 180.7 | 964.3 |
Accounts payable | 1,317.0 | - | - | - |
Commitments and guarantees provided | 1,362.2 | 156.6 | 148.6 | 250.5 |
Total undiscounted non-derivative financial liabilities | 5,118.7 | 1,128.1 | 1,948.9 | 2,569.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Gross-settled derivative liabilities outflow | 597.2 | 141.0 | 70.3 | 73.2 |
Gross-settled derivative liabilities inflow | (535.2) | (151.3) | (61.2) | (66.6) |
Total gross-settled derivative liabilities | 62.0 | (10.3) | 9.1 | 6.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net-settled derivative liabilities | 1.5 | 1.2 | 1.5 | 1.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted derivative liabilities | 63.5 | (9.1) | 10.6 | 7.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted financial liabilities | 5,182.2 | 1,119.0 | 1,959.5 | 2,576.7 |
| \u00a0 | December 31, 2021 | |||
|---|---|---|---|---|
| \u00a0 | < 1 year | 1-2 years | 3-5 years | > 5 years |
Non-derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Redemption of debt | 814.2 | 600.4 | 1,002.1 | 1,317.0 |
Redemption of other financial liabilities | 13.9 | 41.2 | 72.0 | 6.5 |
Interest payments | 111.9 | 98.6 | 208.0 | 188.1 |
Payments on lease liabilities | 123.8 | 228.1 | 161.7 | 908.2 |
Accounts payable | 1,040.9 | - | - | - |
Commitments and guarantees provided | 447.5 | 11.0 | 22.1 | 0.5 |
Total undiscounted non-derivative financial liabilities | 2,552.2 | 979.3 | 1,465.9 | 2,420.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Gross-settled derivative liabilities outflow | 1,265.9 | - | - | - |
Gross-settled derivative liabilities inflow | (1,254.8) | - | - | - |
Total gross-settled derivative liabilities | 11.1 | - | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net-settled derivative liabilities | 0.6 | - | 0.9 | 5.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted derivative liabilities | 11.7 | - | 0.9 | 5.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted financial liabilities | 2,563.9 | 979.3 | 1,466.8 | 2,425.6 |
The total debt of continuing operations as of December 31, 2022, amounted to \u20ac\u00a05,025.6 million (2021: \u20ac\u00a03,731.4 million). For 100% of the bank debt, the applicable covenants were complied with or waived during 2021 and 2022. Refer to note 22 for details on applicable covenants.
The movements during 2022 and 2021 in the net cash position were as follows:
| \u00a0 | Cash and cash equivalents | Marketable securities and deposits | Total debt | Net (debt) / cash |
|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2021 | 1,427.0 | 175.8 | (3,065.3) | (1,462.5) |
Cash flows | 820.2 | 3,898.9 | (534.2) | 4,184.9 |
Foreign exchange adjustments | 9.2 | 5.7 | (132.9) | (118.0) |
Fair value movements | - | 79.6 | - | 79.6 |
Other non-cash movements | - | - | 1.0 | 1.0 |
Balance on December 31, 2021 | 2,256.4 | 4,160.0 | (3,731.4) | 2,685.0 |
Cash flows | (200.1) | (605.8) | (846.9) | (1,652.8) |
Foreign exchange adjustments | 9.4 | (14.3) | (59.2) | (64.1) |
Fair value movements | - | (179.0) | - | (179.0) |
Reclassification to held for sale | - | - | - | - |
Other non-cash movements | (21.8) | - | (388.1) | (409.9) |
Balance on December 31, 2022 | 2,043.9 | 3,360.9 | (5,025.6) | 379.2 |
This net cash position represents a ratio of 0.2 (2021: net cash ratio of 0.6) when compared to the operating result before depreciation, amortization and impairments, less income from marketable securities and share of profit of associates and joint ventures. The differences between the debt cash flows in the table above and those in the cash flow statement relate to cash flows on other financial liabilities, which are not part of the net cash definition.
Market risk - currency risk
Foreign currency exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. From time to time the Company hedges foreign currency exchange risk arising from significant, highly probable forecast transactions, including acquisitions of subsidiaries. The Company primarily uses foreign currency derivative financial instruments to hedge this risk, matching the critical terms of the hedged item, and in principle applies a hedge ratio of one.
The table below shows the net assets per currency, taking into account debt instruments denominated in foreign currency and related hedging instruments.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
U.S. dollar | 2,077.5 | 1,049.9 |
U.K. pound sterling | 536.3 | 101.6 |
Chinese yuan renminbi | 496.4 | 515.8 |
Singapore dollar | 447.2 | 349.0 |
Canadian dollar | 185.3 | 230.9 |
Hong-Kong dollar | 161.6 | 150.4 |
Brazilian real | 117.0 | 94.0 |
Australian dollar | 108.9 | 68.5 |
Thai baht | 91.9 | 77.6 |
Taiwan dollar | 71.3 | 39.4 |
Saudi riyal | 62.4 | 54.0 |
South African rand | 50.6 | 55.7 |
Other | 390.1 | 184.0 |
Total continuing operations | 4,796.5 | 2,970.8 |
An average change in value of these currencies by 10% would have a pre-tax effect on equity of \u20ac\u00a0479.7 million. Vopak applies hedge accounting to net investments in foreign operations (hedged item) for a nominal amount of \u20ac\u00a0792.9 million (2021: \u20ac\u00a0889.5 million), of which \u20ac\u00a0663.6 million (2021: \u20ac\u00a0695.3 million) was hedged via foreign currency interest bearing debt and \u20ac\u00a0129.3 million (2021: \u20ac\u00a0194.2 million) via derivative financial instruments. The remaining currency exposures relate mainly to investments in foreign operations that the Company does not hedge.
The market value of the currency derivative financial instruments per the consolidated financial statements were as follows.
| \u00a0 | \u00a0 | December 31, 2022 | December 31, 2021 | ||||
|---|---|---|---|---|---|---|---|
| \u00a0 | Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount |
Fair value hedge | < 1 year | 0.7 | (7.7) | 198.9 | 1.5 | (0.5) | 45.8 |
| \u00a0 | \u00a0 | 0.7 | (7.7) | 198.9 | 1.5 | (0.5) | 45.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash flow hedge | < 1 year | 53.9 | (4.6) | 458.4 | 35.1 | (0.3) | 473.4 |
Cash flow hedge | 1-5 years | 10.2 | (2.2) | 212.5 | - | - | - |
Cash flow hedge | > 5 years | 6.6 | - | 66.6 | 0.5 | - | 66.6 |
| \u00a0 | \u00a0 | 70.7 | (6.8) | 737.5 | 35.6 | (0.3) | 540.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net investment hedge | < 1 year | 1.0 | - | 130.3 | - | (3.9) | 189.9 |
| \u00a0 | \u00a0 | 1.0 | - | 130.3 | - | (3.9) | 189.9 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
No hedge accounting | < 1 year | 14.3 | (4.4) | 839.3 | 8.3 | (6.3) | 1,057.2 |
| \u00a0 | \u00a0 | 14.3 | (4.4) | 839.3 | 8.3 | (6.3) | 1,057.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total currency derivative financial instruments | \u00a0 | 86.7 | (18.9) | 1,906.0 | 45.4 | (11.0) | 1,832.9 |
In addition, one of the Company\u2019s consolidated minority interests holds cross-currency interest rate swaps to hedge foreign currency risk on fixed rate debt denominated in U.S. dollar. These interest rate swaps, with a notional amount of \u20ac\u00a0525.2 million (2021: \u20ac\u00a0525.2 million), are included under foreign currency derivatives.
Sensitivity of profit and equity to financial instruments, with respect to exchange rate changes
The value of debt and hedging instruments denominated in currencies other than the functional currency of the entities holding them are subject to exchange rate movements. This primarily relates to instruments denominated in Chinese yuan renminbi, U.S. dollar and Singapore dollar. The aggregate effect on net profit of a 10% depreciation in exchange rates is \u20ac\u00a00.1 million (2021: \u20ac\u00a0(0.7) million), with an equal but opposite effect of a 10% appreciation in exchange rates. The aggregate effect on equity of a 10% appreciation of the foreign currencies against the euro is \u20ac\u00a092.4 million (2021: \u20ac\u00a0104.2 million). The aggregate effect on equity of a 10% depreciation of the foreign currencies against the euro is \u20ac\u00a0(66.7) million (2021: \u20ac\u00a0(81.4) million).
Sensitivity of revenues and profit to the translation of the revenues and results of foreign operations, with respect to exchange rate changes
The result is impacted by translating the result of foreign currency operations. The translation risk of converting the net result of foreign entities into euro mainly concerns the British pound, the Singapore dollar and the U.S. dollar. The sensitivity to these currencies is as follows, excluding the effect of discontinued operations.
| \u00a0 | EUR/USD \u2206 $10ct | EUR/GBP \u2206 \u00a310ct | EUR/SGD \u2206 $10ct | |||
|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Impact on revenues | 131.1 | 103.3 | 49.4 | 21.4 | 129.2 | 15.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Impact on net profit from continuing operations | 15.9 | 19.7 | 1.6 | 0.5 | 5.5 | 4.6 |
Market risk - interest rate risk
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. There is no debt at other segments.
Fixed income investments that are part of the Liquid portfolio are subject to fair value interest rate risk. In view of the short average duration of this portfolio, this risk is limited.
As of December 31, 2022, taking into account interest rate swaps, 55% (2021: 51%) of the total debt of \u20ac\u00a05,025.7 million (2021: \u20ac\u00a03,731.4 million) was at fixed rates for an average period of 4.2 years (2021: 4.1 years).
The market value of the interest rate derivative financial instruments per the consolidated financial statements is shown below.
| \u00a0 | \u00a0 | December 31, 2022 | December 31, 2021 | ||||
|---|---|---|---|---|---|---|---|
| \u00a0 | Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount |
Cash flow hedge | < 1 year | 1.7 | (0.2) | 37.3 | - | - | 0.2 |
Cash flow hedge | 1-5 years | 5.4 | (0.8) | 160.5 | 0.2 | (0.9) | 85.1 |
Cash flow hedge | > 5 years | - | - | - | - | (4.7) | 53.7 |
| \u00a0 | \u00a0 | 7.1 | (1.0) | 197.8 | 0.2 | (5.6) | 139.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
No hedge accounting | 1-5 years | 2.8 | - | 60.0 | - | - | - |
| \u00a0 | \u00a0 | 2.8 | - | 60.0 | - | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total interest rate derivative financial instruments | \u00a0 | 9.9 | (1.0) | 257.8 | 0.2 | (5.6) | 139.0 |
The weighted-average interest rate on total debt was 3.6% (2021: 3.1%).
If variable interest rates in 2022 or 2021 had decreased/increased by 25%, the impact on the consolidated statement of income for the year would have been insignificant.
An increase of 25% in interest rates underlying the calculation of the valuation of interest rate swaps would have had a pre-tax positive impact on equity of \u20ac\u00a013.3 million (2021: \u20ac\u00a01.4 million). An equal but opposite change would have had a pre-tax negative impact on equity of \u20ac\u00a014.0 million (2021: \u20ac\u00a01.4 million negative).
Market risk - price risk
At the end of 2022, the Company had investments in equity securities (included in marketable securities and deposits and other financial assets) amounting to \u20ac\u00a0615.1 million (2021: \u20ac\u00a0502.3 million), based on quoted market prices at the statement of financial position date. If at December 31, 2022, equity markets had fallen 10% overall, the portfolio value could have decreased by 10%, which would have resulted in a negative impact on other reserves of \u20ac\u00a09.4 million (2021: \u20ac\u00a08.4 million) and a negative impact on income of \u20ac\u00a052.1 million (2021: \u20ac\u00a041.9 million). A 10% increase would have had the equal but opposite effect.
The Company has not identified additional financial risk exposures in 2022 compared to the previous year, and its approach to financial risk management remained unchanged.
The Company manages its capital to safeguard its ability to continue as a going concern and to provide an adequate return on its invested capital.
The capital structure at the end of the reporting periods is summarized in the table below:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Equity | 13,010.1 | 12,434.7 |
Non-current debt | 2,956.5 | 2,917.2 |
Current debt | 2,069.2 | 814.2 |
Cash and cash equivalents | (2,043.9) | (2,256.4) |
Total capital employed | 15,991.9 | 13,909.7 |
A related party is a person or entity that is related to the Company. These include both people and entities that have, or are subject to, the influence or control of the Company.
Employment benefits for the Executive Board, charged to the income statement, are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Members of the Executive Board | \u00a0 | \u00a0 |
Short-term employee benefits | 3.9 | 9.1 |
Post-employment benefits | 1.7 | 0.9 |
Share-based compensation | 3.3 | 2.5 |
| \u00a0 | 8.9 | 12.5 |
For details on share-based compensation plans refer to note 34.
The fixed 2022 remuneration for the Supervisory Directors of HAL Holding N.V. was \u20ac\u00a00.4 million (2021: \u20ac\u00a00.4 million) in total.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
Capital commitments
On December 31, 2022, capital commitments in respect of property, plant and equipment amounted to \u20ac\u00a0265.8 million (2021: \u20ac\u00a0237.0 million) and mainly relate to terminal construction activities at Vopak, vessel-related construction activities at Boskalis and a new build vessel ordered at Anthony Veder.
Financial commitments
At year end, Safilo had contracts with licensors for the production and sale of branded sunglasses and frames. These contracts include guarantees for a minimum amount of production as well as commitments for advertising. These licensing commitments can be summarized as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
No later than 1 year | 89.0 | 68.7 |
Later than 1 year and no later than 5 years | 204.2 | 250.4 |
Later than 5 years | 12.9 | 17.6 |
| \u00a0 | 306.1 | 336.7 |
Commitments and guarantees
The Company and its subsidiaries and controlled minority interests entered into various commitments to provide debt and equity financing. These commitments mainly relate to Boskalis, Vopak, the Real estate segment and acquisitions of HAL. In addition, certain subsidiaries, mainly Boskalis and Van Wijnen, have provided (counter) guarantees to financial institutions in respect of contracts, partnerships, joint arrangements and associates. The total estimated amount of these commitments and guarantees not recognized in the statement of financial position is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Commitments to provide debt or equity funding | 598.8 | 86.7 |
Guarantees and securities provided | 1,319.2 | 394.4 |
| \u00a0 | 1,918.0 | 481.1 |
The above commitments and guarantees relate for \u20ac\u00a01,086 million to commitments and guarantees provided by Boskalis.
The commitments and guarantees are included in the liquidity risk paragraph in note 38.
Other contingencies
Associates and joint ventures Vopak
The joint ventures and associates of Vopak are currently, and may from time to time become, involved in a number of legal proceedings, including inquiries from, or discussions with, governmental authorities (including tax authorities) that are incidental to their operations. For the contingent liabilities of the joint ventures and associates as at year-end related to legal cases, it is based on the current facts and circumstances not believed that they may have a material adverse effect on the financial position or profitability of Vopak. Due to inherent uncertainties, Vopak cannot make any accurate quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings referred to in this report, however costs in complex litigation may be substantial.
Environmental obligations Vopak
Vopak is exposed to risks regarding environmental obligations arising from past activities. For example, a number of sites has to be decontaminated before being handed back at the end of the contractual period. Under current legislation, environmental plans and any other measures to be adopted have to be agreed with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations arise, a provision is formed based on the most reliable estimate possible of future expenses. Vopak management is of the opinion that the provisions are adequate, based on information currently available. However, given the degree of difficulty in making estimates, this does not guarantee that no additional costs will arise going forward.
Legal proceedings and other contingent liabilities
As a result of its day-to-day activities, the Company is involved in a number of legal proceedings. Management\u00a0is of the opinion that for the legal cases and risks for which no provision has been recognized, it is not probable that the final outcome will result in a cash outflow, therefore no provisions have been recognized.
As part of divestments of terminals and assets, Vopak has provided certain customary representations and warranties in the relevant sales purchase agreements. These representations and warranties will generally terminate, depending on their specific features, a number of years after the date of the relevant transaction completion date. Based on the current facts and circumstances, Vopak management has determined that for the items for which no provision is currently recognized, the likelihood of a cash outflow relating to these items is considered to be remote.
Non-controlling\u00a0interests\u00a0with\u00a0respect\u00a0to\u00a0Vopak and\u00a0Safilo are significant to the Company. The non-controlling interests in Vopak and Safilo can\u00a0be detailed\u00a0as\u00a0follows:
| \u00a0 | Vopak | Vopak | Safilo | Safilo | Total | Total |
|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Profit / (loss) allocated to the non-controlling interest during the year | (57.3) | 140.1 | 23.3 | 12.7 | (34.0) | 152.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Accumulated non-controlling interest at December 31 | 1,703.3 | 1,805.1 | 247.0 | 217.6 | 1,950.3 | 2,022.7 |
Set\u00a0out\u00a0below\u00a0is\u00a0the\u00a0summarized financial\u00a0information\u00a0for\u00a0Vopak and Safilo. This is the financial information\u00a0as\u00a0reported\u00a0by\u00a0these companies, including purchase price accounting adjustments made by\u00a0the\u00a0Company.
| \u00a0 | Vopak | Safilo | ||
|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 |
Summarized balance sheet | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
As of December 31 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 520.6 | 567.7 | 598.0 | 564.2 |
Liabilities | (1,162.2) | (960.2) | (312.2) | (310.6) |
| \u00a0 | (641.6) | (392.5) | 285.8 | 253.6 |
Non-current | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 6,546.7 | 6,587.1 | 388.4 | 406.6 |
Liabilities | (2,691.9) | (2,780.9) | (219.0) | (273.7) |
| \u00a0 | 3,854.8 | 3,806.2 | 169.4 | 132.9 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,213.2 | 3,413.7 | 455.2 | 386.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Summarized income statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
For the year | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue | 1,430.9 | 1,269.0 | 1,075.5 | 969.6 |
Profit / (loss) before tax | (38.2) | 303.2 | 57.5 | 28.5 |
Income tax expense | (100.8) | (60.0) | (9.3) | (12.4) |
Profit / (loss) after income tax | (139.0) | 243.2 | 48.2 | 16.1 |
Other comprehensive income | 132.6 | 168.3 | - | 31.2 |
Total comprehensive income (CI) | (6.4) | 411.5 | 48.2 | 47.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
CI allocated to non-controlling interest | 37.8 | 37.0 | 1.9 | 3.8 |
Dividend paid to non-controlling interest | 33.1 | 25.0 | 0.9 | 1.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Summarized cash flow statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
For the year | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash from operating activities | 872.1 | 741.1 | 17.8 | 25.2 |
Interest paid net | (96.9) | (70.7) | (6.2) | (6.9) |
Income tax (paid) / received | (55.9) | (65.0) | (2.4) | (1.1) |
Net cash from operating activities | 719.3 | 605.4 | 9.2 | 17.2 |
Net cash from investing activities | (489.4) | (588.4) | (15.6) | (9.8) |
Net cash from financing activities | (249.1) | (15.0) | (16.8) | (0.8) |
Increase/(decrease) in cash and cash equivalents | (19.2) | 2.0 | (23.2) | 6.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents at beginning of year | 73.4 | 68.3 | 99.0 | 88.9 |
Cash included in assets held for sale beginning of year | (21.8) | - | - | - |
Effect of exchange rate changes and reclassifications | 1.4 | 3.1 | 1.9 | 3.4 |
Increase/(decrease) in cash and cash equivalents | (19.2) | 2.0 | (23.2) | 6.6 |
Cash and cash equivalents at end of year | 33.8 | 73.4 | 77.7 | 98.9 |
The summarized financial information of the associates and joint ventures of Vopak is as follows.
Summarized\u00a0statements\u00a0of\u00a0financial\u00a0position on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Non-current assets | 205.4 | 209.9 | 4,657.7 | 3,771.8 | 1,858.2 | 1,984.8 | 1,205.5 | 1,130.8 | 7,926.8 | 7,097.3 |
Cash and cash equivalents | 10.7 | 10.6 | 579.9 | 465.4 | 163.4 | 139.4 | 17.7 | 19.6 | 771.7 | 635.0 |
Other current assets | 10.0 | 17.3 | 243.8 | 273.9 | 85.2 | 104.1 | 58.5 | 51.1 | 397.5 | 446.4 |
Total assets | 226.1 | 237.8 | 5,481.4 | 4,511.1 | 2,106.8 | 2,228.3 | 1,281.7 | 1,201.5 | 9,096.0 | 8,178.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial non-current liabilities | 136.0 | 149.6 | 1,861.6 | 1,795.2 | 922.3 | 989.3 | 386.7 | 363.1 | 3,306.6 | 3,297.2 |
Other non-current liabilities | 12.7 | 13.8 | 137.1 | 179.7 | 183.0 | 250.8 | 2.3 | 9.1 | 335.1 | 453.4 |
Financial current liabilities | 15.6 | 17.6 | 516.2 | 177.3 | 138.6 | 125.6 | 14.2 | 16.6 | 684.6 | 337.1 |
Other current liabilities | 20.5 | 13.9 | 352.5 | 263.5 | 75.7 | 62.6 | 47.5 | 48.0 | 496.2 | 388.0 |
Total liabilities | 184.8 | 194.9 | 2,867.4 | 2,415.7 | 1,319.6 | 1,428.3 | 450.7 | 436.8 | 4,822.5 | 4,475.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net assets | 41.3 | 42.9 | 2,614.0 | 2,095.4 | 787.2 | 800.0 | 831.0 | 764.7 | 4,273.5 | 3,703.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net assets | 19.1 | 20.0 | 983.7 | 817.6 | 405.4 | 408.7 | 289.2 | 258.8 | 1,697.4 | 1,505.1 |
Goodwill on acquisition | - | - | 112.1 | 12.4 | 31.7 | 31.4 | 36.6 | 34.4 | 180.4 | 78.2 |
Vopak\u2019s carrying amount of net assets | 19.1 | 20.0 | 1,095.8 | 830.0 | 437.1 | 440.1 | 325.8 | 293.2 | 1,877.8 | 1,583.3 |
Summarized\u00a0statements\u00a0of\u00a0total\u00a0comprehensive\u00a0income on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Revenues | 50.7 | 51.8 | 987.1 | 842.9 | 427.6 | 458.5 | 238.3 | 194.7 | 1,703.7 | 1,547.9 |
Operating expenses | (19.3) | (18.5) | (290.9) | (192.1) | (109.9) | (99.9) | (150.8) | (124.2) | (570.9) | (434.7) |
Depreciation, amortization and impairment | (13.2) | (13.2) | (236.5) | (210.7) | (161.4) | (120.4) | (28.8) | (30.1) | (439.9) | (374.4) |
Operating profit (EBIT) | 18.2 | 20.1 | 459.7 | 440.1 | 156.3 | 238.2 | 58.7 | 40.4 | 692.9 | 738.8 |
Net finance income / (expense) | (4.9) | (5.6) | (88.9) | (56.7) | (70.2) | (65.5) | (17.1) | (12.9) | (181.1) | (140.7) |
Income tax | (2.4) | (2.7) | (35.4) | (37.4) | (34.9) | (62.1) | (0.1) | (0.2) | (72.8) | (102.4) |
Net profit | 10.9 | 11.8 | 335.4 | 346.0 | 51.2 | 110.6 | 41.5 | 27.3 | 439.0 | 495.7 |
Other comprehensive income | - | - | 87.1 | 44.2 | 46.5 | 22.9 | 42.8 | (7.4) | 176.4 | 59.7 |
Total comprehensive income | 10.9 | 11.8 | 422.5 | 390.2 | 97.7 | 133.5 | 84.3 | 19.9 | 615.4 | 555.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net profit | 3.0 | 4.0 | 119.2 | 125.0 | 26.5 | 36.5 | 13.6 | 6.8 | 162.3 | 172.3 |
Vopak\u2019s share of OCI | - | - | 24.0 | 12.5 | 23.2 | 11.4 | 21.4 | (3.7) | 68.6 | 20.2 |
Vopak\u2019s share of total comprehensive income | 3.0 | 4.0 | 143.2 | 137.5 | 49.7 | 47.9 | 35.0 | 3.1 | 230.9 | 192.5 |
On March 14, 2023, HAL completed the acquisition of 100% of the shares in IQIP Holding B.V. (\u2018IQIP\u2019). IQIP is a supplier of foundation and installation equipment to the offshore wind, coastal & civil and oil & gas markets. The company is active worldwide and both sells and rents out equipment. Revenue over the financial year ending December 31, 2022, amounted to \u20ac\u00a0102 million.
IQIP is headquartered in Sliedrecht and has approximately 300 employees.
Name | Country of incorporation | Nature of business | Interest in common shares | Interest in preferred shares | Non-controlling interest |
|---|---|---|---|---|---|
Subsidiaries | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
HAL Holding N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Real Estate Inc. | U.S.A. | Real estate | 100.0% | 0.0% | 0.0% |
HAL Investments B.V. | The Netherlands | Holding company | 100.0% | 0.0% | 0.0% |
Rotter y Krauss | Chile | Optical retail | 100.0% | 100.0% | 0.0% |
Koninklijke Boskalis N.V. | The Netherlands | Dredging and offshore | 98.9% | 0.0% | 1.1% |
FD Mediagroep B.V. | The Netherlands | Media | 97.8% | 100.0% | 2.2% |
Broadview Holding B.V. | The Netherlands | Industrial | 97.4% | 0.0% | 2.6% |
Koninklijke Ahrend B.V. | The Netherlands | Office furniture | 96.0% | 100.0% | 4.0% |
280ppm B.V. | The Netherlands | GHG reduction investments | 95.0% | 100.0% | 5.0% |
Infomedics Holding B.V. | The Netherlands | Financial services | 94.5% | 0.0% | 5.5% |
Timber and Building Supplies Holland N.V. | The Netherlands | Building materials | 94.3% | 0.0% | 5.7% |
AN Direct B.V. | The Netherlands | Hearing aids | 90.0% | 0.0% | 10.0% |
SB Real Estate | The Netherlands | Real estate | 90.0% | 0.0% | 10.0% |
Van Wijnen Holding B.V. | The Netherlands | Construction | 88.0% | 100.0% | 12.0% |
Atlas Professionals B.V. | The Netherlands | Staffing | 86.9% | 0.0% | 13.1% |
HR Top Holding B.V. | The Netherlands | HR services | 86.7% | 100.0% | 13.3% |
GreenV B.V. | The Netherlands | Greenhouse projects | 71.3% | 0.0% | 28.7% |
Pro Gamers Group | Germany | Computer gaming equipment | 64.3% | 79.4% | 35.7% |
Anthony Veder Group N.V. | Cura\u00e7ao | Shipping | 62.9% | 0.0% | 37.1% |
Auxilium GmbH | Germany | Orthopedic devices | 53.8% | 100.0% | 46.2% |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Controlled minority interests | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Safilo Group S.p.A. | Italy | Optical products | 49.84% | 0.00% | 50.16% |
Koninklijke Vopak N.V. | The Netherlands | Tank terminals | 48.15% | 0.00% | 51.85% |
All the above entities are included in the consolidation. The proportion of the effective voting rights in the respective entity are virtually equal to the proportion of the ordinary shares held.
Non-controlled interests | \u00a0 |
|---|---|
Publicly traded | \u00a0 |
SBM Offshore N.V. | 22.88% |
| \u00a0 | \u00a0 |
Other | \u00a0 |
Coolblue B.V. | 49.00% |
Prodrive Technologies Group B.V. | 31.45% |
DMF Investment Management B.V. | 26.30% |
The Company\u2019s reportable segments are defined as follows:
Unquoted
Quoted minority interests
Real estate
Liquid portfolio
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources between segments and assessing the performance of the operating segments, is identified as the Executive Board. The reportable segments are defined based on differences in products and services as well as differences in the nature of the respective assets and the management thereof.
Unquoted relates to majority-owned companies as well as non-controlling minority interests in companies that derive their revenues from various products and activities such as dredging, (maritime) construction and maintenance, building materials, computer gaming equipment, orthopedic devices, office furniture, greenhouse projects, staffing, shipping and other products and activities. In July 2022, HAL obtained (de facto) control over Boskalis (refer to note 3) and, in accordance with earlier communicated intentions, the company was delisted as per November 9, 2022. Therefore, Boskalis has been included in the Unquoted segment in these financial statements as of the date of first consolidation.
The Quoted minority interests segment comprises both the Company\u2019s consolidated and unconsolidated minority interests in publicly traded entities. Boskalis was included in this segment until the date of first consolidation.
The Real estate segment relates to the development and rental of retail centers, multi-family properties and office buildings. This segment does not include the activities of the Company\u2019s construction companies.
The segment Liquid portfolio consists of financial assets, included in marketable securities, and cash-equivalent instruments generating interest, dividend and trading results.
Operating income (for the purpose of this report defined as earnings before interest, exceptional and non-recurring items of the optical retail and unquoted segment, taxes and amortization of intangible assets but including amortization of software) has been detailed on the following page.
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
Unquoted | 402.8 | 403.6 |
Quoted minority interests | 325.1 | 645.4 |
Real estate | 53.6 | 42.5 |
Liquid portfolio | (119.7) | 80.0 |
Optical retail (discontinued in 2021) | - | 464.5 |
Total operating income | 661.8 | 1,636.0 |
Reconciling items: | \u00a0 | \u00a0 |
- Discontinued operations (optical retail) | - | (464.5) |
- Amortization and impairment of intangibles | (459.8) | (129.4) |
- Capital gain on the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V. | - | 3,500.7 |
- Revaluation of previously held equity interest in Boskalis | 656.2 | - |
- Other | (51.3) | (77.6) |
Operating result as per the consolidated statement of income | 806.9 | 4,465.2 |
Financial expense, net | (125.7) | (119.1) |
Profit before tax as per the consolidated statement of income | 681.2 | 4,346.1 |
The \u201cother\u201d reconciling items represent mostly corporate overhead and exceptional items (excluding those of Vopak, Safilo, SBM Offshore and, for the first half of 2022, Boskalis). The segment Quoted minority interests includes the operating income (including exceptional items) of Vopak and Safilo and the Company\u2019s share in the net income of SBM Offshore and, for the first half of 2022, Boskalis. In the second half of 2022, Boskalis was included in the Unquoted segment.
The composition of depreciation and impairment expense on property, plant and equipment, right-of-use assets and investment properties by segment is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 378.1 | 205.9 |
Quoted minority interests | 797.6 | 403.8 |
Real estate | 2.3 | 2.0 |
Reconciling items | 1.7 | 1.6 |
| \u00a0 | 1,179.7 | 613.3 |
The reconciling items represent the corporate depreciation expense.
The composition of revenues by segment is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 7,625.9 | 5,008.4 |
Quoted minority interests | 2,478.4 | 2,204.9 |
Total continuing operations | 10,104.3 | 7,213.3 |
Discontinued operations (optical retail) | - | 1,891.1 |
| \u00a0 | 10,104.3 | 9,104.4 |
The composition of assets by segment is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 13,307.9 | 6,242.6 |
Quoted minority interests | 8,858.8 | 9,923.2 |
Real estate | 270.7 | 237.7 |
Liquid portfolio | 3,892.1 | 5,608.1 |
Reconciling items | 385.0 | 610.7 |
| \u00a0 | 26,714.5 | 22,622.3 |
The reconciling items represent corporate assets, including deferred tax, loans and pension benefit assets. The reconciling items also include an amount of \u20ac\u00a0250 million (2021: \u20ac\u00a0500 million) representing the part of the proceeds from the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V., which is held in escrow for potential liabilities of HAL under the sale and purchase agreement.
The composition of investments in associates and joint arrangements by segment is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 501.0 | 336.6 |
Quoted minority interests | 2,682.7 | 3,379.6 |
Real estate | 175.1 | 132.9 |
| \u00a0 | 3,358.8 | 3,849.1 |
The composition of capital expenditures by segment is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 521.0 | 180.8 |
Quoted minority interests | 404.0 | 526.8 |
Real estate | 10.9 | 28.7 |
Total continuing operations | 935.9 | 736.3 |
Discontinued operations (optical retail) | - | 75.3 |
| \u00a0 | 935.9 | 811.6 |
Capital expenditures consist of additions to property, plant and equipment, investment properties and other intangible assets that are not related to acquisitions.
The composition of liabilities by segment is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 6,442.9 | 3,411.6 |
Quoted minority interests | 4,385.3 | 4,325.2 |
Real estate | 3.1 | 1.9 |
Liquid portfolio | 0.3 | 0.3 |
Reconciling items | 645.1 | 77.1 |
| \u00a0 | 11,476.7 | 7,816.1 |
The reconciling items represent corporate debt (\u20ac\u00a0576 million, 2021: nil) and liabilities, including liabilities related to obligations to acquire equity instruments in certain subsidiaries from the management of these subsidiaries and deferred tax.
The composition of revenues by geographical area is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Europe | 6,671.3 | 5,150.5 |
USA & Canada | 1,270.4 | 1,049.1 |
Asia | 1,452.4 | 583.0 |
Other | 710.2 | 430.7 |
Total continuing operations | 10,104.3 | 7,213.3 |
Discontinued operations (optical retail) | - | 1,891.1 |
| \u00a0 | 10,104.3 | 9,104.4 |
The composition of property, plant and equipment, investment properties, right-of-use assets, intangible assets and investments in associates and joint ventures by geographical area is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Europe | 9,667.1 | 7,722.9 |
USA & Canada | 1,421.7 | 1,349.3 |
Asia | 4,004.4 | 2,141.6 |
Other | 1,197.3 | 1,235.2 |
| \u00a0 | 16,290.5 | 12,449.0 |
The Company\u2019s reportable segments are defined as follows:
Unquoted
Quoted minority interests
Real estate
Liquid portfolio
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources between segments and assessing the performance of the operating segments, is identified as the Executive Board. The reportable segments are defined based on differences in products and services as well as differences in the nature of the respective assets and the management thereof.
Unquoted relates to majority-owned companies as well as non-controlling minority interests in companies that derive their revenues from various products and activities such as dredging, (maritime) construction and maintenance, building materials, computer gaming equipment, orthopedic devices, office furniture, greenhouse projects, staffing, shipping and other products and activities. In July 2022, HAL obtained (de facto) control over Boskalis (refer to note 3) and, in accordance with earlier communicated intentions, the company was delisted as per November 9, 2022. Therefore, Boskalis has been included in the Unquoted segment in these financial statements as of the date of first consolidation.
The Quoted minority interests segment comprises both the Company\u2019s consolidated and unconsolidated minority interests in publicly traded entities. Boskalis was included in this segment until the date of first consolidation.
The Real estate segment relates to the development and rental of retail centers, multi-family properties and office buildings. This segment does not include the activities of the Company\u2019s construction companies.
The segment Liquid portfolio consists of financial assets, included in marketable securities, and cash-equivalent instruments generating interest, dividend and trading results.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of the business combination and the fair value of any contingent consideration to be transferred. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree is measured, on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets.
If the business combination is achieved in stages, the Company\u2019s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and the difference with the book value of the previously held equity interest is recognized in the consolidated statement of income. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired, is recorded as goodwill. If the total of the consideration transferred, the non-controlling interest recognized and the fair value of the previously held interest is less than the fair value of the net assets of the subsidiary acquired (\u2018badwill\u2019), the difference is directly recognized in the consolidated statement of income. Acquisition-related costs are expensed as incurred. Subsequent changes to the fair value of the contingent consideration classified as an asset or liability are recognized in the consolidated statement of income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Critical accounting estimates and judgments
When a company is acquired, a value is assigned to intangible assets such as trademarks and the customer relationships. The determination of the value at the time of acquisition and the estimated useful life are subject to judgment. Assumptions by management underlying the estimation of fair value include the future cash flows expected from the asset and discount rates. Useful life is estimated using past experience and relevant industry practices.
Property, plant and equipment are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items (such as unrecoverable taxes and transport) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced parts is derecognized. All other repair and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life as follows: buildings 10-50 years, vessels and floating equipment 5-30 years, tank storage terminals 10-40 years and equipment and other 3-15 years. Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Critical accounting estimates and judgments
Property, plant and equipment of represent a substantial part of the total assets of the Company and the related depreciation forms a substantial part of the annual operating expenses. The useful life and residual value of these assets have a major impact on the measurement of property, plant and equipment. These estimates and assumptions are partly based on the expected useful productive lives, experiences related to similar assets, the maintenance history and the period during which the company has the economic benefits from the utilization of the assets
Investment properties are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the properties (such as unrecoverable taxes) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life (25-50 years). Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
A right-of-use asset and a related lease liability are recognized for lease contracts that exceed a duration of twelve months, except when a contract relates to leases of low-value assets, payments are primarily based on variables such as revenue or when a lessor has a substantive substitution right. The latter contracts are expensed on a straight-line basis over the contract term.
The Company leases real estate properties (land and buildings) to house its retail stores, offices, logistical activities and storage terminal operations. Lease contracts are negotiated on an individual basis and, due to the geographical spread and the various business models of operating companies, contain a wide range of different terms and conditions.
The Company leases vessels and floating equipment in respect of its businesses of transporting liquefied gases and petrochemical products, dredging and offshore energy. These lease contracts are negotiated on an individual basis and may contain a wide range of different terms and conditions due to the international lessor base and the complex and varying nature of individual vessels.
The Company leases terminal-related assets, including storage assets, jetties and loading facilities. These lease contracts are also negotiated on an individual basis and contain a wide range of different terms and conditions due to geographical spread and specific nature of the assets.
The Company also leases trucks, passenger cars and machinery and equipment, including information and communication technology equipment. These contracts are insignificant compared to the total leased asset portfolio.
Right-of-use assets
At the commencement date of the lease contract, the right-of-use asset is measured at cost. This comprises the initial amount of the lease liability, adjusted for prepayments and lease incentives received, initial direct cost, estimated restoration and dismantling costs, where applicable. Depreciation is calculated using the straight-line method to write off the cost of each right-of-use asset from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The right-of-use assets are subject to impairment and adjusted for remeasurement of lease liabilities.
Lease liabilities
At the commencement date of the lease contract, the lease liability is measured at the present value of the lease payments over the lease term, discounted using the incremental borrowing rate. Payments include (in-substance) fixed payments, variable lease payments that depend on an index or rate, amounts expected to be payable under residual value guarantees, expected (early termination) penalties and amounts expected to be payable for the exercise of purchase options, when the Company is reasonably certain to exercise these. Contractual payments related to service costs are excluded from the measurement of lease liabilities in respect of terminal-related assets. Lease liabilities are subsequently measured at amortized cost using the effective interest method. A lease liability is remeasured when there is an adjustment to future lease payments arising from, for example, renegotiation of the lease contract, a change in index or rate, or in case of reassessment of the Company\u2019s expected exercise of options. A remeasurement of the lease liability is reflected as a corresponding adjustment to the right-of-use asset, with any excess over the carrying amount of the asset being recognized in the consolidated statement of income. Rent concessions occurring as a direct consequence of the COVID-19 pandemic are not assessed whether these are lease modifications and instead are accounted for as if they are not lease modifications. Accordingly, these concessions will be recorded as a reduction of the lease liability through the current income statement and not amortized over the term of the lease.
Lessor accounting
The Company subleases some of its right-of-use assets to franchisees or third parties. When substantially all the risks and rewards are transferred to the lessee, the sublease is classified as a finance lease, otherwise the sub-lease is an operating lease. When the sublease is classified as a finance lease, the right-of-use asset in the head lease is de-recognized and a lease receivable is recognized, with any difference being recorded in the consolidated statement of income. Subsequently, the interest income and interest expense are accrued on the lease receivable and lease liability respectively applying the effective interest method. Rental income from operating subleases is recognized in the consolidated statement of income, within other revenue.
COVID-19-related lease concessions
In 2020 and 2021, amendments to IFRS 16 were issued under which rent reductions are recognized directly in the consolidated income statement when the change in lease payments does not result in higher consideration, only lease payments in 2020 and up to June 30, 2022, are reduced and there are no substantial changes to other terms and conditions of the lease. A substantial change is considered to be present if the scope of the lease or the lease term is amended. The Company elected to apply this amendment and exercised judgment to determine if rent reductions met the above requirements.
Critical accounting estimates and judgments - lease terms
The lease term comprises of the non-cancellable period agreed in the lease contract and the periods covered by renewal or termination options that are reasonably certain to be exercised. Significant renewal and termination options primarily relate to the lease of real estate. Renewal and termination options are assessed at the lease commencement date and subsequently, if there is a change in circumstances within the control of the Company. When assessing renewal and termination options, considerations include the quality and performance of the leased asset and the extent of leasehold improvements undertaken, potential relocation and termination expense including penalties and potentially favorable extension terms and long-term customer contracts related to the leased asset.
Critical accounting estimates and judgments - discount rates
In absence of interest rates implicit in the lease contracts, the Company applies the incremental borrowing rate (IBR) as the discount rate to determine the lease liabilities. The IBR is an approximation of the rate that a lessee would pay to attract the required funding to purchase the asset over a similar term, with similar security and in a similar economic environment. The IBR is determined as the sum of a reference rate, a credit risk premium and a country risk premium. The calculation of the IBR takes into account the currency of the lease contract, the lease term, the type of leased asset, the country and the credit quality of the lessee. A single IBR may be applied to a portfolio of leases within a country, which are similar in nature and lease term.
Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets.
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is carried at cost less accumulated impairments. Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 35. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
For the accounting policies for derivative financial instruments, reference is made to note 37. At initial recognition, the Company classifies its non-derivative financial assets as \u201cmeasured at amortized cost\u201d or as \u201cmeasured at fair value\u201d (either through profit or loss or other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 36). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor\u2019s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 36.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 36), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
The accounting policies applied to marketable securities and deposits are the same as those applied to other financial assets (note 9). Marketable securities are measured at fair value through profit or loss except for certain fixed income securities which are measured at fair value through other comprehensive income.
Trade receivables are initially recognized at the transaction price and subsequently measured at amortized cost using the effective interest method, less a provision for impairment. Trade receivables that include a significant financing component are initially recognized at fair value plus any directly related transaction costs. A provision for impairment is established based on the expected loss model (refer to note 36) with application of the simplified approach. The amount of the provision is the difference between the assets\u2019 carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Additions to and releases from the provision are recognized in the consolidated statement of income.
A construction contract is a contract specifically negotiated for the construction of an asset, including (residential) real estate, greenhouse projects, technical facilities, civil and maritime infrastructure and development projects for which a contract with a customer is present. Development projects for which there is not yet a contract with a customer are included within inventories (refer to note 13). Offshore service contracts are specifically negotiated contracts for (sub-sea) marine services, including heavy transport, inspections and surveys. The timing of invoicing and cash collection may result in unbilled revenue, accounts receivable and deferred revenue with respect to these contracts. Amounts are generally invoiced based on contractual terms, either at periodic intervals or upon achievement of contractual milestones, and for each contract a net position is included in the statement of financial position. In the event that billing occurs subsequent to revenue recognition, unbilled revenue is recognized (as an asset). In the event that payments are received from customers in advance of revenue recognition, deferred revenue is recognized (as a liability).
A provision for onerous contracts is recognized when the remaining unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The provisions taken for onerous contracts related to construction and offshore service contracts are included in note 21. The provision is measured based on the expected incremental and directly related costs of fulfilling the contract.
The order book includes future revenues from projects that have been signed and, for framework contracts, for which work packages have been agreed with clients. This includes mainly projects that are in progress but not yet completed and to a lesser extent projects acquired but not yet in progress at the reporting date.
For information on revenue recognition for construction and offshore service contracts reference is made to note 23.
Critical accounting estimates and judgments
The expected outcome of a construction or offshore service contract is periodically estimated. If the contract is expected to be profitable and the contract revenue highly probable, contract revenue and costs are recognized based on the progress of the project over time, generally by reference to the percentage-of-completion method. When a contract is not estimated to be profitable, the realized loss, determined based on the progress of the project, is recognized in the consolidated statement of income immediately. The expected future losses are included in a provision for onerous contracts (refer to note 21) that is charged against the consolidated statement of income.
There is a robust process in place to determine both progress and forecasted outcomes of construction and offshore service contracts. This process builds on decentralized estimates by project managers that are thoroughly discussed with and reviewed by experienced staff and management at various levels of the organization, including comparative analyses with earlier projections and project budgets. There is inherent estimation uncertainty in this process and actual outcomes of projects may deviate from the forecasted outcomes, affecting revenue and results.
Inventories are stated at the lower of cost and net realizable value. Cost is generally determined using the weighted-average cost method. Cost comprises direct costs and a proportion of attributable production overheads, but excludes interest expense. Net realizable value is the estimated selling price less the estimated costs necessary to make the sale.
Project development includes land positions, related building rights and capitalized property development costs related to projects for which a signed customer contract is not yet in place.
Critical accounting estimates and judgments
Finished goods are regularly subjected to specific assessment tests to identify damaged, slow moving or obsolete inventory, taking into consideration past experience, historic results and the probability of sale under normal market conditions. Based on these analyses, management asserts judgment to determine the write-downs required to reduce the value of the inventory to its net realizable value.
Other current assets generally include prepayments relating to the following year and other receivables to be received within 12 months.
Cash and cash equivalents comprise unrestricted bank balances and liquid investments with a maturity of three months or less.
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately \u00adbefore classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is \u00adupdated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
A discontinued operation is a component of the Company\u2019s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.
Other reserves include the cumulative valuation reserve, the cash flow hedge reserve and the cumulative currency translation reserve.
The cumulative valuation reserve includes the unrealized results, net of tax, on financial assets classified as fair value through other comprehensive income.
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place.
The cumulative currency translation reserve includes all exchange differences resulting from the translation of the financial statements of foreign entities. It also includes the exchange differences on liabilities and the effective currency component of fair value changes of derivative financial instruments, net of tax, to the extent that they are part of an effective net investment hedge relationship.
Deferred tax is recognized using the liability method on taxable temporary differences between the tax base and the accounting base of items included in the consolidated financial statements. Temporary differences are not provided if they relate to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit or differences relating to investments in subsidiaries, associates and joint ventures to the extent that the reversal of the temporary differences are controlled by the Company and it is probable that they will not reverse in the foreseeable future. Withholding tax and any other tax due for unremitted earnings of subsidiaries are not recognized as deferred tax liability unless there is an intention to distribute these earnings in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, at the year end. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax is recognized in the consolidated statement of income unless it relates to items recognized through other comprehensive income.
Tax assets and liabilities are offset when there is a legally enforceable right to set off the recognized amounts and that there is an intent to either settle on a net basis, or to realize the asset and settle the liability simultaneously.
Critical accounting estimates and judgments
Deferred tax assets, including those arising from carry-forward losses, are recognized if it is likely that taxable profits will be available against which losses can be set off. Management exercises judgment to establish the extent to which expected future profits substantiate the recognition of a deferred tax asset.
The Company has both defined benefit and defined contribution plans.
Defined benefit plans
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension charges for defined benefit plans are based on actuarial calculations and calculated in accordance with the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated statement of income so as to spread the regular costs over the service lives of employees in accordance with the advice of independent qualified actuaries who carry out a full valuation of the plans every year. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related liability. The plan assets are measured at fair value. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Current and past service costs, interest components and administrative costs are recognized immediately in the consolidated statement of income. A net defined benefit asset is only recognized to the extent the surplus in the pension plan can be realized during the life of the plan, through refund or reduced future contributions, or at the settlement of the plan.
Defined contribution plans
A defined contribution plan is a pension plan under which the Company pays contributions to a publicly or privately administered pension insurance plan on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Critical accounting estimates and judgments
The defined benefit obligation is determined on the basis of assumptions for future developments in variables such as salary increase, price index increase, life expectancy and discount rate. All assumptions are assessed at the reporting date. Changes in the assumptions may significantly affect the liabilities and pension costs under the defined benefit plans. The weighted average of these assumptions as well as sensitivities of key assumptions are disclosed in this note.
A provision is recognized for a present legal or constructive obligation as a result of past events, when it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made (for onerous contracts refer to note 12). Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Revenue is recognized in the period in which the performance obligation from the underlying contract has been satisfied. In most sales transactions this is at the point in time when control over a product or service has been transferred to the customer. Revenue is shown net of sales tax, value-added tax, discounts, rebates, expected returns and amounts collected on behalf of third parties. A contract with a customer may comprise of multiple distinct performance obligations that require separation. In general, the total consideration under the contract is allocated to performance obligations based on stand-alone selling prices. The timing of revenue recognition depends on the type of performance obligation, as described below.
Sale of goods
The group operates physical retail stores and webstores in the Quoted minority interests and Unquoted segments. Sales on a wholesale basis are present in the Quoted minority interest and Unquoted segments. Revenue is recognized when the product is sold to the customer and control over the product has been transferred to the customer in return for (a right to) payment.
For retail sales, revenue recognition generally coincides with the physical transfer of the product to the customer. Revenue is then recognized at the transaction price, gross of (credit card) fees payable for the transaction which are recorded in selling cost. For rights issued under a customer loyalty program, through vouchers and by way of other future discounts or awards, a contract liability is incurred as a reduction to revenue. Revenue is further reduced and a refund liability is recognized for applicable rights of return. An asset reflecting the right to returned goods is recognized, reducing the cost of sales, at the carrying amount of those goods, net of expected refurbishment cost for returns that are not scrapped. In general, when a replacement product is not an acceptable alternative, the transaction price is refunded. An expected-value calculation based on accumulated experience is used to determine the amounts recognized as a refund liability. Where loyalty programs are in place, revenue allocated to the awards is recognized based on (anticipated) expiration and when the awards are redeemed.
For wholesale and franchise sales the timing of revenue recognition depends on when the products are delivered, with full discretion by the customer or franchisee over the sales channel and price to re-sell the products. Revenue recognition depends on individual customer terms and may occur when the products have been shipped or delivered to a specific location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or objective evidence has been obtained that all criteria for acceptance have been satisfied. Volume incentives apply to various wholesale contracts and reduce related revenues. Depending on the contract, these incentives are either paid at the end of the contract period as a rebate, or provide a right to a discount in the next contractual period. In case of rebates, a refund liability is recorded at the time of the transaction, as a reduction to revenue. The group periodically reviews the expected transaction price for the goods and services provided under the contract and adjusts the revenues from the contract and the refund liability accordingly. Discounts to be provided in future periods based on current year sales are considered a separate performance obligation, reducing current year revenue, and are recognized as a contract liability. The contract liability is recognized as revenue in the consolidated statement of income based on (anticipated) expiration and when the discounts are redeemed. A receivable is recognized for wholesale deliveries when payment has become unconditional. No element of financing is deemed present as payment terms are consistent with market practice. Any prepayments by customers are not considered revenue but are accounted for as contract liabilities.
Obligations to provide a refund under the standard warranty terms are recognized as a provision. Where warranties exceed these standard terms either in time, extent or through the inclusion of (additional) services it is recognized as distinct performance obligation and part of revenues is allocated and recognized over the period covered by the extended warranties. Extended warranties are considered services to be rendered and included under contract liabilities until revenue is recognized.
Provision of services
The group provides storage services in its Quoted minority interest segment and a range of other services, including shipping, staffing and financial services, in its Unquoted segment. Revenue from providing services is recognized in the period in which the services are rendered. Tank storage rentals, including minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period when these services are rendered, as clients simultaneously consume and benefit from the services at the moment that these are rendered. Revenues from excess throughputs and other services are recognized in the period in which they are provided.
For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, based on costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in the consolidated statement of income in the period in which the circumstances that give rise to the revision become known by management. Contracts for the rendering of services typically do not exceed a duration of twelve months, except for framework agreements for which prices are variable or periodically renegotiated.
Modifications of property, plant and equipment paid upfront by customers are accounted for as a contract liability and recognized in the consolidated statement of income over the contractual period on a straight-line basis.
In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered exceed the payment, depending on the specific terms of the contract, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized. If the contract includes an hourly fee, revenue is recognized in the amount to which there is a right to invoice. No element of financing is deemed present as payment terms are consistent with market practice.
License revenues
Franchise rights are accounted for as rights to access the franchisor\u2019s intellectual property. Any fixed fee allocated to those rights is generally recognized over the term of the franchise agreement. Franchise fees that are based on a percentage of sales are recognized at the time of the sale. Access to (digital) content is recognized over time for subscription contracts and at a point in time for usage-based contracts. License revenues are presented within rendering of services.
Construction and offshore contracting activities
The group provides (integration of) goods and services through its construction and offshore contracting businesses in the Unquoted segment, including housing, greenhouse, civil infrastructure and maritime construction. Revenue and results from the these businesses are determined by reference to the latest estimate of the total selling price of the contract, after taking into account claims that have been accepted by the client or that derive from enforceable rights, are highly probable to lead to revenue and can be reliably measured. Such revenue is recognized over time, using the percentage-of-completion method, using a completion rate determined by reference to estimated cost of completed works (input method) and reviewed against progress of the works.
Recognition of revenues and results for property development activities commences only when a contract with a customer for the (further) development and sale of such property has been signed. These contracts generally involve the delivery of both land and buildings. Revenues related to (further) development of the land and the construction of buildings are recognized as set out above. Revenues and results from sale of the land positions are realized at the signing date if the land is transferred to the buyer directly, or through inclusion of land and land-related expenses in the cost basis for determination of project completion, if it remains an integral part of the project under development.
Construction, development and offshore services contracts of the group are frequently subject to variation orders that affect the scope and/or price of the contract and that amend existing performance obligations. Variation orders that are highly probable, cannot be reversed and for which payment is legally enforceable constitute contract modifications. These modifications are accounted for through a cumulative catch-up adjustment.
A provision for onerous contracts is formed against operating expenses when future contract losses are known and can be reliably measured. Additional information on judgement and estimates in relation to construction, development and offshore services contracts are included in note 12.
Income from marketable securities and deposits includes realized and unrealized capital gains and losses, impairment losses, interest, dividends and management fees.
Capital gains and losses represent the change in market value of the marketable securities. Interest income on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest rate method. Dividends are recognized when the right to receive payment is established.
Associates and joint ventures are accounted for using the equity method, which involves recognition in the consolidated statement of income the Company\u2019s share of the net result of the associate or joint venture. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The Company develops, leases and sells residential, retail and office properties in its Real estate segment. Revenue from (operating) lease activities is recognized on a straight-line basis over the lease term. Capital gains from property sales are recognized at the transaction price agreed in the contract when control over the property has been transferred to the buyer. Revenue is recognized at the point in time when the legal title has passed to the buyer and the consideration becomes due.
Short-term employee benefits
Wages, salaries, social security contributions, annual leave, sickness absenteeism, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognized as an expense as the related service is provided by the employee of the Company. A liability is recognized for the amount expected to be paid under short-term cash bonus plans if there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Termination benefits
Termination benefits are recognized as an expense when the Company and its subsidiaries are committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognized as an expense if an offer has been made of voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period they are discounted to their present value.
Share-based compensation
The compensation cost for share-based payment plans is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period). Refer to note 34 for more details on share-based payment plans.
Participation by management of unquoted subsidiaries
Management of certain subsidiaries own non-controlling interests in the capital of these subsidiaries. With respect to certain subsidiaries, the Company has the conditional obligation to acquire these equity instruments for cash. Obligations to acquire non-controlling interest are fair valued, generally, based on a multiple of EBITA less net debt, with measurement differences recorded as employee expense in the consolidated statement of income in accordance with IAS19. Multiples applied are either contractually determined or, generally, in accordance with those applied in the section on estimated value of the subsidiaries and associates.
Operating expenses, including marketing and information and communication technology, are recognized in the consolidated statement of income when incurred.
Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (\u2018earn-out\u2019 liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
Interest income and expense on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest method.
The current income tax charge is calculated on the basis of the tax law enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries have operations, taking into account tax-exempt income and tax losses carried forward. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretations. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Income tax is recognized in the consolidated statement of income unless it relates to items recognized in the consolidated statement of comprehensive income or in the consolidated statement of changes in equity. Where the final outcome of tax-related provisions is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Critical accounting estimates and judgments
Significant judgment is required in determining the worldwide provision for income tax, as subsidiaries are subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain. Provisions for anticipated tax audit issues are recognized based on management\u2019s estimates of whether additional taxes will be due.
Earnings per Share for profit attributable to the owners of parent are calculated by dividing the profit attributable to the owners of parent by the time-weighted average number of outstanding Shares. The calculation of the previous year earnings per Share is adjusted to take into account the stock dividend paid in the current year, in respect of the previous year, in accordance with IAS\u00a033.64.
The Company and its subsidiaries operate a number of equity-settled and cash-settled share- based compensation plans. Under the plans these entities receive services from employees as consideration for respectively ordinary shares of the respective entity or for the cash equivalent to the value of the underlying ordinary shares of the respective entity.
For equity-settled share-based compensation plans, the fair value is determined at the date of grant and expensed in the consolidated statement of income with a corresponding adjustment directly in equity. For cash-settled share-based compensation plans, the fair value is determined at the date of the grant and is re-measured at each reporting date until the liability is settled.
The compensation is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period).
Assets that have an indefinite useful life are tested for impairment annually, while all non-current assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss on non-financial assets is recognized in the consolidated statement of income for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and an asset\u2019s value in use. Goodwill is allocated to groups of cash-generating units (CGU\u2019s) for the purpose of impairment testing. A CGU is in no event larger than the operating segment it belongs to.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s 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 discontinued operations, impairment testing requires management to determine whether the carrying value of the discontinued operation does not exceed the fair value less cost of disposal.
The recoverable amounts in impairment testing are determined based on the value in use and fair value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples\u00a0is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The primary impairment test for the Company relates to annual goodwill impairment testing. Property, plant and equipment as well as joint ventures and associates are reviewed and, when required, tested.
Critical accounting estimates and judgments
The recoverable amounts in impairment testing are determined based on the value in use and fair
value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and (terminal) growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
Derivatives are measured at fair value with any related transaction costs expensed as incurred. Reference is made to the accounting policies in note 36 on fair value measurement. The treatment
of changes in the fair value of derivatives depends on their use, as explained below.
Cash flow hedge
Derivatives held to hedge the uncertainty in timing or amount of future forecasted cash flows are
classified as being part of cash flow hedge relationships. For effective hedges, gains and losses
from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are recycled in the consolidated statement of income at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, or if the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of income immediately.
Net investment hedge
The Company applies hedge accounting to certain investments in foreign operations. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. In the event of disposal or partial disposal of an interest in a foreign operation either through sale or as a result of a repayment of capital, the cumulative exchange difference is recognized in the consolidated statement of income.
Fair value hedge
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Company designates the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk being hedged, with changes going to the consolidated statement of income. Gains and losses on the corresponding derivative are also recognized in the consolidated statement of income. The amounts recognized are offset in income to the extent that the hedge is effective. When the relationship no longer meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortized using the effective interest method.
Derivatives for which hedge accounting is not applied
Derivatives not classified as hedges are carried at fair value with changes being recognized in the consolidated statement of income.
A related party is a person or entity that is related to the Company. These include both people and entities that have, or are subject to, the influence or control of the Company.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
The Company\u2019s reportable segments are defined as follows:
Unquoted
Quoted minority interests
Real estate
Liquid portfolio
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources between segments and assessing the performance of the operating segments, is identified as the Executive Board. The reportable segments are defined based on differences in products and services as well as differences in the nature of the respective assets and the management thereof.
Unquoted relates to majority-owned companies as well as non-controlling minority interests in companies that derive their revenues from various products and activities such as dredging, (maritime) construction and maintenance, building materials, computer gaming equipment, orthopedic devices, office furniture, greenhouse projects, staffing, shipping and other products and activities. In July 2022, HAL obtained (de facto) control over Boskalis (refer to note 3) and, in accordance with earlier communicated intentions, the company was delisted as per November 9, 2022. Therefore, Boskalis has been included in the Unquoted segment in these financial statements as of the date of first consolidation.
The Quoted minority interests segment comprises both the Company\u2019s consolidated and unconsolidated minority interests in publicly traded entities. Boskalis was included in this segment until the date of first consolidation.
The Real estate segment relates to the development and rental of retail centers, multi-family properties and office buildings. This segment does not include the activities of the Company\u2019s construction companies.
The segment Liquid portfolio consists of financial assets, included in marketable securities, and cash-equivalent instruments generating interest, dividend and trading results.
To increase transparency, exceptional items are disclosed separately when relevant. These items are exceptional, by nature, from a management perspective. Exceptional items may include impairments, reversals of impairments, additions to and releases from provisions for restructuring, gains on the sale of subsidiaries, joint arrangements and associates, any other significant provisions being formed or released and any significant changes in estimates.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of the business combination and the fair value of any contingent consideration to be transferred. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree is measured, on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets.
If the business combination is achieved in stages, the Company\u2019s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and the difference with the book value of the previously held equity interest is recognized in the consolidated statement of income. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired, is recorded as goodwill. If the total of the consideration transferred, the non-controlling interest recognized and the fair value of the previously held interest is less than the fair value of the net assets of the subsidiary acquired (\u2018badwill\u2019), the difference is directly recognized in the consolidated statement of income. Acquisition-related costs are expensed as incurred. Subsequent changes to the fair value of the contingent consideration classified as an asset or liability are recognized in the consolidated statement of income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Critical accounting estimates and judgments
When a company is acquired, a value is assigned to intangible assets such as trademarks and the customer relationships. The determination of the value at the time of acquisition and the estimated useful life are subject to judgment. Assumptions by management underlying the estimation of fair value include the future cash flows expected from the asset and discount rates. Useful life is estimated using past experience and relevant industry practices.
Acquisitions
Boskalis
Royal Boskalis N.V. (\u2018Boskalis\u2019) is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors, based in Papendrecht, the Netherlands. The company provides creative and innovative all-round solutions to infrastructural challenges in the maritime, coastal and delta regions of the world. With core activities such as coastal defense, riverbank protection and land reclamation, Boskalis is able to provide adaptive and mitigating solutions to combat the effects of climate change, such as extreme weather conditions and rising sea levels, as well as delivering solutions for the increasing need for space in coastal and delta regions across the world. The company facilitates the development of offshore energy infrastructure, including renewable wind energy. Boskalis is furthermore active in the construction and maintenance of ports, waterways, access channels and civil infrastructure. Boskalis has a versatile fleet of more than 500 vessels and floating equipment and approximately 10,000 employees, including associates.
Full-year revenues for\u00a02022 amounted to \u20ac\u00a03,578 million (2021: \u20ac\u00a02,957 million). Net income for 2022 amounted\u00a0to \u20ac\u00a0241 million (2021: \u20ac\u00a0151 million). At the end of 2022 the order book of\u00a0the company amounted to \u20ac\u00a06.1 billion\u00a0compared to \u20ac\u00a05.4 billion at the end of\u00a02021.
On June 24, 2022, HAL made an all-cash, voluntary offer for all issued and outstanding ordinary shares of Boskalis of \u20ac\u00a032.50 (cum-dividend) per share. The intention for this offer was announced on March 10, 2022. The offer, increased to \u20ac\u00a033.00 (cum dividend) on August 29, 2022, was declared unconditional on September 7, 2022. Following the post-acceptance period, the Company increased its shareholding in Boskalis through purchases in the open market and through tendered shares to 98.9% at the end of the year (2021: 45.54%). Since the announcement of the intended offer on March 10, 2022, HAL acquired shares in Boskalis. As a result of the increase in shareholding, HAL obtained de facto control over Boskalis on July 5, 2022, as the size of its shareholding provided HAL the practical ability to direct the relevant activities of Boskalis unilaterally, considering in particular that HAL could unilaterally adopt, approve or block any decisions with respect to Boskalis that required approval from the supervisory board of Boskalis, that HAL could unilaterally appoint, suspend or dismiss any member of the board of management and/or any member of the supervisory board or unilaterally block a binding nomination (a majority of two-thirds of the votes cast and representing more than half of the issued share capital being required) and that HAL did therefore at that point in time have the current and practical ability to direct the relevant activities of Boskalis. Until that date HAL did not have de facto control over Boskalis and the shares acquired in 2022 up to the de facto control date were accounted for as an investment in an associate in accordance with IAS 28, for an amount of \u20ac\u00a0348.8 million.
In accordance with IFRS, the equity interest in Boskalis that was held prior to obtaining control (classified as an associate and accounted for using the equity method) was revalued to fair value, as reflected by the share price at the date of obtaining de facto control. This resulted in a revaluation gain of \u20ac\u00a0656.2 million, included in share of results from associates and joint ventures (refer to note 25) and a subsequent charge to retained earnings of \u20ac\u00a054.8 million with respect to shares acquired, for an amount of \u20ac\u00a01,885.1 million, after the de facto control date, as this represented transactions with non-controlling interests. At year-end, a non-controlling interest remained of \u20ac\u00a047.1 million. The primary intangible assets recognized in the purchase price allocation include the Boskalis brand name and the order portfolio. In addition, the company\u2019s vessels and other real estate were revalued at market value. Goodwill was recognized in amount of \u20ac\u00a01,224.7 million, related to the knowledge of the workforce, the execution capabilities of the company and the expected growth and profitability of the company.
The total cash outflow during 2022 with respect to the acquisition of Boskalis amounted to \u20ac\u00a02,251.1 million and consisted of the acquisition of shares upto the (de facto) control date of \u20ac\u00a0348.8 million, the shares acquired at the (de facto) control date of \u20ac\u00a017.2 million and the shares purchased after the (de facto) control date of \u20ac\u00a01,885.1 million. The impact of these transactions on book values and results is included in the table below.
| \u00a0 | 2022 |
|---|---|
Book value of the associate at January 1, 2022 | 1,198.4 |
Shares acquired up to the (de facto) control date | 348.8 |
Other movements in the associate | 43.0 |
Total book value of the associate | 1,590.2 |
Revaluation of the associate | 656.2 |
Shares acquired at the (de facto) control date | 17.2 |
Book value of the controlling interest | 2,263.6 |
Book value of the non-controlling interest | 1,877.4 |
Book value of the subsidiary at the (de facto) control date | 4,141.0 |
| \u00a0 | \u00a0 |
Purchase of non-controlling interest | 1,885.1 |
Book value of acquired non-controlling interest | 1,830.3 |
Charged to retained earnings | (54.8) |
Ducky
In May 2022, Pro Gamers Group (64.5% HAL) completed the acquisition of DuckyChannel International Co., Ltd. (\u2018Ducky\u2019). Ducky develops and manufactures mechanical keyboards and had 2022 sales of \u20ac\u00a022.1 million. The intangible assets recognized are the Ducky trademark and goodwill of \u20ac\u00a031.5 million, related to the knowledge of the workforce and the expected growth and profitability of the company.
Details on the acquisitions performed during the year are as follows:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Cash paid | 17.2 | 46.8 | 68.3 | 132.3 |
Future consideration | - | - | 6.2 | 6.2 |
Equity instruments issued | - | - | 15.0 | 15.0 |
Fair value of previously held equity interests | 2,246.4 | - | - | 2,246.4 |
Fair value of net assets acquired | (2,916.4) | (15.3) | (50.5) | (2,982.2) |
Non-controlling interest recognized at fair value | 1,877.5 | - | (0.1) | 1,877.4 |
Goodwill | 1,224.7 | 31.5 | 45.5 | 1,301.7 |
Badwill (in consolidated statement of income) | - | - | (6.6) | (6.6) |
The goodwill on the acquisitions is not deductible for tax purposes.
Details of the net assets acquired are set out below:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Property, plant and equipment and investment properties | 2,984.5 | 0.1 | 21.6 | 3,006.2 |
Right-of-use assets | 128.9 | 0.2 | 3.5 | 132.6 |
Intangible assets | 414.7 | 10.3 | 12.3 | 437.3 |
Investments in associates and joint arrangements | 70.1 | - | - | 70.1 |
Other financial assets | 2.7 | 0.1 | 1.0 | 3.8 |
Deferred tax assets | 9.1 | - | 1.1 | 10.2 |
Other non-current assets | - | 0.2 | - | 0.2 |
Cash | 537.5 | 3.0 | 13.7 | 554.2 |
Assets held for sale | 233.2 | - | - | 233.2 |
Non-current debt | (373.6) | - | (4.1) | (377.7) |
Non-current provisions | (119.5) | - | - | (119.5) |
Lease liabilities | (133.6) | (0.2) | (3.4) | (137.2) |
Deferred tax liabilities | (139.3) | (2.1) | (5.8) | (147.2) |
Other non-current liabilities | - | - | (0.5) | (0.5) |
Current debt | (22.7) | - | (0.2) | (22.9) |
Accounts receivable | 415.1 | 2.7 | 16.8 | 434.6 |
Inventories | 150.2 | 4.4 | 15.1 | 169.7 |
Other current assets | 332.8 | - | 2.4 | 335.2 |
Contract assets | 386.6 | - | - | 386.6 |
Income tax payable | (128.2) | - | (0.9) | (129.1) |
Accounts payable | (224.1) | (1.9) | (9.5) | (235.5) |
Accrued expenses | (1,107.1) | - | (9.4) | (1,116.5) |
Contract liabilities | (430.3) | - | (0.6) | (430.9) |
Other current liabilities | (8.8) | (1.5) | (2.5) | (12.8) |
Current provisions | (61.7) | - | (0.1) | (61.8) |
Net working capital | (675.5) | 3.7 | 11.3 | (660.5) |
Non-controlling interest | (0.1) | - | - | (0.1) |
Fair value of net assets acquired | 2,916.4 | 15.3 | 50.5 | 2,982.2 |
The afore-mentioned acquisitions generated the following results in 2022, respectively would have generated the following results, should they have been consolidated for the full year:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Contribution to 2022 revenues | 1,968.0 | 12.0 | 77.3 | 2,057.3 |
Contribution to 2022 operating income | 147.0 | 4.2 | 9.8 | 161.0 |
Contribution to 2022 net income | 125.0 | 2.6 | 4.5 | 132.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
2022 full-year revenues | 3,578.2 | 22.1 | 156.2 | 3,756.5 |
2022 full-year operating income | 322.6 | 7.9 | 14.0 | 344.5 |
2022 full-year net income | 241.2 | 6.4 | 6.2 | 253.8 |
Acquisition costs charged to the other operating expenses, related to continuing operations, in the consolidated statement of income amounted to \u20ac\u00a010.2 million.
| \u00a0 | Total |
|---|---|
Cash paid for the above acquisitions1 | 132.3 |
Cash acquired in the above acquisitions | (554.2) |
Cash outflow due to acquisition of subsidiaries, net of cash acquired | (421.9) |
Acquisition of and investments in associates and joint arrangements | 894.7 |
Acquisition of Boskalis shares after the (de facto) control date | 1,885.1 |
Cash outflow due to acquisition of associates, joint arrangements and subsidiaries, net of cash acquired | 2,357.9 |
Divestments
Floramedia
On May 31, 2022, HAL sold its ownership interest in Floramedia Group B.V. (\u2018Floramedia\u2019). Floramedia is active in specialty printing, marketing and communication for the green sector. HAL became a shareholder in Floramedia via the acquisition of Mercurius Groep Holding B.V. in 1999.
Livit
On May 2, 2022, HAL completed the sale of its ownership interest in Orthopedie Investments Holding B.V. (\u2018Livit\u2019). Livit manufactures and sells orthopedic and other medical aids to end-customers. Livit operates a network of specialized care centers and fitting locations throughout the Netherlands and was acquired in 2007.
Vopak - Canada terminals
In May 2022, Vopak completed the earlier announced divestment of its 100% shareholding in Vopak Terminals of Canada Inc. and Vopak Terminals of Eastern Canada Inc. The total agreed transaction value including deferred consideration amounted to \u20ac\u00a0129 million (CAD 168 million). The sale generated net cash proceeds of \u20ac\u00a064.7 million in 2022. In May 2023, the remaining consideration of CAD 84 million will be received.
Vopak - India CRL terminal
In May 2022, Vopak transferred its full ownership of the CRL terminal in Kandla India to Aegis Vopak Terminals Ltd (refer to note 6). The purchase consideration, including deferred and contingent components, amounted to approximately \u20ac\u00a039.3million, with net cash proceeds in 2022 of \u20ac\u00a023.9 million.
MYLAPS
On July 8, 2022, HAL sold its ownership interest in MYLAPS B.V. (\u2018MYLAPS\u2019). MYLAPS is active in the development and production of identification and timing equipment for sports events.
Vopak - Vopak Agencies
In December 2022, Vopak completed the divestment of its 100% shareholding in Vopak Agencies B.V. and its 50% shareholding in Diize B.V. The purchase consideration amounted to \u20ac\u00a016.4 million and was received upon execution of the transaction.
The total capital gain on the above divestments of subsidiaries is \u20ac\u00a099.7 million and is included in other income.
The 2022 divestments of subsidiaries, associates and joint ventures resulted in the following cash flows:
| \u00a0 | Vopak | Other | Total |
|---|---|---|---|
Cash received from divestment of subsidiaries | 104.8 | 134.8 | 239.6 |
Cash sold in divestments of subsidiaries | - | (13.0) | (13.0) |
Net cash inflow resulting from divestment of subsidiaries | 104.8 | 121.8 | 226.6 |
Disposal of associates and joint arrangements, including capital repayments1 | 4.6 | 152.6 | 157.2 |
Cash inflow due to divestment of associates, joint arrangements and subsidiaries, net of cash sold | 109.4 | 274.4 | 383.8 |
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of the business combination and the fair value of any contingent consideration to be transferred. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree is measured, on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets.
If the business combination is achieved in stages, the Company\u2019s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and the difference with the book value of the previously held equity interest is recognized in the consolidated statement of income. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired, is recorded as goodwill. If the total of the consideration transferred, the non-controlling interest recognized and the fair value of the previously held interest is less than the fair value of the net assets of the subsidiary acquired (\u2018badwill\u2019), the difference is directly recognized in the consolidated statement of income. Acquisition-related costs are expensed as incurred. Subsequent changes to the fair value of the contingent consideration classified as an asset or liability are recognized in the consolidated statement of income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Critical accounting estimates and judgments
When a company is acquired, a value is assigned to intangible assets such as trademarks and the customer relationships. The determination of the value at the time of acquisition and the estimated useful life are subject to judgment. Assumptions by management underlying the estimation of fair value include the future cash flows expected from the asset and discount rates. Useful life is estimated using past experience and relevant industry practices.
Acquisitions
Boskalis
Royal Boskalis N.V. (\u2018Boskalis\u2019) is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors, based in Papendrecht, the Netherlands. The company provides creative and innovative all-round solutions to infrastructural challenges in the maritime, coastal and delta regions of the world. With core activities such as coastal defense, riverbank protection and land reclamation, Boskalis is able to provide adaptive and mitigating solutions to combat the effects of climate change, such as extreme weather conditions and rising sea levels, as well as delivering solutions for the increasing need for space in coastal and delta regions across the world. The company facilitates the development of offshore energy infrastructure, including renewable wind energy. Boskalis is furthermore active in the construction and maintenance of ports, waterways, access channels and civil infrastructure. Boskalis has a versatile fleet of more than 500 vessels and floating equipment and approximately 10,000 employees, including associates.
Full-year revenues for\u00a02022 amounted to \u20ac\u00a03,578 million (2021: \u20ac\u00a02,957 million). Net income for 2022 amounted\u00a0to \u20ac\u00a0241 million (2021: \u20ac\u00a0151 million). At the end of 2022 the order book of\u00a0the company amounted to \u20ac\u00a06.1 billion\u00a0compared to \u20ac\u00a05.4 billion at the end of\u00a02021.
On June 24, 2022, HAL made an all-cash, voluntary offer for all issued and outstanding ordinary shares of Boskalis of \u20ac\u00a032.50 (cum-dividend) per share. The intention for this offer was announced on March 10, 2022. The offer, increased to \u20ac\u00a033.00 (cum dividend) on August 29, 2022, was declared unconditional on September 7, 2022. Following the post-acceptance period, the Company increased its shareholding in Boskalis through purchases in the open market and through tendered shares to 98.9% at the end of the year (2021: 45.54%). Since the announcement of the intended offer on March 10, 2022, HAL acquired shares in Boskalis. As a result of the increase in shareholding, HAL obtained de facto control over Boskalis on July 5, 2022, as the size of its shareholding provided HAL the practical ability to direct the relevant activities of Boskalis unilaterally, considering in particular that HAL could unilaterally adopt, approve or block any decisions with respect to Boskalis that required approval from the supervisory board of Boskalis, that HAL could unilaterally appoint, suspend or dismiss any member of the board of management and/or any member of the supervisory board or unilaterally block a binding nomination (a majority of two-thirds of the votes cast and representing more than half of the issued share capital being required) and that HAL did therefore at that point in time have the current and practical ability to direct the relevant activities of Boskalis. Until that date HAL did not have de facto control over Boskalis and the shares acquired in 2022 up to the de facto control date were accounted for as an investment in an associate in accordance with IAS 28, for an amount of \u20ac\u00a0348.8 million.
In accordance with IFRS, the equity interest in Boskalis that was held prior to obtaining control (classified as an associate and accounted for using the equity method) was revalued to fair value, as reflected by the share price at the date of obtaining de facto control. This resulted in a revaluation gain of \u20ac\u00a0656.2 million, included in share of results from associates and joint ventures (refer to note 25) and a subsequent charge to retained earnings of \u20ac\u00a054.8 million with respect to shares acquired, for an amount of \u20ac\u00a01,885.1 million, after the de facto control date, as this represented transactions with non-controlling interests. At year-end, a non-controlling interest remained of \u20ac\u00a047.1 million. The primary intangible assets recognized in the purchase price allocation include the Boskalis brand name and the order portfolio. In addition, the company\u2019s vessels and other real estate were revalued at market value. Goodwill was recognized in amount of \u20ac\u00a01,224.7 million, related to the knowledge of the workforce, the execution capabilities of the company and the expected growth and profitability of the company.
The total cash outflow during 2022 with respect to the acquisition of Boskalis amounted to \u20ac\u00a02,251.1 million and consisted of the acquisition of shares upto the (de facto) control date of \u20ac\u00a0348.8 million, the shares acquired at the (de facto) control date of \u20ac\u00a017.2 million and the shares purchased after the (de facto) control date of \u20ac\u00a01,885.1 million. The impact of these transactions on book values and results is included in the table below.
| \u00a0 | 2022 |
|---|---|
Book value of the associate at January 1, 2022 | 1,198.4 |
Shares acquired up to the (de facto) control date | 348.8 |
Other movements in the associate | 43.0 |
Total book value of the associate | 1,590.2 |
Revaluation of the associate | 656.2 |
Shares acquired at the (de facto) control date | 17.2 |
Book value of the controlling interest | 2,263.6 |
Book value of the non-controlling interest | 1,877.4 |
Book value of the subsidiary at the (de facto) control date | 4,141.0 |
| \u00a0 | \u00a0 |
Purchase of non-controlling interest | 1,885.1 |
Book value of acquired non-controlling interest | 1,830.3 |
Charged to retained earnings | (54.8) |
Ducky
In May 2022, Pro Gamers Group (64.5% HAL) completed the acquisition of DuckyChannel International Co., Ltd. (\u2018Ducky\u2019). Ducky develops and manufactures mechanical keyboards and had 2022 sales of \u20ac\u00a022.1 million. The intangible assets recognized are the Ducky trademark and goodwill of \u20ac\u00a031.5 million, related to the knowledge of the workforce and the expected growth and profitability of the company.
Details on the acquisitions performed during the year are as follows:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Cash paid | 17.2 | 46.8 | 68.3 | 132.3 |
Future consideration | - | - | 6.2 | 6.2 |
Equity instruments issued | - | - | 15.0 | 15.0 |
Fair value of previously held equity interests | 2,246.4 | - | - | 2,246.4 |
Fair value of net assets acquired | (2,916.4) | (15.3) | (50.5) | (2,982.2) |
Non-controlling interest recognized at fair value | 1,877.5 | - | (0.1) | 1,877.4 |
Goodwill | 1,224.7 | 31.5 | 45.5 | 1,301.7 |
Badwill (in consolidated statement of income) | - | - | (6.6) | (6.6) |
The goodwill on the acquisitions is not deductible for tax purposes.
Details of the net assets acquired are set out below:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Property, plant and equipment and investment properties | 2,984.5 | 0.1 | 21.6 | 3,006.2 |
Right-of-use assets | 128.9 | 0.2 | 3.5 | 132.6 |
Intangible assets | 414.7 | 10.3 | 12.3 | 437.3 |
Investments in associates and joint arrangements | 70.1 | - | - | 70.1 |
Other financial assets | 2.7 | 0.1 | 1.0 | 3.8 |
Deferred tax assets | 9.1 | - | 1.1 | 10.2 |
Other non-current assets | - | 0.2 | - | 0.2 |
Cash | 537.5 | 3.0 | 13.7 | 554.2 |
Assets held for sale | 233.2 | - | - | 233.2 |
Non-current debt | (373.6) | - | (4.1) | (377.7) |
Non-current provisions | (119.5) | - | - | (119.5) |
Lease liabilities | (133.6) | (0.2) | (3.4) | (137.2) |
Deferred tax liabilities | (139.3) | (2.1) | (5.8) | (147.2) |
Other non-current liabilities | - | - | (0.5) | (0.5) |
Current debt | (22.7) | - | (0.2) | (22.9) |
Accounts receivable | 415.1 | 2.7 | 16.8 | 434.6 |
Inventories | 150.2 | 4.4 | 15.1 | 169.7 |
Other current assets | 332.8 | - | 2.4 | 335.2 |
Contract assets | 386.6 | - | - | 386.6 |
Income tax payable | (128.2) | - | (0.9) | (129.1) |
Accounts payable | (224.1) | (1.9) | (9.5) | (235.5) |
Accrued expenses | (1,107.1) | - | (9.4) | (1,116.5) |
Contract liabilities | (430.3) | - | (0.6) | (430.9) |
Other current liabilities | (8.8) | (1.5) | (2.5) | (12.8) |
Current provisions | (61.7) | - | (0.1) | (61.8) |
Net working capital | (675.5) | 3.7 | 11.3 | (660.5) |
Non-controlling interest | (0.1) | - | - | (0.1) |
Fair value of net assets acquired | 2,916.4 | 15.3 | 50.5 | 2,982.2 |
The afore-mentioned acquisitions generated the following results in 2022, respectively would have generated the following results, should they have been consolidated for the full year:
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Contribution to 2022 revenues | 1,968.0 | 12.0 | 77.3 | 2,057.3 |
Contribution to 2022 operating income | 147.0 | 4.2 | 9.8 | 161.0 |
Contribution to 2022 net income | 125.0 | 2.6 | 4.5 | 132.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
2022 full-year revenues | 3,578.2 | 22.1 | 156.2 | 3,756.5 |
2022 full-year operating income | 322.6 | 7.9 | 14.0 | 344.5 |
2022 full-year net income | 241.2 | 6.4 | 6.2 | 253.8 |
Acquisition costs charged to the other operating expenses, related to continuing operations, in the consolidated statement of income amounted to \u20ac\u00a010.2 million.
| \u00a0 | Total |
|---|---|
Cash paid for the above acquisitions1 | 132.3 |
Cash acquired in the above acquisitions | (554.2) |
Cash outflow due to acquisition of subsidiaries, net of cash acquired | (421.9) |
Acquisition of and investments in associates and joint arrangements | 894.7 |
Acquisition of Boskalis shares after the (de facto) control date | 1,885.1 |
Cash outflow due to acquisition of associates, joint arrangements and subsidiaries, net of cash acquired | 2,357.9 |
Divestments
Floramedia
On May 31, 2022, HAL sold its ownership interest in Floramedia Group B.V. (\u2018Floramedia\u2019). Floramedia is active in specialty printing, marketing and communication for the green sector. HAL became a shareholder in Floramedia via the acquisition of Mercurius Groep Holding B.V. in 1999.
Livit
On May 2, 2022, HAL completed the sale of its ownership interest in Orthopedie Investments Holding B.V. (\u2018Livit\u2019). Livit manufactures and sells orthopedic and other medical aids to end-customers. Livit operates a network of specialized care centers and fitting locations throughout the Netherlands and was acquired in 2007.
Vopak - Canada terminals
In May 2022, Vopak completed the earlier announced divestment of its 100% shareholding in Vopak Terminals of Canada Inc. and Vopak Terminals of Eastern Canada Inc. The total agreed transaction value including deferred consideration amounted to \u20ac\u00a0129 million (CAD 168 million). The sale generated net cash proceeds of \u20ac\u00a064.7 million in 2022. In May 2023, the remaining consideration of CAD 84 million will be received.
Vopak - India CRL terminal
In May 2022, Vopak transferred its full ownership of the CRL terminal in Kandla India to Aegis Vopak Terminals Ltd (refer to note 6). The purchase consideration, including deferred and contingent components, amounted to approximately \u20ac\u00a039.3million, with net cash proceeds in 2022 of \u20ac\u00a023.9 million.
MYLAPS
On July 8, 2022, HAL sold its ownership interest in MYLAPS B.V. (\u2018MYLAPS\u2019). MYLAPS is active in the development and production of identification and timing equipment for sports events.
Vopak - Vopak Agencies
In December 2022, Vopak completed the divestment of its 100% shareholding in Vopak Agencies B.V. and its 50% shareholding in Diize B.V. The purchase consideration amounted to \u20ac\u00a016.4 million and was received upon execution of the transaction.
The total capital gain on the above divestments of subsidiaries is \u20ac\u00a099.7 million and is included in other income.
The 2022 divestments of subsidiaries, associates and joint ventures resulted in the following cash flows:
| \u00a0 | Vopak | Other | Total |
|---|---|---|---|
Cash received from divestment of subsidiaries | 104.8 | 134.8 | 239.6 |
Cash sold in divestments of subsidiaries | - | (13.0) | (13.0) |
Net cash inflow resulting from divestment of subsidiaries | 104.8 | 121.8 | 226.6 |
Disposal of associates and joint arrangements, including capital repayments1 | 4.6 | 152.6 | 157.2 |
Cash inflow due to divestment of associates, joint arrangements and subsidiaries, net of cash sold | 109.4 | 274.4 | 383.8 |
Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
The movements of investments accounted for using the equity method are set out below.
| \u00a0 | Associates | Joint ventures | Total |
|---|---|---|---|
Share of net assets | 2,017.8 | 1,056.3 | 3,074.1 |
Goodwill | 310.9 | 74.2 | 385.1 |
Balance on January 1, 2021 | 2,328.7 | 1,130.5 | 3,459.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 6.7 | 145.0 | 151.7 |
Consolidation | 0.4 | - | 0.4 |
Disposals | (17.3) | (1.0) | (18.3) |
Share of results - real estate | - | 42.3 | 42.3 |
Share of results - discontinued operations | 3.1 | (0.3) | 2.8 |
Share of results - other | 223.8 | 160.8 | 384.6 |
Share of other comprehensive income | 67.5 | 9.4 | 76.9 |
Dividends | (114.7) | (178.4) | (293.1) |
Reclassification | (0.2) | (2.1) | (2.3) |
Reclassification to held for sale | 3.1 | (26.1) | (23.0) |
Impairments | - | (43.5) | (43.5) |
Exchange differences | 35.3 | 82.8 | 118.1 |
Other | (6.7) | - | (6.7) |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 2,209.6 | 1,252.7 | 3,462.3 |
Goodwill | 320.1 | 66.7 | 386.8 |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 644.2 | 319.7 | 963.9 |
Consolidation | 10.8 | 59.3 | 70.1 |
Disposals | (47.4) | (2.5) | (49.9) |
Share of results - real estate | - | 50.0 | 50.0 |
Share of results - other | 893.4 | 143.9 | 1,037.3 |
Share of other comprehensive income | 191.6 | 46.7 | 238.3 |
Dividends | (141.2) | (188.1) | (329.3) |
Impairments | (165.8) | - | (165.8) |
Impairments reversal | - | 3.8 | 3.8 |
Reclassification1 | (2,262.5) | - | (2,262.5) |
Reclassification to held for sale | (1.5) | (77.8) | (79.3) |
Exchange differences | 8.4 | 29.3 | 37.7 |
Other | (4.6) | - | (4.6) |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 1,418.3 | 1,540.3 | 2,958.6 |
Goodwill | 236.8 | 163.4 | 400.2 |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
The amounts recognized in the statement of financial position comprise:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Publicly traded | 804.9 | 1,796.2 |
Other | 2,553.9 | 2,052.9 |
| \u00a0 | 3,358.8 | 3,849.1 |
Vopak - PT2SB
In March 2020, a fire took place at an anchor client of PT2SB (25% Vopak) in Malaysia, leading to a subsequent closure of the facility. Following another incident in 2022, the refinery is only expected to resume operations in the first half of 2023. At December 31, 2022, PT2SB has reported \u20ac\u00a0173 million in net accounts receivable from this client (December 2021: \u20ac\u00a088 million). The refinery closure impacted the client\u2019s liquidity position, which may impact PT2SB\u2019s financial performance in 2023.
Investments
Prodrive Technologies
On February 17, 2022, HAL completed the acquisition of 31.45% of the shares in Prodrive Technologies Group B.V. (\u2018Prodrive Technologies\u2019). The company is active in the research, development and manufacturing of high-tech electronics, software and mechatronic products and systems. Prodrive Technologies provides solutions for, among others, the semiconductor, medical and electric mobility industries. As part of the notional purchase price allocation procedures an amount of \u20ac\u00a093.7 million was recognized as goodwill, which was part of the inititial carrying value of this associate. In the fourth quarter of 2022 an impairment of \u20ac\u00a0129.6 million was recorded on this associate (refer to note 35) and a related earn-out liability of \u20ac\u00a019.0 was released.
Real estate joint ventures
The gross investment in joint ventures belonging to the real estate segment increased by \u20ac\u00a085 million during 2022.
Vopak - Aegis
In the second quarter of 2022, Vopak acquired a 49% shareholding in the Aegis Vopak Terminals Ltd. entity (joint venture) and a 24% shareholding in the Hindustan Aegis LPG Ltd. entity (associate). The acquisition-date fair value of the consideration transferred amounted to \u20ac\u00a0226.3 million, of which \u20ac\u00a0174.2 million was paid in cash and \u20ac\u00a052.1 million is contingent upon the completion of certain projects (\u20ac\u00a032.6 million) and exceeding certain revenue targets in 2025 (\u20ac\u00a019.5 million). The company is still working on the notional purchase price allocation for these transactions and expects to finalize this within twelve months after acquisition date.
Divestments
Vopak - Diize
In December 2022 Vopak divested 50% of its shareholding in Diize B.V. The remaining 50% of the former subsidiary was retained and classified as a joint venture.
Vopak - ThaiTank terminal
In December 2022, Vopak recorded an exceptional gain of \u20ac\u00a05.2 million related to the dilution of 14% of its equity interest in ThaiTank Terminal Ltd. After the dilution, Vopak continues to hold an equity interest of 35% that continues to be classified as a joint venture.
Vopak - German LNG terminal
As a result of the divestment of the 33.3% shareholding in the German LNG Terminal GmbH, an impairment reversal of \u20ac\u00a03.8 million was recorded within exceptional items (refer to note 35). This reversal partially offsets the impairment of \u20ac\u00a010.8 million recognized in 2021. Contingent proceeds dependent on the final investment decision of the project amounted to \u20ac\u00a08.9 million. As at the reporting date respective conditions were not yet met.
Quoted associate(s)
The difference between the market value of the Company\u2019s share in its publicly traded associate SBM Offshore N.V. (2021: including Boskalis) and the book value is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Market value | 606.0 | 2,061.2 |
Book value | 804.9 | 1,796.2 |
| \u00a0 | (198.9) | 265.0 |
Real estate joint ventures
The financial position of the U.S. real estate joint ventures included in the real estate segment can be summarized as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Properties in operation and under construction | 554.5 | 477.1 |
Project debt | (339.6) | (322.5) |
Non-controlling interest | (39.8) | (21.6) |
HAL equity share | 175.1 | 133.0 |
The real estate portfolio consisted at the end of 2022 of 16 joint ventures of which 2 were invested in office buildings and 14 in residential real estate. The total (expected) cost of the real estate portfolio amounted to $ 1,138.1 million (\u20ac\u00a01,062.5 million) as of December 31, 2022 (2021: $\u00a0987.8 million, \u20ac\u00a0867.5 million). HAL\u2019s total equity commitment for these projects amounts to $ 306.2 million (\u20ac\u00a0285.9 million, 2021: $\u00a0289.1 million, \u20ac\u00a0253.9 million) of which $\u00a080.0 million (\u20ac\u00a074.7 million) was not yet spent as of December 31, 2022 (2021: $\u00a080.4 million, \u20ac\u00a070.6 million). As certain properties are under construction, the income statements of these joint ventures on a 100% basis are not significant in relation to these financial statements. Revenues for 2022 amounted to \u20ac\u00a030.0 million (2021: \u20ac\u00a021.2 million).
Principal associate
As of 2022, the principal (non-consolidated) associate of the Company is SBM Offshore N.V. (\u2018SBM Offshore\u2019) in which the Company has a 22.88% ownership interest. SBM Offshore is incorporated in the Netherlands and is listed on Euronext Amsterdam. The company designs, builds, installs and operates offshore floating facilities for the offshore energy industry.
Set out below is the summarized financial information for SBM Offshore. This summary is based on publicly available information.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Current | \u00a0 | \u00a0 |
Cash and cash equivalents | 683.0 | 1,021.0 |
Other current assets | 8,388.0 | 5,395.0 |
Total current assets | 9,071.0 | 6,416.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities (excluding trade payables) | 1,883.0 | 1,899.0 |
Other current liabilities (including trade payables) | 1,720.0 | 1,299.0 |
Total current liabilities | 3,603.0 | 3,198.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current | \u00a0 | \u00a0 |
Assets | 6,818.0 | 6,795.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities | 6,898.0 | 6,090.0 |
Other liabilities | 474.0 | 387.0 |
Total non-current liabilities | 7,372.0 | 6,477.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-controlling interest | 1,517.0 | 957.0 |
| \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,397.0 | 2,579.0 |
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Revenue | 4,913.0 | 3,747.0 |
Depreciation, amortization and impairment | (189.0) | (88.0) |
Financial income | 12.0 | 3.0 |
Financial expense | (385.0) | (304.0) |
Profit / (loss) before tax | 660.0 | 543.0 |
Profit / (loss) after tax for owners of parent | 450.0 | 400.0 |
Other comprehensive income for owners of parent | 526.0 | (51.0) |
Total comprehensive income for owners of parent | 976.0 | 349.0 |
Reconciliation of the summarized financial information for SBM Offshore:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Net assets January 1 | 2,579.0 | 2,556.0 |
Profit / (loss) for the period | 450.0 | 400.0 |
Other comprehensive income | 526.0 | (51.0) |
Transactions with owners | (158.0) | (326.0) |
Net assets December 31 | 3,397.0 | 2,579.0 |
| \u00a0 | \u00a0 | \u00a0 |
| \u00a0 | \u20ac\u00a0'm | \u20ac\u00a0'm |
Interest in SBM Offshore (22.88%, 2021: 22.88%) | 736.0 | 530.0 |
Intangible assets recognized in purchase price allocation | 25.9 | 27.3 |
Goodwill | 43.0 | 40.5 |
Book value | 804.9 | 597.8 |
We refer to note 43 with respect to summarized financial information on associates and joint ventures of Vopak.
Associates and joint ventures are accounted for using the equity method, which involves recognition in the consolidated statement of income the Company\u2019s share of the net result of the associate or joint venture. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Share of results1 | 381.2 | 384.6 |
Revaluation upon gaining control | 656.2 | - |
Impairments | (165.8) | (43.5) |
Reversal of impairments | 3.8 | - |
Continuing operations | 875.4 | 341.1 |
Discontinued operations | - | 2.8 |
| \u00a0 | 875.4 | 343.9 |
The revaluation gain in 2022 related to the revaluation of the previously held equity interest of the Company in Boskalis upon gaining de facto control over the company (refer to note 3).
For details on impairments, reference is made to note 35.
Non-controlling\u00a0interests\u00a0with\u00a0respect\u00a0to\u00a0Vopak and\u00a0Safilo are significant to the Company. The non-controlling interests in Vopak and Safilo can\u00a0be detailed\u00a0as\u00a0follows:
| \u00a0 | Vopak | Vopak | Safilo | Safilo | Total | Total |
|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Profit / (loss) allocated to the non-controlling interest during the year | (57.3) | 140.1 | 23.3 | 12.7 | (34.0) | 152.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Accumulated non-controlling interest at December 31 | 1,703.3 | 1,805.1 | 247.0 | 217.6 | 1,950.3 | 2,022.7 |
Set\u00a0out\u00a0below\u00a0is\u00a0the\u00a0summarized financial\u00a0information\u00a0for\u00a0Vopak and Safilo. This is the financial information\u00a0as\u00a0reported\u00a0by\u00a0these companies, including purchase price accounting adjustments made by\u00a0the\u00a0Company.
| \u00a0 | Vopak | Safilo | ||
|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 |
Summarized balance sheet | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
As of December 31 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 520.6 | 567.7 | 598.0 | 564.2 |
Liabilities | (1,162.2) | (960.2) | (312.2) | (310.6) |
| \u00a0 | (641.6) | (392.5) | 285.8 | 253.6 |
Non-current | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 6,546.7 | 6,587.1 | 388.4 | 406.6 |
Liabilities | (2,691.9) | (2,780.9) | (219.0) | (273.7) |
| \u00a0 | 3,854.8 | 3,806.2 | 169.4 | 132.9 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,213.2 | 3,413.7 | 455.2 | 386.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Summarized income statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
For the year | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue | 1,430.9 | 1,269.0 | 1,075.5 | 969.6 |
Profit / (loss) before tax | (38.2) | 303.2 | 57.5 | 28.5 |
Income tax expense | (100.8) | (60.0) | (9.3) | (12.4) |
Profit / (loss) after income tax | (139.0) | 243.2 | 48.2 | 16.1 |
Other comprehensive income | 132.6 | 168.3 | - | 31.2 |
Total comprehensive income (CI) | (6.4) | 411.5 | 48.2 | 47.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
CI allocated to non-controlling interest | 37.8 | 37.0 | 1.9 | 3.8 |
Dividend paid to non-controlling interest | 33.1 | 25.0 | 0.9 | 1.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Summarized cash flow statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
For the year | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash from operating activities | 872.1 | 741.1 | 17.8 | 25.2 |
Interest paid net | (96.9) | (70.7) | (6.2) | (6.9) |
Income tax (paid) / received | (55.9) | (65.0) | (2.4) | (1.1) |
Net cash from operating activities | 719.3 | 605.4 | 9.2 | 17.2 |
Net cash from investing activities | (489.4) | (588.4) | (15.6) | (9.8) |
Net cash from financing activities | (249.1) | (15.0) | (16.8) | (0.8) |
Increase/(decrease) in cash and cash equivalents | (19.2) | 2.0 | (23.2) | 6.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents at beginning of year | 73.4 | 68.3 | 99.0 | 88.9 |
Cash included in assets held for sale beginning of year | (21.8) | - | - | - |
Effect of exchange rate changes and reclassifications | 1.4 | 3.1 | 1.9 | 3.4 |
Increase/(decrease) in cash and cash equivalents | (19.2) | 2.0 | (23.2) | 6.6 |
Cash and cash equivalents at end of year | 33.8 | 73.4 | 77.7 | 98.9 |
The summarized financial information of the associates and joint ventures of Vopak is as follows.
Summarized\u00a0statements\u00a0of\u00a0financial\u00a0position on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Non-current assets | 205.4 | 209.9 | 4,657.7 | 3,771.8 | 1,858.2 | 1,984.8 | 1,205.5 | 1,130.8 | 7,926.8 | 7,097.3 |
Cash and cash equivalents | 10.7 | 10.6 | 579.9 | 465.4 | 163.4 | 139.4 | 17.7 | 19.6 | 771.7 | 635.0 |
Other current assets | 10.0 | 17.3 | 243.8 | 273.9 | 85.2 | 104.1 | 58.5 | 51.1 | 397.5 | 446.4 |
Total assets | 226.1 | 237.8 | 5,481.4 | 4,511.1 | 2,106.8 | 2,228.3 | 1,281.7 | 1,201.5 | 9,096.0 | 8,178.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial non-current liabilities | 136.0 | 149.6 | 1,861.6 | 1,795.2 | 922.3 | 989.3 | 386.7 | 363.1 | 3,306.6 | 3,297.2 |
Other non-current liabilities | 12.7 | 13.8 | 137.1 | 179.7 | 183.0 | 250.8 | 2.3 | 9.1 | 335.1 | 453.4 |
Financial current liabilities | 15.6 | 17.6 | 516.2 | 177.3 | 138.6 | 125.6 | 14.2 | 16.6 | 684.6 | 337.1 |
Other current liabilities | 20.5 | 13.9 | 352.5 | 263.5 | 75.7 | 62.6 | 47.5 | 48.0 | 496.2 | 388.0 |
Total liabilities | 184.8 | 194.9 | 2,867.4 | 2,415.7 | 1,319.6 | 1,428.3 | 450.7 | 436.8 | 4,822.5 | 4,475.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net assets | 41.3 | 42.9 | 2,614.0 | 2,095.4 | 787.2 | 800.0 | 831.0 | 764.7 | 4,273.5 | 3,703.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net assets | 19.1 | 20.0 | 983.7 | 817.6 | 405.4 | 408.7 | 289.2 | 258.8 | 1,697.4 | 1,505.1 |
Goodwill on acquisition | - | - | 112.1 | 12.4 | 31.7 | 31.4 | 36.6 | 34.4 | 180.4 | 78.2 |
Vopak\u2019s carrying amount of net assets | 19.1 | 20.0 | 1,095.8 | 830.0 | 437.1 | 440.1 | 325.8 | 293.2 | 1,877.8 | 1,583.3 |
Summarized\u00a0statements\u00a0of\u00a0total\u00a0comprehensive\u00a0income on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Revenues | 50.7 | 51.8 | 987.1 | 842.9 | 427.6 | 458.5 | 238.3 | 194.7 | 1,703.7 | 1,547.9 |
Operating expenses | (19.3) | (18.5) | (290.9) | (192.1) | (109.9) | (99.9) | (150.8) | (124.2) | (570.9) | (434.7) |
Depreciation, amortization and impairment | (13.2) | (13.2) | (236.5) | (210.7) | (161.4) | (120.4) | (28.8) | (30.1) | (439.9) | (374.4) |
Operating profit (EBIT) | 18.2 | 20.1 | 459.7 | 440.1 | 156.3 | 238.2 | 58.7 | 40.4 | 692.9 | 738.8 |
Net finance income / (expense) | (4.9) | (5.6) | (88.9) | (56.7) | (70.2) | (65.5) | (17.1) | (12.9) | (181.1) | (140.7) |
Income tax | (2.4) | (2.7) | (35.4) | (37.4) | (34.9) | (62.1) | (0.1) | (0.2) | (72.8) | (102.4) |
Net profit | 10.9 | 11.8 | 335.4 | 346.0 | 51.2 | 110.6 | 41.5 | 27.3 | 439.0 | 495.7 |
Other comprehensive income | - | - | 87.1 | 44.2 | 46.5 | 22.9 | 42.8 | (7.4) | 176.4 | 59.7 |
Total comprehensive income | 10.9 | 11.8 | 422.5 | 390.2 | 97.7 | 133.5 | 84.3 | 19.9 | 615.4 | 555.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net profit | 3.0 | 4.0 | 119.2 | 125.0 | 26.5 | 36.5 | 13.6 | 6.8 | 162.3 | 172.3 |
Vopak\u2019s share of OCI | - | - | 24.0 | 12.5 | 23.2 | 11.4 | 21.4 | (3.7) | 68.6 | 20.2 |
Vopak\u2019s share of total comprehensive income | 3.0 | 4.0 | 143.2 | 137.5 | 49.7 | 47.9 | 35.0 | 3.1 | 230.9 | 192.5 |
Name | Country of incorporation | Nature of business | Interest in common shares | Interest in preferred shares | Non-controlling interest |
|---|---|---|---|---|---|
Subsidiaries | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
HAL Holding N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Real Estate Inc. | U.S.A. | Real estate | 100.0% | 0.0% | 0.0% |
HAL Investments B.V. | The Netherlands | Holding company | 100.0% | 0.0% | 0.0% |
Rotter y Krauss | Chile | Optical retail | 100.0% | 100.0% | 0.0% |
Koninklijke Boskalis N.V. | The Netherlands | Dredging and offshore | 98.9% | 0.0% | 1.1% |
FD Mediagroep B.V. | The Netherlands | Media | 97.8% | 100.0% | 2.2% |
Broadview Holding B.V. | The Netherlands | Industrial | 97.4% | 0.0% | 2.6% |
Koninklijke Ahrend B.V. | The Netherlands | Office furniture | 96.0% | 100.0% | 4.0% |
280ppm B.V. | The Netherlands | GHG reduction investments | 95.0% | 100.0% | 5.0% |
Infomedics Holding B.V. | The Netherlands | Financial services | 94.5% | 0.0% | 5.5% |
Timber and Building Supplies Holland N.V. | The Netherlands | Building materials | 94.3% | 0.0% | 5.7% |
AN Direct B.V. | The Netherlands | Hearing aids | 90.0% | 0.0% | 10.0% |
SB Real Estate | The Netherlands | Real estate | 90.0% | 0.0% | 10.0% |
Van Wijnen Holding B.V. | The Netherlands | Construction | 88.0% | 100.0% | 12.0% |
Atlas Professionals B.V. | The Netherlands | Staffing | 86.9% | 0.0% | 13.1% |
HR Top Holding B.V. | The Netherlands | HR services | 86.7% | 100.0% | 13.3% |
GreenV B.V. | The Netherlands | Greenhouse projects | 71.3% | 0.0% | 28.7% |
Pro Gamers Group | Germany | Computer gaming equipment | 64.3% | 79.4% | 35.7% |
Anthony Veder Group N.V. | Cura\u00e7ao | Shipping | 62.9% | 0.0% | 37.1% |
Auxilium GmbH | Germany | Orthopedic devices | 53.8% | 100.0% | 46.2% |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Controlled minority interests | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Safilo Group S.p.A. | Italy | Optical products | 49.84% | 0.00% | 50.16% |
Koninklijke Vopak N.V. | The Netherlands | Tank terminals | 48.15% | 0.00% | 51.85% |
All the above entities are included in the consolidation. The proportion of the effective voting rights in the respective entity are virtually equal to the proportion of the ordinary shares held.
Non-controlled interests | \u00a0 |
|---|---|
Publicly traded | \u00a0 |
SBM Offshore N.V. | 22.88% |
| \u00a0 | \u00a0 |
Other | \u00a0 |
Coolblue B.V. | 49.00% |
Prodrive Technologies Group B.V. | 31.45% |
DMF Investment Management B.V. | 26.30% |
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of the business combination and the fair value of any contingent consideration to be transferred. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree is measured, on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets.
If the business combination is achieved in stages, the Company\u2019s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and the difference with the book value of the previously held equity interest is recognized in the consolidated statement of income. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired, is recorded as goodwill. If the total of the consideration transferred, the non-controlling interest recognized and the fair value of the previously held interest is less than the fair value of the net assets of the subsidiary acquired (\u2018badwill\u2019), the difference is directly recognized in the consolidated statement of income. Acquisition-related costs are expensed as incurred. Subsequent changes to the fair value of the contingent consideration classified as an asset or liability are recognized in the consolidated statement of income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Critical accounting estimates and judgments
When a company is acquired, a value is assigned to intangible assets such as trademarks and the customer relationships. The determination of the value at the time of acquisition and the estimated useful life are subject to judgment. Assumptions by management underlying the estimation of fair value include the future cash flows expected from the asset and discount rates. Useful life is estimated using past experience and relevant industry practices.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of the business combination and the fair value of any contingent consideration to be transferred. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree is measured, on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets.
If the business combination is achieved in stages, the Company\u2019s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and the difference with the book value of the previously held equity interest is recognized in the consolidated statement of income. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired, is recorded as goodwill. If the total of the consideration transferred, the non-controlling interest recognized and the fair value of the previously held interest is less than the fair value of the net assets of the subsidiary acquired (\u2018badwill\u2019), the difference is directly recognized in the consolidated statement of income. Acquisition-related costs are expensed as incurred. Subsequent changes to the fair value of the contingent consideration classified as an asset or liability are recognized in the consolidated statement of income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Critical accounting estimates and judgments
When a company is acquired, a value is assigned to intangible assets such as trademarks and the customer relationships. The determination of the value at the time of acquisition and the estimated useful life are subject to judgment. Assumptions by management underlying the estimation of fair value include the future cash flows expected from the asset and discount rates. Useful life is estimated using past experience and relevant industry practices.
| \u00a0 | Boskalis | Ducky | Other | Total |
|---|---|---|---|---|
Cash paid | 17.2 | 46.8 | 68.3 | 132.3 |
Future consideration | - | - | 6.2 | 6.2 |
Equity instruments issued | - | - | 15.0 | 15.0 |
Fair value of previously held equity interests | 2,246.4 | - | - | 2,246.4 |
Fair value of net assets acquired | (2,916.4) | (15.3) | (50.5) | (2,982.2) |
Non-controlling interest recognized at fair value | 1,877.5 | - | (0.1) | 1,877.4 |
Goodwill | 1,224.7 | 31.5 | 45.5 | 1,301.7 |
Badwill (in consolidated statement of income) | - | - | (6.6) | (6.6) |
Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets.
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is carried at cost less accumulated impairments. Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 35. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Movements for goodwill and other intangibles are as follows:
| \u00a0 | Goodwill | Software | Trade- | Customer relationships | Other | Total |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,225.6 | 399.3 | 420.6 | 421.5 | 152.0 | 2,619.0 |
Accumulated amortization and impairments | (693.6) | (236.4) | (168.4) | (179.1) | (60.4) | (1,337.9) |
Balance on January 1, 2021 | 532.0 | 162.9 | 252.2 | 242.4 | 91.6 | 1,281.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 597.7 | 76.0 | 0.3 | - | 17.5 | 691.5 |
Consolidation | - | 8.3 | 204.4 | 234.8 | 20.5 | 468.0 |
Purchase price accounting adjustments | 5.7 | - | - | - | - | 5.7 |
Disposals | - | (0.9) | - | - | 0.1 | (0.8) |
Amortization and impairments | - | (39.7) | (28.7) | (22.6) | (38.4) | (129.4) |
Reclassification | (1.4) | (20.5) | 23.7 | - | - | 1.8 |
Reclassification to held for sale | (25.9) | (30.7) | 0.9 | (0.2) | (1.8) | (57.7) |
Exchange differences and other | 25.4 | 2.6 | 13.8 | 7.0 | 4.2 | 53.0 |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,282.4 | 452.9 | 646.8 | 664.2 | 188.1 | 3,234.4 |
Accumulated amortization and impairments | (148.9) | (294.9) | (180.2) | (202.8) | (94.4) | (921.2) |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 1,301.7 | 32.5 | 0.3 | - | 17.4 | 1,351.9 |
Consolidation | - | 0.7 | 369.4 | 7.2 | 60.0 | 437.3 |
Disposals | - | (0.2) | (0.1) | - | - | (0.3) |
Amortization and impairments | (312.1) | (39.9) | (46.5) | (32.5) | (28.8) | (459.8) |
Reclassification | - | (0.9) | - | - | - | (0.9) |
Reclassification to held for sale | (18.0) | (2.8) | - | - | (1.5) | (22.3) |
Exchange differences and other | 11.7 | 1.8 | 10.3 | 1.8 | 1.7 | 27.3 |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 2,533.2 | 487.6 | 1,028.2 | 673.1 | 245.8 | 4,967.9 |
Accumulated amortization and impairments | (416.4) | (338.4) | (228.2) | (235.2) | (103.3) | (1,321.5) |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
The 2022 increases in trademarks and other intangibles (order book) mainly relate to Boskalis (refer to note 3). Information on impairment testing and impairments is included in note 35.
Goodwill
Unquoted
Goodwill for the unquoted segment has been tested for impairment losses at a level that reflects the way the operations are managed and with which the goodwill would naturally be associated. Management reviews the unquoted business performance on an entity level. Goodwill is also monitored on this level.
The recoverable amount of cash-generating units is generally determined based on the calculation of their value in use. These calculations use cash flow projections covering a five-year period. Cash flows beyond this five-year period are extrapolated using an estimated growth rate of nil. In 2022 the value-in-use method was applied to 51.7% of the goodwill tested (2021: all). For 48.3% (2021: none) of the goodwill tested, the fair value less cost of disposal was used, this related to Pro Gamers Group. These percentages do not take into account the goodwill related to the Boskalis acquisition, discussed below.
Key assumptions used for value-in-use calculations are included as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted investments | \u00a0 | \u00a0 |
Weighted-average increase in revenues | 6.6% | 5.9% |
Weighted-average gross margin | 54.5% | 56.0% |
Weighted-average pre-tax discount rate | 15.6% | 13.1% |
Growth rate beyond year five | 0.0% | 0.0% |
For impairment tests using fair value less cost of disposal calculations the key assumptions have been individually disclosed, below.
Impairment testing during the year resulted in impairment charges on the goodwill of Pro Gamers Group of \u20ac\u00a0312.1 million (HAL share \u20ac\u00a0200.0 million), in the Unquoted segment. This was primarily the result of a contraction of the markets for graphical cards and other computer components, the significant increase of container freight prices and a decrease in sales as a result of the war in Ukraine, combined with a significant increase in the weighted-average cost of capital, as risk-free rates, debt spreads and beta for the peer group experienced a sharp increase. The recoverable value of \u20ac\u00a0510.2 million was based on a five-year discounted cash flow model using a pre-tax WACC of 15.94% and a terminal growth rate of 1.5%, applying the fair value less cost of disposal method.
The valuation models include certain assumptions with respect to revenue growth, margin development, discount rates and terminal growth rates. A negative development of 2% in these assumptions would result in a potential (further) impairment charge on goodwill for the Unquoted segment as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
2% lower increase in revenues | 97.8 | 2.5 |
2% increase in the discount rate | 88.4 | 11.5 |
2% lower gross margin | 241.0 | 18.7 |
If the cash flows beyond the five-year period were extrapolated using an estimated growth rate of 2%, the value in use of the cash-generating units within the Unquoted segment that indicated a potential impairment in the above sensitivity analyses would increase by \u20ac\u00a0352.7 million (2021: \u20ac\u00a037.6 million).
The goodwill recognized as a result of the Boskalis transaction in 2022 (refer to note 3) was tested by comparison of the performance since acquisition with the business enterprise valuation underlying the purchase price allocation. The business enterprise valuation was based on a five-year discounted cash flow model using a weighted-average pre-tax WACC of 11.1% and a 1.6% terminal growth rate. No impairment was recognized.
Quoted
Vopak and Safilo are both listed entities. At the year-end 2022 the stock\u00a0market value of the ownership interest in Safilo exceeded its carrying value by \u20ac\u00a0105.4 million. At the end of 2022, the stock\u00a0market value of the ownership interest in Vopak exceeded its carrying value by \u20ac\u00a0170.0 million. These stock market values qualify as level 1 in the fair value hierarchy.
The goodwill at the level of Safilo (\u20ac\u00a034.9 million) has been tested on a single cash-generating unit basis using a five-year projection based on the financial projections for the period 2023-2027, which confirm the main goals and strategies as defined in the 2023-2027 business plan. This value-in-use model includes a weighted-average cost of capital (WACC) of 10.12% and a 2.07% terminal growth rate beyond the explicit forecast period (2021: 7.93%, respectively 1.90%). Applying alternative scenarios with a 30% decrease of EBITDA or with an increase of the WACC by 3.0% also does not lead to impairment.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-471": { "value": "Property, plant and equipment are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items (such as unrecoverable taxes and transport) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced parts is derecognized. All other repair and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life as follows: buildings 10-50 years, vessels and floating equipment 5-30 years, tank storage terminals 10-40 years and equipment and other 3-15 years. Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Critical accounting estimates and judgments
Property, plant and equipment of represent a substantial part of the total assets of the Company and the related depreciation forms a substantial part of the annual operating expenses. The useful life and residual value of these assets have a major impact on the measurement of property, plant and equipment. These estimates and assumptions are partly based on the expected useful productive lives, experiences related to similar assets, the maintenance history and the period during which the company has the economic benefits from the utilization of the assets
Movements for 2022 and 2021 are as follows:
| \u00a0 | Land and buildings | Vessels and floating equipment | Tank storage terminals | Equipment | Total |
|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,093.1 | 630.9 | 5,583.4 | 1,927.3 | 9,234.7 |
Cost value - under construction | 15.9 | 11.5 | 709.3 | 21.8 | 758.5 |
Accumulated depreciation and impairments | (453.4) | (188.7) | (2,791.9) | (1,442.7) | (4,876.7) |
Balance on January 1, 2021 | 655.6 | 453.7 | 3,500.8 | 506.4 | 5,116.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 81.5 | 17.1 | 431.0 | 159.5 | 689.1 |
Consolidation | 18.5 | - | - | 9.5 | 28.0 |
Disposals | (9.3) | - | (2.7) | (6.2) | (18.2) |
Depreciation and impairments, net of reversals | (35.6) | (34.1) | (301.9) | (107.1) | (478.7) |
Reclassification | (5.9) | - | (94.1) | (6.7) | (106.7) |
Reclassification to held for sale | (49.3) | - | (94.9) | (27.7) | (171.9) |
Exchange differences | 16.9 | 20.7 | 106.0 | 14.8 | 158.4 |
Balance on December 31, 2021 | 672.4 | 457.4 | 3,544.2 | 542.5 | 5,216.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,093.1 | 664.1 | 6,312.5 | 1,963.8 | 10,033.5 |
Cost value - under construction | 72.2 | 31.3 | 322.1 | 96.6 | 522.2 |
Accumulated depreciation and impairments | (492.9) | (238.0) | (3,090.4) | (1,517.9) | (5,339.2) |
Balance on December 31, 2021 | 672.4 | 457.4 | 3,544.2 | 542.5 | 5,216.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 63.7 | 343.4 | 340.8 | 126.9 | 874.8 |
Consolidation | 150.0 | 2,836.1 | - | 20.1 | 3,006.2 |
Disposals | (7.4) | (23.2) | (2.1) | (4.5) | (37.2) |
Depreciation and impairments, net of reversals | (58.2) | (174.9) | (677.1) | (110.3) | (1,020.5) |
Reclassification | (1.0) | (1.8) | (26.2) | (6.3) | (35.3) |
Exchange differences | 4.2 | (6.0) | 87.9 | 4.9 | 91.0 |
Balance on December 31, 2022 | 823.7 | 3,431.0 | 3,267.5 | 573.3 | 8,095.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,255.9 | 3,570.6 | 6,771.1 | 1,993.3 | 13,590.9 |
Cost value - under construction | 94.9 | 270.0 | 318.6 | 149.4 | 832.9 |
Accumulated depreciation and impairments | (527.1) | (409.6) | (3,822.2) | (1,569.4) | (6,328.3) |
Balance on December 31, 2022 | 823.7 | 3,431.0 | 3,267.5 | 573.3 | 8,095.5 |
Note 22 details information on pledges.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-579": { "value": "Property, plant and equipment are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items (such as unrecoverable taxes and transport) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced parts is derecognized. All other repair and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life as follows: buildings 10-50 years, vessels and floating equipment 5-30 years, tank storage terminals 10-40 years and equipment and other 3-15 years. Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Critical accounting estimates and judgments
Property, plant and equipment of represent a substantial part of the total assets of the Company and the related depreciation forms a substantial part of the annual operating expenses. The useful life and residual value of these assets have a major impact on the measurement of property, plant and equipment. These estimates and assumptions are partly based on the expected useful productive lives, experiences related to similar assets, the maintenance history and the period during which the company has the economic benefits from the utilization of the assets
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life as follows: buildings 10-50 years, vessels and floating equipment 5-30 years, tank storage terminals 10-40 years and equipment and other 3-15 years. Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life (25-50 years). Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Right-of-use assets
At the commencement date of the lease contract, the right-of-use asset is measured at cost. This comprises the initial amount of the lease liability, adjusted for prepayments and lease incentives received, initial direct cost, estimated restoration and dismantling costs, where applicable. Depreciation is calculated using the straight-line method to write off the cost of each right-of-use asset from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The right-of-use assets are subject to impairment and adjusted for remeasurement of lease liabilities.
Investment properties are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the properties (such as unrecoverable taxes) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life (25-50 years). Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
Movements for 2022 and 2021 are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
Cost value | 72.1 | 43.8 |
Accumulated depreciation and impairments | (4.1) | (1.8) |
Balance on January 1 | 68.0 | 42.0 |
| \u00a0 | \u00a0 | \u00a0 |
Investments | 10.9 | 28.7 |
Disposals | - | (0.4) |
Depreciation and impairments | (2.4) | (2.3) |
Balance on December 31 | 76.5 | 68.0 |
| \u00a0 | \u00a0 | \u00a0 |
Cost value | 79.7 | 72.1 |
Cost value - under construction | 3.3 | - |
Accumulated depreciation and impairments | (6.5) | (4.1) |
Balance on December 31 | 76.5 | 68.0 |
At year-end 2022 and 2021, the carrying value of the investment properties was a reasonable approximation of their fair value.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-582": { "value": "Investment properties are recorded at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the properties (such as unrecoverable taxes) and construction costs that can be allocated directly (such as hours of own employees and advisory fees). Interest during construction is capitalized. To the extent that dismantling obligations exist, these are included in the cost of the assets.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life (25-50 years). Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.
A right-of-use asset and a related lease liability are recognized for lease contracts that exceed a duration of twelve months, except when a contract relates to leases of low-value assets, payments are primarily based on variables such as revenue or when a lessor has a substantive substitution right. The latter contracts are expensed on a straight-line basis over the contract term.
The Company leases real estate properties (land and buildings) to house its retail stores, offices, logistical activities and storage terminal operations. Lease contracts are negotiated on an individual basis and, due to the geographical spread and the various business models of operating companies, contain a wide range of different terms and conditions.
The Company leases vessels and floating equipment in respect of its businesses of transporting liquefied gases and petrochemical products, dredging and offshore energy. These lease contracts are negotiated on an individual basis and may contain a wide range of different terms and conditions due to the international lessor base and the complex and varying nature of individual vessels.
The Company leases terminal-related assets, including storage assets, jetties and loading facilities. These lease contracts are also negotiated on an individual basis and contain a wide range of different terms and conditions due to geographical spread and specific nature of the assets.
The Company also leases trucks, passenger cars and machinery and equipment, including information and communication technology equipment. These contracts are insignificant compared to the total leased asset portfolio.
Right-of-use assets
At the commencement date of the lease contract, the right-of-use asset is measured at cost. This comprises the initial amount of the lease liability, adjusted for prepayments and lease incentives received, initial direct cost, estimated restoration and dismantling costs, where applicable. Depreciation is calculated using the straight-line method to write off the cost of each right-of-use asset from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The right-of-use assets are subject to impairment and adjusted for remeasurement of lease liabilities.
Lease liabilities
At the commencement date of the lease contract, the lease liability is measured at the present value of the lease payments over the lease term, discounted using the incremental borrowing rate. Payments include (in-substance) fixed payments, variable lease payments that depend on an index or rate, amounts expected to be payable under residual value guarantees, expected (early termination) penalties and amounts expected to be payable for the exercise of purchase options, when the Company is reasonably certain to exercise these. Contractual payments related to service costs are excluded from the measurement of lease liabilities in respect of terminal-related assets. Lease liabilities are subsequently measured at amortized cost using the effective interest method. A lease liability is remeasured when there is an adjustment to future lease payments arising from, for example, renegotiation of the lease contract, a change in index or rate, or in case of reassessment of the Company\u2019s expected exercise of options. A remeasurement of the lease liability is reflected as a corresponding adjustment to the right-of-use asset, with any excess over the carrying amount of the asset being recognized in the consolidated statement of income. Rent concessions occurring as a direct consequence of the COVID-19 pandemic are not assessed whether these are lease modifications and instead are accounted for as if they are not lease modifications. Accordingly, these concessions will be recorded as a reduction of the lease liability through the current income statement and not amortized over the term of the lease.
Lessor accounting
The Company subleases some of its right-of-use assets to franchisees or third parties. When substantially all the risks and rewards are transferred to the lessee, the sublease is classified as a finance lease, otherwise the sub-lease is an operating lease. When the sublease is classified as a finance lease, the right-of-use asset in the head lease is de-recognized and a lease receivable is recognized, with any difference being recorded in the consolidated statement of income. Subsequently, the interest income and interest expense are accrued on the lease receivable and lease liability respectively applying the effective interest method. Rental income from operating subleases is recognized in the consolidated statement of income, within other revenue.
COVID-19-related lease concessions
In 2020 and 2021, amendments to IFRS 16 were issued under which rent reductions are recognized directly in the consolidated income statement when the change in lease payments does not result in higher consideration, only lease payments in 2020 and up to June 30, 2022, are reduced and there are no substantial changes to other terms and conditions of the lease. A substantial change is considered to be present if the scope of the lease or the lease term is amended. The Company elected to apply this amendment and exercised judgment to determine if rent reductions met the above requirements.
Critical accounting estimates and judgments - lease terms
The lease term comprises of the non-cancellable period agreed in the lease contract and the periods covered by renewal or termination options that are reasonably certain to be exercised. Significant renewal and termination options primarily relate to the lease of real estate. Renewal and termination options are assessed at the lease commencement date and subsequently, if there is a change in circumstances within the control of the Company. When assessing renewal and termination options, considerations include the quality and performance of the leased asset and the extent of leasehold improvements undertaken, potential relocation and termination expense including penalties and potentially favorable extension terms and long-term customer contracts related to the leased asset.
Critical accounting estimates and judgments - discount rates
In absence of interest rates implicit in the lease contracts, the Company applies the incremental borrowing rate (IBR) as the discount rate to determine the lease liabilities. The IBR is an approximation of the rate that a lessee would pay to attract the required funding to purchase the asset over a similar term, with similar security and in a similar economic environment. The IBR is determined as the sum of a reference rate, a credit risk premium and a country risk premium. The calculation of the IBR takes into account the currency of the lease contract, the lease term, the type of leased asset, the country and the credit quality of the lessee. A single IBR may be applied to a portfolio of leases within a country, which are similar in nature and lease term.
Movements in the right-of-use assets are as follows:
| \u00a0 | Land and buildings | Vessels and floating equipment | Equipment and other | Total |
|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 982.6 | 72.2 | 118.2 | 1,173.0 |
Accumulated depreciation and impairments | (120.2) | (21.0) | (40.2) | (181.4) |
Balance on January 1, 2021 | 862.4 | 51.2 | 78.0 | 991.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
New lease contracts | 57.9 | 27.7 | 40.7 | 126.3 |
Consolidation | 13.0 | - | 0.5 | 13.5 |
Depreciation and impairments continuing operations | (80.0) | (19.2) | (33.1) | (132.3) |
Reclassification | 0.4 | - | (0.9) | (0.5) |
Reclassification to held for sale | (106.7) | - | (3.9) | (110.6) |
Reassessment and remeasurement | 112.7 | (29.5) | 1.7 | 84.9 |
Exchange differences | 25.5 | 3.1 | 0.7 | 29.3 |
Balance on December 31, 2021 | 885.2 | 33.3 | 83.7 | 1,002.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,084.7 | 67.4 | 146.7 | 1,298.8 |
Accumulated depreciation and impairments | (199.5) | (34.1) | (63.0) | (296.6) |
Balance on December 31, 2021 | 885.2 | 33.3 | 83.7 | 1,002.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
New lease contracts | 75.7 | 21.2 | 38.5 | 135.4 |
Consolidation | 76.0 | 39.1 | 17.5 | 132.6 |
Depreciation and impairments | (95.7) | (22.7) | (38.4) | (156.8) |
Reclassification to held for sale | (57.2) | - | (3.3) | (60.5) |
Reassessment and remeasurement | 43.6 | (0.6) | 0.5 | 43.5 |
Exchange differences | 14.4 | 2.1 | 0.4 | 16.9 |
Balance on December 31, 2022 | 942.0 | 72.4 | 98.9 | 1,113.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,221.2 | 91.3 | 181.9 | 1,494.4 |
Accumulated depreciation and impairments | (279.2) | (18.9) | (83.0) | (381.1) |
Balance on December 31, 2022 | 942.0 | 72.4 | 98.9 | 1,113.3 |
In 2022, variable payments of \u20ac\u00a07.4\u00a0million (2021: \u20ac\u00a05.1 million) related to on-balance lease contracts were included in operating expenses. Leases with an original duration of less than 12 months and leases for which the leased asset was of low value were included in the 2022 other operating expenses for \u20ac\u00a026.6 million, respectively \u20ac\u00a05.6 million (2021: \u20ac\u00a014.7 million, respectively \u20ac\u00a05.0 million). The total cash outflow for leases in 2022 amounted to \u20ac\u00a0222.3 million (2021: \u20ac\u00a0352.4 million), of which none (2021: \u20ac\u00a0188.0 million) related to discontinued operations.
Movements in the lease liabilities for 2022 and 2021 are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 1,072.5 | 1,053.1 |
New lease contracts | 135.4 | 126.3 |
Consolidation | 137.2 | 12.9 |
Accrued interest continuing operations | 31.2 | 27.7 |
Accrued interest discontinued operations | - | 10.1 |
Payments | (182.7) | (327.6) |
Rent reductions | - | (6.1) |
Reclassification to held for sale | (60.7) | 77.2 |
Reassessment and remeasurement | 41.9 | 69.4 |
Exchange differences and other | 20.5 | 29.5 |
Balance on December 31 | 1,195.3 | 1,072.5 |
| \u00a0 | \u00a0 | \u00a0 |
Current lease liabilities | 150.6 | 123.4 |
Non-current lease liabilities | 1,044.7 | 949.1 |
Balance on December 31 | 1,195.3 | 1,072.5 |
The consolidated lease liability as at December 31, 2022, relates mainly to Vopak (\u20ac\u00a0648.6 million, 2021: \u20ac\u00a0711.3 million). The weighted-average incremental borrowing rate applied to this portfolio was 3.2% (2021: 3.1%).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-585": { "value": "A right-of-use asset and a related lease liability are recognized for lease contracts that exceed a duration of twelve months, except when a contract relates to leases of low-value assets, payments are primarily based on variables such as revenue or when a lessor has a substantive substitution right. The latter contracts are expensed on a straight-line basis over the contract term.
The Company leases real estate properties (land and buildings) to house its retail stores, offices, logistical activities and storage terminal operations. Lease contracts are negotiated on an individual basis and, due to the geographical spread and the various business models of operating companies, contain a wide range of different terms and conditions.
The Company leases vessels and floating equipment in respect of its businesses of transporting liquefied gases and petrochemical products, dredging and offshore energy. These lease contracts are negotiated on an individual basis and may contain a wide range of different terms and conditions due to the international lessor base and the complex and varying nature of individual vessels.
The Company leases terminal-related assets, including storage assets, jetties and loading facilities. These lease contracts are also negotiated on an individual basis and contain a wide range of different terms and conditions due to geographical spread and specific nature of the assets.
The Company also leases trucks, passenger cars and machinery and equipment, including information and communication technology equipment. These contracts are insignificant compared to the total leased asset portfolio.
Right-of-use assets
At the commencement date of the lease contract, the right-of-use asset is measured at cost. This comprises the initial amount of the lease liability, adjusted for prepayments and lease incentives received, initial direct cost, estimated restoration and dismantling costs, where applicable. Depreciation is calculated using the straight-line method to write off the cost of each right-of-use asset from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The right-of-use assets are subject to impairment and adjusted for remeasurement of lease liabilities.
Lease liabilities
At the commencement date of the lease contract, the lease liability is measured at the present value of the lease payments over the lease term, discounted using the incremental borrowing rate. Payments include (in-substance) fixed payments, variable lease payments that depend on an index or rate, amounts expected to be payable under residual value guarantees, expected (early termination) penalties and amounts expected to be payable for the exercise of purchase options, when the Company is reasonably certain to exercise these. Contractual payments related to service costs are excluded from the measurement of lease liabilities in respect of terminal-related assets. Lease liabilities are subsequently measured at amortized cost using the effective interest method. A lease liability is remeasured when there is an adjustment to future lease payments arising from, for example, renegotiation of the lease contract, a change in index or rate, or in case of reassessment of the Company\u2019s expected exercise of options. A remeasurement of the lease liability is reflected as a corresponding adjustment to the right-of-use asset, with any excess over the carrying amount of the asset being recognized in the consolidated statement of income. Rent concessions occurring as a direct consequence of the COVID-19 pandemic are not assessed whether these are lease modifications and instead are accounted for as if they are not lease modifications. Accordingly, these concessions will be recorded as a reduction of the lease liability through the current income statement and not amortized over the term of the lease.
Lessor accounting
The Company subleases some of its right-of-use assets to franchisees or third parties. When substantially all the risks and rewards are transferred to the lessee, the sublease is classified as a finance lease, otherwise the sub-lease is an operating lease. When the sublease is classified as a finance lease, the right-of-use asset in the head lease is de-recognized and a lease receivable is recognized, with any difference being recorded in the consolidated statement of income. Subsequently, the interest income and interest expense are accrued on the lease receivable and lease liability respectively applying the effective interest method. Rental income from operating subleases is recognized in the consolidated statement of income, within other revenue.
COVID-19-related lease concessions
In 2020 and 2021, amendments to IFRS 16 were issued under which rent reductions are recognized directly in the consolidated income statement when the change in lease payments does not result in higher consideration, only lease payments in 2020 and up to June 30, 2022, are reduced and there are no substantial changes to other terms and conditions of the lease. A substantial change is considered to be present if the scope of the lease or the lease term is amended. The Company elected to apply this amendment and exercised judgment to determine if rent reductions met the above requirements.
Critical accounting estimates and judgments - lease terms
The lease term comprises of the non-cancellable period agreed in the lease contract and the periods covered by renewal or termination options that are reasonably certain to be exercised. Significant renewal and termination options primarily relate to the lease of real estate. Renewal and termination options are assessed at the lease commencement date and subsequently, if there is a change in circumstances within the control of the Company. When assessing renewal and termination options, considerations include the quality and performance of the leased asset and the extent of leasehold improvements undertaken, potential relocation and termination expense including penalties and potentially favorable extension terms and long-term customer contracts related to the leased asset.
Critical accounting estimates and judgments - discount rates
In absence of interest rates implicit in the lease contracts, the Company applies the incremental borrowing rate (IBR) as the discount rate to determine the lease liabilities. The IBR is an approximation of the rate that a lessee would pay to attract the required funding to purchase the asset over a similar term, with similar security and in a similar economic environment. The IBR is determined as the sum of a reference rate, a credit risk premium and a country risk premium. The calculation of the IBR takes into account the currency of the lease contract, the lease term, the type of leased asset, the country and the credit quality of the lessee. A single IBR may be applied to a portfolio of leases within a country, which are similar in nature and lease term.
Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets.
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is carried at cost less accumulated impairments. Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 35. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Movements for goodwill and other intangibles are as follows:
| \u00a0 | Goodwill | Software | Trade- | Customer relationships | Other | Total |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,225.6 | 399.3 | 420.6 | 421.5 | 152.0 | 2,619.0 |
Accumulated amortization and impairments | (693.6) | (236.4) | (168.4) | (179.1) | (60.4) | (1,337.9) |
Balance on January 1, 2021 | 532.0 | 162.9 | 252.2 | 242.4 | 91.6 | 1,281.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 597.7 | 76.0 | 0.3 | - | 17.5 | 691.5 |
Consolidation | - | 8.3 | 204.4 | 234.8 | 20.5 | 468.0 |
Purchase price accounting adjustments | 5.7 | - | - | - | - | 5.7 |
Disposals | - | (0.9) | - | - | 0.1 | (0.8) |
Amortization and impairments | - | (39.7) | (28.7) | (22.6) | (38.4) | (129.4) |
Reclassification | (1.4) | (20.5) | 23.7 | - | - | 1.8 |
Reclassification to held for sale | (25.9) | (30.7) | 0.9 | (0.2) | (1.8) | (57.7) |
Exchange differences and other | 25.4 | 2.6 | 13.8 | 7.0 | 4.2 | 53.0 |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,282.4 | 452.9 | 646.8 | 664.2 | 188.1 | 3,234.4 |
Accumulated amortization and impairments | (148.9) | (294.9) | (180.2) | (202.8) | (94.4) | (921.2) |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 1,301.7 | 32.5 | 0.3 | - | 17.4 | 1,351.9 |
Consolidation | - | 0.7 | 369.4 | 7.2 | 60.0 | 437.3 |
Disposals | - | (0.2) | (0.1) | - | - | (0.3) |
Amortization and impairments | (312.1) | (39.9) | (46.5) | (32.5) | (28.8) | (459.8) |
Reclassification | - | (0.9) | - | - | - | (0.9) |
Reclassification to held for sale | (18.0) | (2.8) | - | - | (1.5) | (22.3) |
Exchange differences and other | 11.7 | 1.8 | 10.3 | 1.8 | 1.7 | 27.3 |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 2,533.2 | 487.6 | 1,028.2 | 673.1 | 245.8 | 4,967.9 |
Accumulated amortization and impairments | (416.4) | (338.4) | (228.2) | (235.2) | (103.3) | (1,321.5) |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
The 2022 increases in trademarks and other intangibles (order book) mainly relate to Boskalis (refer to note 3). Information on impairment testing and impairments is included in note 35.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-475": { "value": "Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets.
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is carried at cost less accumulated impairments. Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 35. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Movements for goodwill and other intangibles are as follows:
| \u00a0 | Goodwill | Software | Trade- | Customer relationships | Other | Total |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,225.6 | 399.3 | 420.6 | 421.5 | 152.0 | 2,619.0 |
Accumulated amortization and impairments | (693.6) | (236.4) | (168.4) | (179.1) | (60.4) | (1,337.9) |
Balance on January 1, 2021 | 532.0 | 162.9 | 252.2 | 242.4 | 91.6 | 1,281.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 597.7 | 76.0 | 0.3 | - | 17.5 | 691.5 |
Consolidation | - | 8.3 | 204.4 | 234.8 | 20.5 | 468.0 |
Purchase price accounting adjustments | 5.7 | - | - | - | - | 5.7 |
Disposals | - | (0.9) | - | - | 0.1 | (0.8) |
Amortization and impairments | - | (39.7) | (28.7) | (22.6) | (38.4) | (129.4) |
Reclassification | (1.4) | (20.5) | 23.7 | - | - | 1.8 |
Reclassification to held for sale | (25.9) | (30.7) | 0.9 | (0.2) | (1.8) | (57.7) |
Exchange differences and other | 25.4 | 2.6 | 13.8 | 7.0 | 4.2 | 53.0 |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 1,282.4 | 452.9 | 646.8 | 664.2 | 188.1 | 3,234.4 |
Accumulated amortization and impairments | (148.9) | (294.9) | (180.2) | (202.8) | (94.4) | (921.2) |
Balance on December 31, 2021 | 1,133.5 | 158.0 | 466.6 | 461.4 | 93.7 | 2,313.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 1,301.7 | 32.5 | 0.3 | - | 17.4 | 1,351.9 |
Consolidation | - | 0.7 | 369.4 | 7.2 | 60.0 | 437.3 |
Disposals | - | (0.2) | (0.1) | - | - | (0.3) |
Amortization and impairments | (312.1) | (39.9) | (46.5) | (32.5) | (28.8) | (459.8) |
Reclassification | - | (0.9) | - | - | - | (0.9) |
Reclassification to held for sale | (18.0) | (2.8) | - | - | (1.5) | (22.3) |
Exchange differences and other | 11.7 | 1.8 | 10.3 | 1.8 | 1.7 | 27.3 |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost value | 2,533.2 | 487.6 | 1,028.2 | 673.1 | 245.8 | 4,967.9 |
Accumulated amortization and impairments | (416.4) | (338.4) | (228.2) | (235.2) | (103.3) | (1,321.5) |
Balance on December 31, 2022 | 2,116.8 | 149.2 | 800.0 | 437.9 | 142.5 | 3,646.4 |
The 2022 increases in trademarks and other intangibles (order book) mainly relate to Boskalis (refer to note 3). Information on impairment testing and impairments is included in note 35.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-588": { "value": "Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets.
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is carried at cost less accumulated impairments. Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 35. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Intangible assets include goodwill, trademarks, customer relationships, software and other intangible assets.
Software - cloud computing arrangements
Costs incurred for configuration or customization of cloud computing arrangements are generally directly recognized in income. If the configuration or customization services were provided by the application provider and they are not considered distinct, the costs are recognized as an expense over the lifetime of the contract. In limited circumstances, certain configuration or customization activities may give rise to a separate intangible asset that is amortized on a straight-line basis over an estimated useful life that is not in excess of the lifetime of the contract.
Software - other
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company that are expected to generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Only direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Software acquired in a business combination are initially recognized at their fair value, generally using a cost approach. Software licenses and products are generally amortized on a straight-line basis over an estimated useful life of 5 to 10 years.
Trademarks
Trademarks acquired in a business combination are initially recognized at fair value, using the relief-from-royalty approach. They are subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Customer relationships
The valuation of customer relationships acquired in a business combination is based on the present value of estimated future cash flows. Customer relationships are initially recognized at fair value and subsequently amortized over an estimated useful life, generally a maximum of 20 years, on a straight-line basis with no residual value.
Other intangibles
Intangibles within this category are amortized on a straight-line basis over an estimated useful life of maximum 15 years. Other intangible assets include order books, distribution relationships, license agreements, intellectual property and non-compete agreements.
Goodwill
Goodwill arises on business combinations and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value amounts of the identifiable assets, liabilities and contingent liabilities.
Goodwill is carried at cost less accumulated impairments. Goodwill is subject to annual impairment testing, and whenever there is an indication of impairment, as described in note 35. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill relating to a business combination in foreign currency is recorded in the respective currency and converted at the exchange rate at the end of the period.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-477": { "value": "Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
The movements of investments accounted for using the equity method are set out below.
| \u00a0 | Associates | Joint ventures | Total |
|---|---|---|---|
Share of net assets | 2,017.8 | 1,056.3 | 3,074.1 |
Goodwill | 310.9 | 74.2 | 385.1 |
Balance on January 1, 2021 | 2,328.7 | 1,130.5 | 3,459.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 6.7 | 145.0 | 151.7 |
Consolidation | 0.4 | - | 0.4 |
Disposals | (17.3) | (1.0) | (18.3) |
Share of results - real estate | - | 42.3 | 42.3 |
Share of results - discontinued operations | 3.1 | (0.3) | 2.8 |
Share of results - other | 223.8 | 160.8 | 384.6 |
Share of other comprehensive income | 67.5 | 9.4 | 76.9 |
Dividends | (114.7) | (178.4) | (293.1) |
Reclassification | (0.2) | (2.1) | (2.3) |
Reclassification to held for sale | 3.1 | (26.1) | (23.0) |
Impairments | - | (43.5) | (43.5) |
Exchange differences | 35.3 | 82.8 | 118.1 |
Other | (6.7) | - | (6.7) |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 2,209.6 | 1,252.7 | 3,462.3 |
Goodwill | 320.1 | 66.7 | 386.8 |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 644.2 | 319.7 | 963.9 |
Consolidation | 10.8 | 59.3 | 70.1 |
Disposals | (47.4) | (2.5) | (49.9) |
Share of results - real estate | - | 50.0 | 50.0 |
Share of results - other | 893.4 | 143.9 | 1,037.3 |
Share of other comprehensive income | 191.6 | 46.7 | 238.3 |
Dividends | (141.2) | (188.1) | (329.3) |
Impairments | (165.8) | - | (165.8) |
Impairments reversal | - | 3.8 | 3.8 |
Reclassification1 | (2,262.5) | - | (2,262.5) |
Reclassification to held for sale | (1.5) | (77.8) | (79.3) |
Exchange differences | 8.4 | 29.3 | 37.7 |
Other | (4.6) | - | (4.6) |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 1,418.3 | 1,540.3 | 2,958.6 |
Goodwill | 236.8 | 163.4 | 400.2 |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
The amounts recognized in the statement of financial position comprise:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Publicly traded | 804.9 | 1,796.2 |
Other | 2,553.9 | 2,052.9 |
| \u00a0 | 3,358.8 | 3,849.1 |
Vopak - PT2SB
In March 2020, a fire took place at an anchor client of PT2SB (25% Vopak) in Malaysia, leading to a subsequent closure of the facility. Following another incident in 2022, the refinery is only expected to resume operations in the first half of 2023. At December 31, 2022, PT2SB has reported \u20ac\u00a0173 million in net accounts receivable from this client (December 2021: \u20ac\u00a088 million). The refinery closure impacted the client\u2019s liquidity position, which may impact PT2SB\u2019s financial performance in 2023.
Investments
Prodrive Technologies
On February 17, 2022, HAL completed the acquisition of 31.45% of the shares in Prodrive Technologies Group B.V. (\u2018Prodrive Technologies\u2019). The company is active in the research, development and manufacturing of high-tech electronics, software and mechatronic products and systems. Prodrive Technologies provides solutions for, among others, the semiconductor, medical and electric mobility industries. As part of the notional purchase price allocation procedures an amount of \u20ac\u00a093.7 million was recognized as goodwill, which was part of the inititial carrying value of this associate. In the fourth quarter of 2022 an impairment of \u20ac\u00a0129.6 million was recorded on this associate (refer to note 35) and a related earn-out liability of \u20ac\u00a019.0 was released.
Real estate joint ventures
The gross investment in joint ventures belonging to the real estate segment increased by \u20ac\u00a085 million during 2022.
Vopak - Aegis
In the second quarter of 2022, Vopak acquired a 49% shareholding in the Aegis Vopak Terminals Ltd. entity (joint venture) and a 24% shareholding in the Hindustan Aegis LPG Ltd. entity (associate). The acquisition-date fair value of the consideration transferred amounted to \u20ac\u00a0226.3 million, of which \u20ac\u00a0174.2 million was paid in cash and \u20ac\u00a052.1 million is contingent upon the completion of certain projects (\u20ac\u00a032.6 million) and exceeding certain revenue targets in 2025 (\u20ac\u00a019.5 million). The company is still working on the notional purchase price allocation for these transactions and expects to finalize this within twelve months after acquisition date.
Divestments
Vopak - Diize
In December 2022 Vopak divested 50% of its shareholding in Diize B.V. The remaining 50% of the former subsidiary was retained and classified as a joint venture.
Vopak - ThaiTank terminal
In December 2022, Vopak recorded an exceptional gain of \u20ac\u00a05.2 million related to the dilution of 14% of its equity interest in ThaiTank Terminal Ltd. After the dilution, Vopak continues to hold an equity interest of 35% that continues to be classified as a joint venture.
Vopak - German LNG terminal
As a result of the divestment of the 33.3% shareholding in the German LNG Terminal GmbH, an impairment reversal of \u20ac\u00a03.8 million was recorded within exceptional items (refer to note 35). This reversal partially offsets the impairment of \u20ac\u00a010.8 million recognized in 2021. Contingent proceeds dependent on the final investment decision of the project amounted to \u20ac\u00a08.9 million. As at the reporting date respective conditions were not yet met.
Quoted associate(s)
The difference between the market value of the Company\u2019s share in its publicly traded associate SBM Offshore N.V. (2021: including Boskalis) and the book value is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Market value | 606.0 | 2,061.2 |
Book value | 804.9 | 1,796.2 |
| \u00a0 | (198.9) | 265.0 |
Real estate joint ventures
The financial position of the U.S. real estate joint ventures included in the real estate segment can be summarized as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Properties in operation and under construction | 554.5 | 477.1 |
Project debt | (339.6) | (322.5) |
Non-controlling interest | (39.8) | (21.6) |
HAL equity share | 175.1 | 133.0 |
The real estate portfolio consisted at the end of 2022 of 16 joint ventures of which 2 were invested in office buildings and 14 in residential real estate. The total (expected) cost of the real estate portfolio amounted to $ 1,138.1 million (\u20ac\u00a01,062.5 million) as of December 31, 2022 (2021: $\u00a0987.8 million, \u20ac\u00a0867.5 million). HAL\u2019s total equity commitment for these projects amounts to $ 306.2 million (\u20ac\u00a0285.9 million, 2021: $\u00a0289.1 million, \u20ac\u00a0253.9 million) of which $\u00a080.0 million (\u20ac\u00a074.7 million) was not yet spent as of December 31, 2022 (2021: $\u00a080.4 million, \u20ac\u00a070.6 million). As certain properties are under construction, the income statements of these joint ventures on a 100% basis are not significant in relation to these financial statements. Revenues for 2022 amounted to \u20ac\u00a030.0 million (2021: \u20ac\u00a021.2 million).
Principal associate
As of 2022, the principal (non-consolidated) associate of the Company is SBM Offshore N.V. (\u2018SBM Offshore\u2019) in which the Company has a 22.88% ownership interest. SBM Offshore is incorporated in the Netherlands and is listed on Euronext Amsterdam. The company designs, builds, installs and operates offshore floating facilities for the offshore energy industry.
Set out below is the summarized financial information for SBM Offshore. This summary is based on publicly available information.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Current | \u00a0 | \u00a0 |
Cash and cash equivalents | 683.0 | 1,021.0 |
Other current assets | 8,388.0 | 5,395.0 |
Total current assets | 9,071.0 | 6,416.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities (excluding trade payables) | 1,883.0 | 1,899.0 |
Other current liabilities (including trade payables) | 1,720.0 | 1,299.0 |
Total current liabilities | 3,603.0 | 3,198.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current | \u00a0 | \u00a0 |
Assets | 6,818.0 | 6,795.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities | 6,898.0 | 6,090.0 |
Other liabilities | 474.0 | 387.0 |
Total non-current liabilities | 7,372.0 | 6,477.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-controlling interest | 1,517.0 | 957.0 |
| \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,397.0 | 2,579.0 |
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Revenue | 4,913.0 | 3,747.0 |
Depreciation, amortization and impairment | (189.0) | (88.0) |
Financial income | 12.0 | 3.0 |
Financial expense | (385.0) | (304.0) |
Profit / (loss) before tax | 660.0 | 543.0 |
Profit / (loss) after tax for owners of parent | 450.0 | 400.0 |
Other comprehensive income for owners of parent | 526.0 | (51.0) |
Total comprehensive income for owners of parent | 976.0 | 349.0 |
Reconciliation of the summarized financial information for SBM Offshore:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Net assets January 1 | 2,579.0 | 2,556.0 |
Profit / (loss) for the period | 450.0 | 400.0 |
Other comprehensive income | 526.0 | (51.0) |
Transactions with owners | (158.0) | (326.0) |
Net assets December 31 | 3,397.0 | 2,579.0 |
| \u00a0 | \u00a0 | \u00a0 |
| \u00a0 | \u20ac\u00a0'm | \u20ac\u00a0'm |
Interest in SBM Offshore (22.88%, 2021: 22.88%) | 736.0 | 530.0 |
Intangible assets recognized in purchase price allocation | 25.9 | 27.3 |
Goodwill | 43.0 | 40.5 |
Book value | 804.9 | 597.8 |
We refer to note 43 with respect to summarized financial information on associates and joint ventures of Vopak.
The summarized financial information of the associates and joint ventures of Vopak is as follows.
Summarized\u00a0statements\u00a0of\u00a0financial\u00a0position on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Non-current assets | 205.4 | 209.9 | 4,657.7 | 3,771.8 | 1,858.2 | 1,984.8 | 1,205.5 | 1,130.8 | 7,926.8 | 7,097.3 |
Cash and cash equivalents | 10.7 | 10.6 | 579.9 | 465.4 | 163.4 | 139.4 | 17.7 | 19.6 | 771.7 | 635.0 |
Other current assets | 10.0 | 17.3 | 243.8 | 273.9 | 85.2 | 104.1 | 58.5 | 51.1 | 397.5 | 446.4 |
Total assets | 226.1 | 237.8 | 5,481.4 | 4,511.1 | 2,106.8 | 2,228.3 | 1,281.7 | 1,201.5 | 9,096.0 | 8,178.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial non-current liabilities | 136.0 | 149.6 | 1,861.6 | 1,795.2 | 922.3 | 989.3 | 386.7 | 363.1 | 3,306.6 | 3,297.2 |
Other non-current liabilities | 12.7 | 13.8 | 137.1 | 179.7 | 183.0 | 250.8 | 2.3 | 9.1 | 335.1 | 453.4 |
Financial current liabilities | 15.6 | 17.6 | 516.2 | 177.3 | 138.6 | 125.6 | 14.2 | 16.6 | 684.6 | 337.1 |
Other current liabilities | 20.5 | 13.9 | 352.5 | 263.5 | 75.7 | 62.6 | 47.5 | 48.0 | 496.2 | 388.0 |
Total liabilities | 184.8 | 194.9 | 2,867.4 | 2,415.7 | 1,319.6 | 1,428.3 | 450.7 | 436.8 | 4,822.5 | 4,475.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net assets | 41.3 | 42.9 | 2,614.0 | 2,095.4 | 787.2 | 800.0 | 831.0 | 764.7 | 4,273.5 | 3,703.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net assets | 19.1 | 20.0 | 983.7 | 817.6 | 405.4 | 408.7 | 289.2 | 258.8 | 1,697.4 | 1,505.1 |
Goodwill on acquisition | - | - | 112.1 | 12.4 | 31.7 | 31.4 | 36.6 | 34.4 | 180.4 | 78.2 |
Vopak\u2019s carrying amount of net assets | 19.1 | 20.0 | 1,095.8 | 830.0 | 437.1 | 440.1 | 325.8 | 293.2 | 1,877.8 | 1,583.3 |
Summarized\u00a0statements\u00a0of\u00a0total\u00a0comprehensive\u00a0income on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Revenues | 50.7 | 51.8 | 987.1 | 842.9 | 427.6 | 458.5 | 238.3 | 194.7 | 1,703.7 | 1,547.9 |
Operating expenses | (19.3) | (18.5) | (290.9) | (192.1) | (109.9) | (99.9) | (150.8) | (124.2) | (570.9) | (434.7) |
Depreciation, amortization and impairment | (13.2) | (13.2) | (236.5) | (210.7) | (161.4) | (120.4) | (28.8) | (30.1) | (439.9) | (374.4) |
Operating profit (EBIT) | 18.2 | 20.1 | 459.7 | 440.1 | 156.3 | 238.2 | 58.7 | 40.4 | 692.9 | 738.8 |
Net finance income / (expense) | (4.9) | (5.6) | (88.9) | (56.7) | (70.2) | (65.5) | (17.1) | (12.9) | (181.1) | (140.7) |
Income tax | (2.4) | (2.7) | (35.4) | (37.4) | (34.9) | (62.1) | (0.1) | (0.2) | (72.8) | (102.4) |
Net profit | 10.9 | 11.8 | 335.4 | 346.0 | 51.2 | 110.6 | 41.5 | 27.3 | 439.0 | 495.7 |
Other comprehensive income | - | - | 87.1 | 44.2 | 46.5 | 22.9 | 42.8 | (7.4) | 176.4 | 59.7 |
Total comprehensive income | 10.9 | 11.8 | 422.5 | 390.2 | 97.7 | 133.5 | 84.3 | 19.9 | 615.4 | 555.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net profit | 3.0 | 4.0 | 119.2 | 125.0 | 26.5 | 36.5 | 13.6 | 6.8 | 162.3 | 172.3 |
Vopak\u2019s share of OCI | - | - | 24.0 | 12.5 | 23.2 | 11.4 | 21.4 | (3.7) | 68.6 | 20.2 |
Vopak\u2019s share of total comprehensive income | 3.0 | 4.0 | 143.2 | 137.5 | 49.7 | 47.9 | 35.0 | 3.1 | 230.9 | 192.5 |
Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
The movements of investments accounted for using the equity method are set out below.
| \u00a0 | Associates | Joint ventures | Total |
|---|---|---|---|
Share of net assets | 2,017.8 | 1,056.3 | 3,074.1 |
Goodwill | 310.9 | 74.2 | 385.1 |
Balance on January 1, 2021 | 2,328.7 | 1,130.5 | 3,459.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 6.7 | 145.0 | 151.7 |
Consolidation | 0.4 | - | 0.4 |
Disposals | (17.3) | (1.0) | (18.3) |
Share of results - real estate | - | 42.3 | 42.3 |
Share of results - discontinued operations | 3.1 | (0.3) | 2.8 |
Share of results - other | 223.8 | 160.8 | 384.6 |
Share of other comprehensive income | 67.5 | 9.4 | 76.9 |
Dividends | (114.7) | (178.4) | (293.1) |
Reclassification | (0.2) | (2.1) | (2.3) |
Reclassification to held for sale | 3.1 | (26.1) | (23.0) |
Impairments | - | (43.5) | (43.5) |
Exchange differences | 35.3 | 82.8 | 118.1 |
Other | (6.7) | - | (6.7) |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 2,209.6 | 1,252.7 | 3,462.3 |
Goodwill | 320.1 | 66.7 | 386.8 |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 644.2 | 319.7 | 963.9 |
Consolidation | 10.8 | 59.3 | 70.1 |
Disposals | (47.4) | (2.5) | (49.9) |
Share of results - real estate | - | 50.0 | 50.0 |
Share of results - other | 893.4 | 143.9 | 1,037.3 |
Share of other comprehensive income | 191.6 | 46.7 | 238.3 |
Dividends | (141.2) | (188.1) | (329.3) |
Impairments | (165.8) | - | (165.8) |
Impairments reversal | - | 3.8 | 3.8 |
Reclassification1 | (2,262.5) | - | (2,262.5) |
Reclassification to held for sale | (1.5) | (77.8) | (79.3) |
Exchange differences | 8.4 | 29.3 | 37.7 |
Other | (4.6) | - | (4.6) |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 1,418.3 | 1,540.3 | 2,958.6 |
Goodwill | 236.8 | 163.4 | 400.2 |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
The amounts recognized in the statement of financial position comprise:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Publicly traded | 804.9 | 1,796.2 |
Other | 2,553.9 | 2,052.9 |
| \u00a0 | 3,358.8 | 3,849.1 |
Vopak - PT2SB
In March 2020, a fire took place at an anchor client of PT2SB (25% Vopak) in Malaysia, leading to a subsequent closure of the facility. Following another incident in 2022, the refinery is only expected to resume operations in the first half of 2023. At December 31, 2022, PT2SB has reported \u20ac\u00a0173 million in net accounts receivable from this client (December 2021: \u20ac\u00a088 million). The refinery closure impacted the client\u2019s liquidity position, which may impact PT2SB\u2019s financial performance in 2023.
Investments
Prodrive Technologies
On February 17, 2022, HAL completed the acquisition of 31.45% of the shares in Prodrive Technologies Group B.V. (\u2018Prodrive Technologies\u2019). The company is active in the research, development and manufacturing of high-tech electronics, software and mechatronic products and systems. Prodrive Technologies provides solutions for, among others, the semiconductor, medical and electric mobility industries. As part of the notional purchase price allocation procedures an amount of \u20ac\u00a093.7 million was recognized as goodwill, which was part of the inititial carrying value of this associate. In the fourth quarter of 2022 an impairment of \u20ac\u00a0129.6 million was recorded on this associate (refer to note 35) and a related earn-out liability of \u20ac\u00a019.0 was released.
Real estate joint ventures
The gross investment in joint ventures belonging to the real estate segment increased by \u20ac\u00a085 million during 2022.
Vopak - Aegis
In the second quarter of 2022, Vopak acquired a 49% shareholding in the Aegis Vopak Terminals Ltd. entity (joint venture) and a 24% shareholding in the Hindustan Aegis LPG Ltd. entity (associate). The acquisition-date fair value of the consideration transferred amounted to \u20ac\u00a0226.3 million, of which \u20ac\u00a0174.2 million was paid in cash and \u20ac\u00a052.1 million is contingent upon the completion of certain projects (\u20ac\u00a032.6 million) and exceeding certain revenue targets in 2025 (\u20ac\u00a019.5 million). The company is still working on the notional purchase price allocation for these transactions and expects to finalize this within twelve months after acquisition date.
Divestments
Vopak - Diize
In December 2022 Vopak divested 50% of its shareholding in Diize B.V. The remaining 50% of the former subsidiary was retained and classified as a joint venture.
Vopak - ThaiTank terminal
In December 2022, Vopak recorded an exceptional gain of \u20ac\u00a05.2 million related to the dilution of 14% of its equity interest in ThaiTank Terminal Ltd. After the dilution, Vopak continues to hold an equity interest of 35% that continues to be classified as a joint venture.
Vopak - German LNG terminal
As a result of the divestment of the 33.3% shareholding in the German LNG Terminal GmbH, an impairment reversal of \u20ac\u00a03.8 million was recorded within exceptional items (refer to note 35). This reversal partially offsets the impairment of \u20ac\u00a010.8 million recognized in 2021. Contingent proceeds dependent on the final investment decision of the project amounted to \u20ac\u00a08.9 million. As at the reporting date respective conditions were not yet met.
Quoted associate(s)
The difference between the market value of the Company\u2019s share in its publicly traded associate SBM Offshore N.V. (2021: including Boskalis) and the book value is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Market value | 606.0 | 2,061.2 |
Book value | 804.9 | 1,796.2 |
| \u00a0 | (198.9) | 265.0 |
Real estate joint ventures
The financial position of the U.S. real estate joint ventures included in the real estate segment can be summarized as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Properties in operation and under construction | 554.5 | 477.1 |
Project debt | (339.6) | (322.5) |
Non-controlling interest | (39.8) | (21.6) |
HAL equity share | 175.1 | 133.0 |
The real estate portfolio consisted at the end of 2022 of 16 joint ventures of which 2 were invested in office buildings and 14 in residential real estate. The total (expected) cost of the real estate portfolio amounted to $ 1,138.1 million (\u20ac\u00a01,062.5 million) as of December 31, 2022 (2021: $\u00a0987.8 million, \u20ac\u00a0867.5 million). HAL\u2019s total equity commitment for these projects amounts to $ 306.2 million (\u20ac\u00a0285.9 million, 2021: $\u00a0289.1 million, \u20ac\u00a0253.9 million) of which $\u00a080.0 million (\u20ac\u00a074.7 million) was not yet spent as of December 31, 2022 (2021: $\u00a080.4 million, \u20ac\u00a070.6 million). As certain properties are under construction, the income statements of these joint ventures on a 100% basis are not significant in relation to these financial statements. Revenues for 2022 amounted to \u20ac\u00a030.0 million (2021: \u20ac\u00a021.2 million).
Principal associate
As of 2022, the principal (non-consolidated) associate of the Company is SBM Offshore N.V. (\u2018SBM Offshore\u2019) in which the Company has a 22.88% ownership interest. SBM Offshore is incorporated in the Netherlands and is listed on Euronext Amsterdam. The company designs, builds, installs and operates offshore floating facilities for the offshore energy industry.
Set out below is the summarized financial information for SBM Offshore. This summary is based on publicly available information.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Current | \u00a0 | \u00a0 |
Cash and cash equivalents | 683.0 | 1,021.0 |
Other current assets | 8,388.0 | 5,395.0 |
Total current assets | 9,071.0 | 6,416.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities (excluding trade payables) | 1,883.0 | 1,899.0 |
Other current liabilities (including trade payables) | 1,720.0 | 1,299.0 |
Total current liabilities | 3,603.0 | 3,198.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current | \u00a0 | \u00a0 |
Assets | 6,818.0 | 6,795.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities | 6,898.0 | 6,090.0 |
Other liabilities | 474.0 | 387.0 |
Total non-current liabilities | 7,372.0 | 6,477.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-controlling interest | 1,517.0 | 957.0 |
| \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,397.0 | 2,579.0 |
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Revenue | 4,913.0 | 3,747.0 |
Depreciation, amortization and impairment | (189.0) | (88.0) |
Financial income | 12.0 | 3.0 |
Financial expense | (385.0) | (304.0) |
Profit / (loss) before tax | 660.0 | 543.0 |
Profit / (loss) after tax for owners of parent | 450.0 | 400.0 |
Other comprehensive income for owners of parent | 526.0 | (51.0) |
Total comprehensive income for owners of parent | 976.0 | 349.0 |
Reconciliation of the summarized financial information for SBM Offshore:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Net assets January 1 | 2,579.0 | 2,556.0 |
Profit / (loss) for the period | 450.0 | 400.0 |
Other comprehensive income | 526.0 | (51.0) |
Transactions with owners | (158.0) | (326.0) |
Net assets December 31 | 3,397.0 | 2,579.0 |
| \u00a0 | \u00a0 | \u00a0 |
| \u00a0 | \u20ac\u00a0'm | \u20ac\u00a0'm |
Interest in SBM Offshore (22.88%, 2021: 22.88%) | 736.0 | 530.0 |
Intangible assets recognized in purchase price allocation | 25.9 | 27.3 |
Goodwill | 43.0 | 40.5 |
Book value | 804.9 | 597.8 |
We refer to note 43 with respect to summarized financial information on associates and joint ventures of Vopak.
The summarized financial information of the associates and joint ventures of Vopak is as follows.
Summarized\u00a0statements\u00a0of\u00a0financial\u00a0position on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Non-current assets | 205.4 | 209.9 | 4,657.7 | 3,771.8 | 1,858.2 | 1,984.8 | 1,205.5 | 1,130.8 | 7,926.8 | 7,097.3 |
Cash and cash equivalents | 10.7 | 10.6 | 579.9 | 465.4 | 163.4 | 139.4 | 17.7 | 19.6 | 771.7 | 635.0 |
Other current assets | 10.0 | 17.3 | 243.8 | 273.9 | 85.2 | 104.1 | 58.5 | 51.1 | 397.5 | 446.4 |
Total assets | 226.1 | 237.8 | 5,481.4 | 4,511.1 | 2,106.8 | 2,228.3 | 1,281.7 | 1,201.5 | 9,096.0 | 8,178.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial non-current liabilities | 136.0 | 149.6 | 1,861.6 | 1,795.2 | 922.3 | 989.3 | 386.7 | 363.1 | 3,306.6 | 3,297.2 |
Other non-current liabilities | 12.7 | 13.8 | 137.1 | 179.7 | 183.0 | 250.8 | 2.3 | 9.1 | 335.1 | 453.4 |
Financial current liabilities | 15.6 | 17.6 | 516.2 | 177.3 | 138.6 | 125.6 | 14.2 | 16.6 | 684.6 | 337.1 |
Other current liabilities | 20.5 | 13.9 | 352.5 | 263.5 | 75.7 | 62.6 | 47.5 | 48.0 | 496.2 | 388.0 |
Total liabilities | 184.8 | 194.9 | 2,867.4 | 2,415.7 | 1,319.6 | 1,428.3 | 450.7 | 436.8 | 4,822.5 | 4,475.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net assets | 41.3 | 42.9 | 2,614.0 | 2,095.4 | 787.2 | 800.0 | 831.0 | 764.7 | 4,273.5 | 3,703.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net assets | 19.1 | 20.0 | 983.7 | 817.6 | 405.4 | 408.7 | 289.2 | 258.8 | 1,697.4 | 1,505.1 |
Goodwill on acquisition | - | - | 112.1 | 12.4 | 31.7 | 31.4 | 36.6 | 34.4 | 180.4 | 78.2 |
Vopak\u2019s carrying amount of net assets | 19.1 | 20.0 | 1,095.8 | 830.0 | 437.1 | 440.1 | 325.8 | 293.2 | 1,877.8 | 1,583.3 |
Summarized\u00a0statements\u00a0of\u00a0total\u00a0comprehensive\u00a0income on\u00a0a\u00a0100%\u00a0basis:
| \u00a0 | Europe & Africa | Asia & Middle East | New energy & LNG | Americas & Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Revenues | 50.7 | 51.8 | 987.1 | 842.9 | 427.6 | 458.5 | 238.3 | 194.7 | 1,703.7 | 1,547.9 |
Operating expenses | (19.3) | (18.5) | (290.9) | (192.1) | (109.9) | (99.9) | (150.8) | (124.2) | (570.9) | (434.7) |
Depreciation, amortization and impairment | (13.2) | (13.2) | (236.5) | (210.7) | (161.4) | (120.4) | (28.8) | (30.1) | (439.9) | (374.4) |
Operating profit (EBIT) | 18.2 | 20.1 | 459.7 | 440.1 | 156.3 | 238.2 | 58.7 | 40.4 | 692.9 | 738.8 |
Net finance income / (expense) | (4.9) | (5.6) | (88.9) | (56.7) | (70.2) | (65.5) | (17.1) | (12.9) | (181.1) | (140.7) |
Income tax | (2.4) | (2.7) | (35.4) | (37.4) | (34.9) | (62.1) | (0.1) | (0.2) | (72.8) | (102.4) |
Net profit | 10.9 | 11.8 | 335.4 | 346.0 | 51.2 | 110.6 | 41.5 | 27.3 | 439.0 | 495.7 |
Other comprehensive income | - | - | 87.1 | 44.2 | 46.5 | 22.9 | 42.8 | (7.4) | 176.4 | 59.7 |
Total comprehensive income | 10.9 | 11.8 | 422.5 | 390.2 | 97.7 | 133.5 | 84.3 | 19.9 | 615.4 | 555.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Vopak\u2019s share of net profit | 3.0 | 4.0 | 119.2 | 125.0 | 26.5 | 36.5 | 13.6 | 6.8 | 162.3 | 172.3 |
Vopak\u2019s share of OCI | - | - | 24.0 | 12.5 | 23.2 | 11.4 | 21.4 | (3.7) | 68.6 | 20.2 |
Vopak\u2019s share of total comprehensive income | 3.0 | 4.0 | 143.2 | 137.5 | 49.7 | 47.9 | 35.0 | 3.1 | 230.9 | 192.5 |
Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
The movements of investments accounted for using the equity method are set out below.
| \u00a0 | Associates | Joint ventures | Total |
|---|---|---|---|
Share of net assets | 2,017.8 | 1,056.3 | 3,074.1 |
Goodwill | 310.9 | 74.2 | 385.1 |
Balance on January 1, 2021 | 2,328.7 | 1,130.5 | 3,459.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 6.7 | 145.0 | 151.7 |
Consolidation | 0.4 | - | 0.4 |
Disposals | (17.3) | (1.0) | (18.3) |
Share of results - real estate | - | 42.3 | 42.3 |
Share of results - discontinued operations | 3.1 | (0.3) | 2.8 |
Share of results - other | 223.8 | 160.8 | 384.6 |
Share of other comprehensive income | 67.5 | 9.4 | 76.9 |
Dividends | (114.7) | (178.4) | (293.1) |
Reclassification | (0.2) | (2.1) | (2.3) |
Reclassification to held for sale | 3.1 | (26.1) | (23.0) |
Impairments | - | (43.5) | (43.5) |
Exchange differences | 35.3 | 82.8 | 118.1 |
Other | (6.7) | - | (6.7) |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 2,209.6 | 1,252.7 | 3,462.3 |
Goodwill | 320.1 | 66.7 | 386.8 |
Balance on December 31, 2021 | 2,529.7 | 1,319.4 | 3,849.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investments | 644.2 | 319.7 | 963.9 |
Consolidation | 10.8 | 59.3 | 70.1 |
Disposals | (47.4) | (2.5) | (49.9) |
Share of results - real estate | - | 50.0 | 50.0 |
Share of results - other | 893.4 | 143.9 | 1,037.3 |
Share of other comprehensive income | 191.6 | 46.7 | 238.3 |
Dividends | (141.2) | (188.1) | (329.3) |
Impairments | (165.8) | - | (165.8) |
Impairments reversal | - | 3.8 | 3.8 |
Reclassification1 | (2,262.5) | - | (2,262.5) |
Reclassification to held for sale | (1.5) | (77.8) | (79.3) |
Exchange differences | 8.4 | 29.3 | 37.7 |
Other | (4.6) | - | (4.6) |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Share of net assets | 1,418.3 | 1,540.3 | 2,958.6 |
Goodwill | 236.8 | 163.4 | 400.2 |
Balance on December 31, 2022 | 1,655.1 | 1,703.7 | 3,358.8 |
The amounts recognized in the statement of financial position comprise:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Publicly traded | 804.9 | 1,796.2 |
Other | 2,553.9 | 2,052.9 |
| \u00a0 | 3,358.8 | 3,849.1 |
Vopak - PT2SB
In March 2020, a fire took place at an anchor client of PT2SB (25% Vopak) in Malaysia, leading to a subsequent closure of the facility. Following another incident in 2022, the refinery is only expected to resume operations in the first half of 2023. At December 31, 2022, PT2SB has reported \u20ac\u00a0173 million in net accounts receivable from this client (December 2021: \u20ac\u00a088 million). The refinery closure impacted the client\u2019s liquidity position, which may impact PT2SB\u2019s financial performance in 2023.
Investments
Prodrive Technologies
On February 17, 2022, HAL completed the acquisition of 31.45% of the shares in Prodrive Technologies Group B.V. (\u2018Prodrive Technologies\u2019). The company is active in the research, development and manufacturing of high-tech electronics, software and mechatronic products and systems. Prodrive Technologies provides solutions for, among others, the semiconductor, medical and electric mobility industries. As part of the notional purchase price allocation procedures an amount of \u20ac\u00a093.7 million was recognized as goodwill, which was part of the inititial carrying value of this associate. In the fourth quarter of 2022 an impairment of \u20ac\u00a0129.6 million was recorded on this associate (refer to note 35) and a related earn-out liability of \u20ac\u00a019.0 was released.
Real estate joint ventures
The gross investment in joint ventures belonging to the real estate segment increased by \u20ac\u00a085 million during 2022.
Vopak - Aegis
In the second quarter of 2022, Vopak acquired a 49% shareholding in the Aegis Vopak Terminals Ltd. entity (joint venture) and a 24% shareholding in the Hindustan Aegis LPG Ltd. entity (associate). The acquisition-date fair value of the consideration transferred amounted to \u20ac\u00a0226.3 million, of which \u20ac\u00a0174.2 million was paid in cash and \u20ac\u00a052.1 million is contingent upon the completion of certain projects (\u20ac\u00a032.6 million) and exceeding certain revenue targets in 2025 (\u20ac\u00a019.5 million). The company is still working on the notional purchase price allocation for these transactions and expects to finalize this within twelve months after acquisition date.
Divestments
Vopak - Diize
In December 2022 Vopak divested 50% of its shareholding in Diize B.V. The remaining 50% of the former subsidiary was retained and classified as a joint venture.
Vopak - ThaiTank terminal
In December 2022, Vopak recorded an exceptional gain of \u20ac\u00a05.2 million related to the dilution of 14% of its equity interest in ThaiTank Terminal Ltd. After the dilution, Vopak continues to hold an equity interest of 35% that continues to be classified as a joint venture.
Vopak - German LNG terminal
As a result of the divestment of the 33.3% shareholding in the German LNG Terminal GmbH, an impairment reversal of \u20ac\u00a03.8 million was recorded within exceptional items (refer to note 35). This reversal partially offsets the impairment of \u20ac\u00a010.8 million recognized in 2021. Contingent proceeds dependent on the final investment decision of the project amounted to \u20ac\u00a08.9 million. As at the reporting date respective conditions were not yet met.
Quoted associate(s)
The difference between the market value of the Company\u2019s share in its publicly traded associate SBM Offshore N.V. (2021: including Boskalis) and the book value is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Market value | 606.0 | 2,061.2 |
Book value | 804.9 | 1,796.2 |
| \u00a0 | (198.9) | 265.0 |
Real estate joint ventures
The financial position of the U.S. real estate joint ventures included in the real estate segment can be summarized as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Properties in operation and under construction | 554.5 | 477.1 |
Project debt | (339.6) | (322.5) |
Non-controlling interest | (39.8) | (21.6) |
HAL equity share | 175.1 | 133.0 |
The real estate portfolio consisted at the end of 2022 of 16 joint ventures of which 2 were invested in office buildings and 14 in residential real estate. The total (expected) cost of the real estate portfolio amounted to $ 1,138.1 million (\u20ac\u00a01,062.5 million) as of December 31, 2022 (2021: $\u00a0987.8 million, \u20ac\u00a0867.5 million). HAL\u2019s total equity commitment for these projects amounts to $ 306.2 million (\u20ac\u00a0285.9 million, 2021: $\u00a0289.1 million, \u20ac\u00a0253.9 million) of which $\u00a080.0 million (\u20ac\u00a074.7 million) was not yet spent as of December 31, 2022 (2021: $\u00a080.4 million, \u20ac\u00a070.6 million). As certain properties are under construction, the income statements of these joint ventures on a 100% basis are not significant in relation to these financial statements. Revenues for 2022 amounted to \u20ac\u00a030.0 million (2021: \u20ac\u00a021.2 million).
Principal associate
As of 2022, the principal (non-consolidated) associate of the Company is SBM Offshore N.V. (\u2018SBM Offshore\u2019) in which the Company has a 22.88% ownership interest. SBM Offshore is incorporated in the Netherlands and is listed on Euronext Amsterdam. The company designs, builds, installs and operates offshore floating facilities for the offshore energy industry.
Set out below is the summarized financial information for SBM Offshore. This summary is based on publicly available information.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Current | \u00a0 | \u00a0 |
Cash and cash equivalents | 683.0 | 1,021.0 |
Other current assets | 8,388.0 | 5,395.0 |
Total current assets | 9,071.0 | 6,416.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities (excluding trade payables) | 1,883.0 | 1,899.0 |
Other current liabilities (including trade payables) | 1,720.0 | 1,299.0 |
Total current liabilities | 3,603.0 | 3,198.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current | \u00a0 | \u00a0 |
Assets | 6,818.0 | 6,795.0 |
| \u00a0 | \u00a0 | \u00a0 |
Financial liabilities | 6,898.0 | 6,090.0 |
Other liabilities | 474.0 | 387.0 |
Total non-current liabilities | 7,372.0 | 6,477.0 |
| \u00a0 | \u00a0 | \u00a0 |
Non-controlling interest | 1,517.0 | 957.0 |
| \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,397.0 | 2,579.0 |
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Revenue | 4,913.0 | 3,747.0 |
Depreciation, amortization and impairment | (189.0) | (88.0) |
Financial income | 12.0 | 3.0 |
Financial expense | (385.0) | (304.0) |
Profit / (loss) before tax | 660.0 | 543.0 |
Profit / (loss) after tax for owners of parent | 450.0 | 400.0 |
Other comprehensive income for owners of parent | 526.0 | (51.0) |
Total comprehensive income for owners of parent | 976.0 | 349.0 |
Reconciliation of the summarized financial information for SBM Offshore:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | USD 'm | USD 'm |
Net assets January 1 | 2,579.0 | 2,556.0 |
Profit / (loss) for the period | 450.0 | 400.0 |
Other comprehensive income | 526.0 | (51.0) |
Transactions with owners | (158.0) | (326.0) |
Net assets December 31 | 3,397.0 | 2,579.0 |
| \u00a0 | \u00a0 | \u00a0 |
| \u00a0 | \u20ac\u00a0'm | \u20ac\u00a0'm |
Interest in SBM Offshore (22.88%, 2021: 22.88%) | 736.0 | 530.0 |
Intangible assets recognized in purchase price allocation | 25.9 | 27.3 |
Goodwill | 43.0 | 40.5 |
Book value | 804.9 | 597.8 |
We refer to note 43 with respect to summarized financial information on associates and joint ventures of Vopak.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-598": { "value": "Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
Associates are entities over which the Company has significant influence, generally presumed to exist at a shareholding of 20% or more of the voting rights, but no (de facto) control.
Associates and joint ventures are accounted for using the equity method. Under the equity method, the interest in the associate or joint venture is recognized at cost, including goodwill identified upon acquisition. If the investment is achieved in stages, the Company deems the fair value of the previously held equity interest as (part of ) the cost of the associate or joint venture. The carrying value is subsequently adjusted to recognize the Company\u2019s share of the post-acquisition results and movements in other comprehensive income of the associate or joint venture. Accounting policies of the associates and joint ventures have been amended, where necessary, to ensure consistency with the policies adopted by the Company. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising on associates and joint ventures are recognized in the income statement.
If the ownership in an associate is reduced, but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is recycled to the consolidated statement of income, where appropriate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-600": { "value": "Joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Most joint arrangements of the Company are considered joint ventures.
Joint operations are joint arrangements whereby the Company and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Company recognizes its share in the joint operations\u2019 individual revenues and expenses, assets and liabilities and includes it on a line-by-line basis with corresponding items in the Company\u2019s financial statements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-481": { "value": "For the accounting policies for derivative financial instruments, reference is made to note 37. At initial recognition, the Company classifies its non-derivative financial assets as \u201cmeasured at amortized cost\u201d or as \u201cmeasured at fair value\u201d (either through profit or loss or other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 36). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor\u2019s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 36.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 36), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
The specification is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Investments in unquoted equity securities | 94.0 | 83.6 |
Loans to associates and joint ventures | 5.2 | 8.0 |
Other loans | 95.6 | 95.8 |
Finance lease receivable | 131.9 | 131.2 |
Escrow | 250.0 | 500.0 |
Other | 68.8 | 47.6 |
| \u00a0 | 645.5 | 866.2 |
The escrow comprises of an amount of \u20ac\u00a0250 million (2021: \u20ac\u00a0500 million) representing the part of the proceeds from the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V. that is held in escrow until July 3, 2023, for potential liabilities of HAL under the sale and purchase agreement. The funds held in escrow carry 0% interest for HAL. The category \u201cother\u201d includes long-term deposits and receivables. For additional information on derivatives reference is made to note 37.
The other financial assets can be further specified as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Non-current | 360.0 | 588.9 |
Current | 285.5 | 277.3 |
| \u00a0 | 645.5 | 866.2 |
Amounts included in the cash flow statement comprise:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Loans provided to associates and joint ventures | (6.3) | (3.5) |
Repayment of loans by associates and joint ventures | - | 38.0 |
Other | 245.5 | (25.1) |
Proceeds from/(investments in) other financial assets in the statement of cash flows | 239.2 | 9.4 |
The category \u201cother\u201d mainly relates to the receipt of \u20ac\u00a0250 million from the afore-mentioned escrow.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-605": { "value": "For the accounting policies for derivative financial instruments, reference is made to note 37. At initial recognition, the Company classifies its non-derivative financial assets as \u201cmeasured at amortized cost\u201d or as \u201cmeasured at fair value\u201d (either through profit or loss or other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 36). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor\u2019s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 36.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 36), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
For the accounting policies for derivative financial instruments, reference is made to note 37. At initial recognition, the Company classifies its non-derivative financial assets as \u201cmeasured at amortized cost\u201d or as \u201cmeasured at fair value\u201d (either through profit or loss or other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 36). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor\u2019s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 36.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 36), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
For the accounting policies for derivative financial instruments, reference is made to note 37. At initial recognition, the Company classifies its non-derivative financial assets as \u201cmeasured at amortized cost\u201d or as \u201cmeasured at fair value\u201d (either through profit or loss or other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 36). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor\u2019s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 36.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 36), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
For the accounting policies for derivative financial instruments, reference is made to note 37. At initial recognition, the Company classifies its non-derivative financial assets as \u201cmeasured at amortized cost\u201d or as \u201cmeasured at fair value\u201d (either through profit or loss or other comprehensive income). The classification depends on the business model the Company applies for managing the financial assets and the contractual terms of the cash flows.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
Financial assets measured at amortized cost
These are assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest. They are initially recognized at fair value plus any directly related transaction costs. Subsequently, these financial assets are carried at amortized cost, less a provision for impairment based on the expected loss model (refer to note 36). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.
Assets held under a finance lease are presented in the consolidated statement of financial position as a receivable at an amount equal to the net investment in the lease. The income on the finance lease receivable is based on a pattern reflecting a constant periodic rate of return on the lessor\u2019s net investment in the finance lease and is presented as revenues.
Financial assets measured at fair value through other comprehensive income
Financial instruments in this class are initially measured at fair value plus any directly related transaction costs. Reference is made to the accounting policies on fair value measurement in note 36.
Debt instruments
These instruments are held both for collection of contractual cash flows, representing solely payments of principal and interest, and for selling the financial assets. Changes in the fair value of these investments are recorded in other comprehensive income and recycled through the consolidated statement of income upon derecognition. Both interest and the provision for impairment, based on the expected loss model (refer to note 36), are recognized in the consolidated statement of income.
Equity instruments
Management can make the irrevocable election at inception to present the subsequent changes in fair value of certain quoted equity investments, included in other financial assets, in other comprehensive income. Dividends from these investments are recognized in the consolidated statement of income when the right to receive payment is established. When the equity interest is sold or becomes equity accounted or part of a business combination, the cumulative result recognized in other comprehensive income is reclassified from the other reserves to retained earnings, without recycling through the consolidated statement of income.
Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
Financial assets are first recognized on the trade date, the date on which the Company commits to purchase the asset. Financial assets are derecognized when the right to receive cash flows from the investments has expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-610": { "value": "Financial assets measured at fair value through profit or loss
Debt instruments that do not qualify for measurement at amortized cost or measurement at fair value through other comprehensive income are measured at fair value through profit or loss. This classification also applies to all equity investments, unless management has made the specific election for measurement through other comprehensive income. Initial recognition of these assets is at fair value with any directly related transaction costs expensed as incurred. Gains or losses on financial instruments in this category are recognized in the consolidated statement of income.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-482": { "value": "The accounting policies applied to marketable securities and deposits are the same as those applied to other financial assets (note 9). Marketable securities are measured at fair value through profit or loss except for certain fixed income securities which are measured at fair value through other comprehensive income.
Marketable securities consist of equity securities amounting to \u20ac\u00a0521.2 million (2021: \u20ac\u00a0418.7 million) and fixed-income securities amounting to \u20ac\u00a02,839.7 million (2021: \u20ac\u00a03,741.3 million). The fixed-income securities mainly include corporate investment-grade bonds, with an average S&P credit rating of A, an average duration of 1.1 year and an average yield to maturity of 3.43%. The portfolios were on average 41% invested in BBB-rated bonds, 40% in A-rated bonds, 10% in AA-rated bonds and 9% in AAA-rated bonds. On average, the portfolio matures for 55% within 1 year, 41% within 1-3 years and 4% within 3-5 years. The emerging market exposure of the portfolios was 4% of the total value. The average amount invested per security was \u20ac\u00a04 million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-483": { "value": "The accounting policies applied to marketable securities and deposits are the same as those applied to other financial assets (note 9). Marketable securities are measured at fair value through profit or loss except for certain fixed income securities which are measured at fair value through other comprehensive income.
Marketable securities consist of equity securities amounting to \u20ac\u00a0521.2 million (2021: \u20ac\u00a0418.7 million) and fixed-income securities amounting to \u20ac\u00a02,839.7 million (2021: \u20ac\u00a03,741.3 million). The fixed-income securities mainly include corporate investment-grade bonds, with an average S&P credit rating of A, an average duration of 1.1 year and an average yield to maturity of 3.43%. The portfolios were on average 41% invested in BBB-rated bonds, 40% in A-rated bonds, 10% in AA-rated bonds and 9% in AAA-rated bonds. On average, the portfolio matures for 55% within 1 year, 41% within 1-3 years and 4% within 3-5 years. The emerging market exposure of the portfolios was 4% of the total value. The average amount invested per security was \u20ac\u00a04 million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsHeldForTradingExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-484": { "value": "Trade receivables are initially recognized at the transaction price and subsequently measured at amortized cost using the effective interest method, less a provision for impairment. Trade receivables that include a significant financing component are initially recognized at fair value plus any directly related transaction costs. A provision for impairment is established based on the expected loss model (refer to note 36) with application of the simplified approach. The amount of the provision is the difference between the assets\u2019 carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Additions to and releases from the provision are recognized in the consolidated statement of income.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Trade receivables | 1,502.3 | 1,042.5 |
Allowance for doubtful accounts | (78.5) | (64.6) |
| \u00a0 | 1,423.8 | 977.9 |
The ageing analysis of the trade receivables that are past due, net of provision for impairment, is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Up to 3 months | 249.0 | 178.2 |
Between 3 and 6 months | 27.3 | 24.3 |
Between 6 and 9 months | 13.5 | 10.6 |
Over 9 months | 32.9 | 19.8 |
| \u00a0 | 322.7 | 232.9 |
Movements on the provision for impairment of trade receivables are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | (64.6) | (68.4) |
Consolidation | (39.2) | (2.4) |
Addition to allowance | (31.2) | (15.3) |
Utilized during the year | 37.9 | 18.2 |
Released | 20.0 | 3.7 |
Reclassification to held for sale | 0.3 | 0.4 |
Other movements | (1.7) | (0.8) |
Balance on December 31 | (78.5) | (64.6) |
There was no indication at the reporting date that these receivables will not be recovered, other than as already provided for. The fair value of the receivables approximates their carrying value.
Information on pledges is included in note 22.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-613": { "value": "Trade receivables are initially recognized at the transaction price and subsequently measured at amortized cost using the effective interest method, less a provision for impairment. Trade receivables that include a significant financing component are initially recognized at fair value plus any directly related transaction costs. A provision for impairment is established based on the expected loss model (refer to note 36) with application of the simplified approach. The amount of the provision is the difference between the assets\u2019 carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Additions to and releases from the provision are recognized in the consolidated statement of income.
Movements on the provision for impairment of trade receivables are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | (64.6) | (68.4) |
Consolidation | (39.2) | (2.4) |
Addition to allowance | (31.2) | (15.3) |
Utilized during the year | 37.9 | 18.2 |
Released | 20.0 | 3.7 |
Reclassification to held for sale | 0.3 | 0.4 |
Other movements | (1.7) | (0.8) |
Balance on December 31 | (78.5) | (64.6) |
There was no indication at the reporting date that these receivables will not be recovered, other than as already provided for. The fair value of the receivables approximates their carrying value.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-488": { "value": "A construction contract is a contract specifically negotiated for the construction of an asset, including (residential) real estate, greenhouse projects, technical facilities, civil and maritime infrastructure and development projects for which a contract with a customer is present. Development projects for which there is not yet a contract with a customer are included within inventories (refer to note 13). Offshore service contracts are specifically negotiated contracts for (sub-sea) marine services, including heavy transport, inspections and surveys. The timing of invoicing and cash collection may result in unbilled revenue, accounts receivable and deferred revenue with respect to these contracts. Amounts are generally invoiced based on contractual terms, either at periodic intervals or upon achievement of contractual milestones, and for each contract a net position is included in the statement of financial position. In the event that billing occurs subsequent to revenue recognition, unbilled revenue is recognized (as an asset). In the event that payments are received from customers in advance of revenue recognition, deferred revenue is recognized (as a liability).
A provision for onerous contracts is recognized when the remaining unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The provisions taken for onerous contracts related to construction and offshore service contracts are included in note 21. The provision is measured based on the expected incremental and directly related costs of fulfilling the contract.
The order book includes future revenues from projects that have been signed and, for framework contracts, for which work packages have been agreed with clients. This includes mainly projects that are in progress but not yet completed and to a lesser extent projects acquired but not yet in progress at the reporting date.
For information on revenue recognition for construction and offshore service contracts reference is made to note 23.
Critical accounting estimates and judgments
The expected outcome of a construction or offshore service contract is periodically estimated. If the contract is expected to be profitable and the contract revenue highly probable, contract revenue and costs are recognized based on the progress of the project over time, generally by reference to the percentage-of-completion method. When a contract is not estimated to be profitable, the realized loss, determined based on the progress of the project, is recognized in the consolidated statement of income immediately. The expected future losses are included in a provision for onerous contracts (refer to note 21) that is charged against the consolidated statement of income.
There is a robust process in place to determine both progress and forecasted outcomes of construction and offshore service contracts. This process builds on decentralized estimates by project managers that are thoroughly discussed with and reviewed by experienced staff and management at various levels of the organization, including comparative analyses with earlier projections and project budgets. There is inherent estimation uncertainty in this process and actual outcomes of projects may deviate from the forecasted outcomes, affecting revenue and results.
Unbilled revenue and deferred revenue related to construction and offshore contracting activities for which there is a contract with a customer are as follows.
| \u00a0 | Dec. 31, 20221 | Dec. 31, 20212 |
|---|---|---|
Unbilled revenue | 372.4 | 70.6 |
Deferred revenue | (584.5) | (160.3) |
| \u00a0 | (212.1) | (89.7) |
The unbilled revenue and deferred revenue balances are expected to be mainly recognized in 2023 as the Company does not pre-finance projects longer than one year and regular invoicing of installments applies.
The order book with regards to construction and offshore service projects for which a signed contract is in place amounts to \u20ac\u00a07.9 billion (2021: \u20ac\u00a01.9 billion). The increase is primarily the result of the acquisition of Boskalis. These revenues are expected to be realized mainly over the next three years. The Company does not use the practical expedient to exclude performance obligations in contracts with an original expected duration of one year or less.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-615": { "value": "A construction contract is a contract specifically negotiated for the construction of an asset, including (residential) real estate, greenhouse projects, technical facilities, civil and maritime infrastructure and development projects for which a contract with a customer is present. Development projects for which there is not yet a contract with a customer are included within inventories (refer to note 13). Offshore service contracts are specifically negotiated contracts for (sub-sea) marine services, including heavy transport, inspections and surveys. The timing of invoicing and cash collection may result in unbilled revenue, accounts receivable and deferred revenue with respect to these contracts. Amounts are generally invoiced based on contractual terms, either at periodic intervals or upon achievement of contractual milestones, and for each contract a net position is included in the statement of financial position. In the event that billing occurs subsequent to revenue recognition, unbilled revenue is recognized (as an asset). In the event that payments are received from customers in advance of revenue recognition, deferred revenue is recognized (as a liability).
A provision for onerous contracts is recognized when the remaining unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The provisions taken for onerous contracts related to construction and offshore service contracts are included in note 21. The provision is measured based on the expected incremental and directly related costs of fulfilling the contract.
The order book includes future revenues from projects that have been signed and, for framework contracts, for which work packages have been agreed with clients. This includes mainly projects that are in progress but not yet completed and to a lesser extent projects acquired but not yet in progress at the reporting date.
For information on revenue recognition for construction and offshore service contracts reference is made to note 23.
Critical accounting estimates and judgments
The expected outcome of a construction or offshore service contract is periodically estimated. If the contract is expected to be profitable and the contract revenue highly probable, contract revenue and costs are recognized based on the progress of the project over time, generally by reference to the percentage-of-completion method. When a contract is not estimated to be profitable, the realized loss, determined based on the progress of the project, is recognized in the consolidated statement of income immediately. The expected future losses are included in a provision for onerous contracts (refer to note 21) that is charged against the consolidated statement of income.
There is a robust process in place to determine both progress and forecasted outcomes of construction and offshore service contracts. This process builds on decentralized estimates by project managers that are thoroughly discussed with and reviewed by experienced staff and management at various levels of the organization, including comparative analyses with earlier projections and project budgets. There is inherent estimation uncertainty in this process and actual outcomes of projects may deviate from the forecasted outcomes, affecting revenue and results.
Inventories are stated at the lower of cost and net realizable value. Cost is generally determined using the weighted-average cost method. Cost comprises direct costs and a proportion of attributable production overheads, but excludes interest expense. Net realizable value is the estimated selling price less the estimated costs necessary to make the sale.
Project development includes land positions, related building rights and capitalized property development costs related to projects for which a signed customer contract is not yet in place.
Critical accounting estimates and judgments
Finished goods are regularly subjected to specific assessment tests to identify damaged, slow moving or obsolete inventory, taking into consideration past experience, historic results and the probability of sale under normal market conditions. Based on these analyses, management asserts judgment to determine the write-downs required to reduce the value of the inventory to its net realizable value.
The composition of the inventories is set out below.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Raw materials | 261.5 | 189.4 |
Work in progress | 60.0 | 67.1 |
Spare parts | 93.9 | 16.9 |
Finished goods | 725.0 | 700.5 |
Project development (including land and building rights) | 120.8 | 118.0 |
Stock in transit | 12.9 | 16.3 |
Provision on inventory | (140.4) | (140.8) |
| \u00a0 | 1,133.7 | 967.4 |
The cost of inventory, services and subcontracted work recognized as an expense amounts to \u20ac\u00a04,792.6 million (2021: \u20ac\u00a02,883.5 million). The total write-down of inventories recognized as an expense amounts to \u20ac\u00a014.3 million (2021: \u20ac\u00a07.2 million).
Information on pledges is included in note 22.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-617": { "value": "Inventories are stated at the lower of cost and net realizable value. Cost is generally determined using the weighted-average cost method. Cost comprises direct costs and a proportion of attributable production overheads, but excludes interest expense. Net realizable value is the estimated selling price less the estimated costs necessary to make the sale.
Project development includes land positions, related building rights and capitalized property development costs related to projects for which a signed customer contract is not yet in place.
Critical accounting estimates and judgments
Finished goods are regularly subjected to specific assessment tests to identify damaged, slow moving or obsolete inventory, taking into consideration past experience, historic results and the probability of sale under normal market conditions. Based on these analyses, management asserts judgment to determine the write-downs required to reduce the value of the inventory to its net realizable value.
Other current assets generally include prepayments relating to the following year and other receivables to be received within 12 months.
The composition of the other current assets is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Prepaid vendors | 418.0 | 81.6 |
VAT receivable | 82.3 | 57.0 |
Supplier bonus receivable | 46.5 | 40.9 |
Income tax receivable | 116.9 | 54.2 |
Other receivables | 234.6 | 181.6 |
| \u00a0 | 898.3 | 415.3 |
Other current assets generally include prepayments relating to the following year and other receivables to be received within 12 months.
Other reserves include the cumulative valuation reserve, the cash flow hedge reserve and the cumulative currency translation reserve.
The cumulative valuation reserve includes the unrealized results, net of tax, on financial assets classified as fair value through other comprehensive income.
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place.
The cumulative currency translation reserve includes all exchange differences resulting from the translation of the financial statements of foreign entities. It also includes the exchange differences on liabilities and the effective currency component of fair value changes of derivative financial instruments, net of tax, to the extent that they are part of an effective net investment hedge relationship.
Income from marketable securities and deposits includes realized and unrealized capital gains and losses, impairment losses, interest, dividends and management fees.
Capital gains and losses represent the change in market value of the marketable securities. Interest income on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest rate method. Dividends are recognized when the right to receive payment is established.
Associates and joint ventures are accounted for using the equity method, which involves recognition in the consolidated statement of income the Company\u2019s share of the net result of the associate or joint venture. When the Company\u2019s share of losses exceeds the carrying amount of an equity-accounted investment, including any unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the company in question. Significant unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company\u2019s interest in the specific company. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The Company develops, leases and sells residential, retail and office properties in its Real estate segment. Revenue from (operating) lease activities is recognized on a straight-line basis over the lease term. Capital gains from property sales are recognized at the transaction price agreed in the contract when control over the property has been transferred to the buyer. Revenue is recognized at the point in time when the legal title has passed to the buyer and the consideration becomes due.
Cash and cash equivalents comprise unrestricted bank balances and liquid investments with a maturity of three months or less.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Cash | 1,707.3 | 1,496.4 |
Cash equivalents | 336.6 | 760.0 |
Cash and cash equivalents | 2,043.9 | 2,256.4 |
Cash equivalents include time deposits with a maturity of less than three months. Cash and cash equivalents in amount of \u20ac\u00a0103.0 million (2021: \u20ac\u00a08.3 million) was held by project-driven construction consortia (joint operations).
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-621": { "value": "Cash and cash equivalents comprise unrestricted bank balances and liquid investments with a maturity of three months or less.
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately \u00adbefore classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is \u00adupdated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
A discontinued operation is a component of the Company\u2019s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
At the reporting date the composition of total assets held for sale and related liabilities was as follows.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Property, plant and equipment | 71.4 | 131.2 |
Right-of-use assets | 4.0 | 22.4 |
Intangible assets | - | 37.4 |
Investments in associates and joint arrangements | 228.3 | 26.5 |
Other non-current assets | - | 1.4 |
Current assets | - | 7.7 |
Total assets held for sale | 303.7 | 226.6 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current liabilities | 42.3 | 43.6 |
Current liabilities | - | 6.6 |
Total liabilities related to assets held for sale | 42.3 | 50.2 |
| \u00a0 | \u00a0 | \u00a0 |
Total net assets held for sale | 261.4 | 176.4 |
In May 2022, Vopak completed the divestment of its Canadian terminals (refer to note 3). At year-end 2021, the net assets held for sale for these terminals amounted to \u20ac\u00a0104.6 million. Also in May 2022, Vopak completed the divestment of its CRL terminal in Kandla, India, (refer to notes 3 and 8). At year-end 2021, the net assets held for sale for this terminal amounted to \u20ac\u00a037.5 million. In December 2022, Vopak completed the divestment of its 100% shareholding in Agencies B.V. and its 50% shareholding in Diize B.V.
On February 7, 2022, a joint venture in which HAL had an 85.5% equity interest sold an apartment building in Bellevue, a suburb of Seattle, consisting of 279 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a075 million and a pre-tax capital gain of \u20ac\u00a050 million. This apartment building was included in assets held for sale at year-end 2021 for \u20ac\u00a026.5 million. On May 2, 2022, HAL completed the sale of its ownership interest in Orthopedie Investments Holding B.V. (\u2018Livit\u2019).On May 31, 2022, HAL sold its ownership interest in Floramedia Group B.V. (\u2018Floramedia\u2019). On July 8, 2022, HAL sold its ownership interest in MYLAPS. Refer to note 3 for details on these divestments. On August 16, 2022, a joint venture in which HAL had a 90% equity interest sold an apartment building in Beacon Hill, a neighborhood in southeast Seattle, consisting of 139 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a027 million and a pre-tax capital gain of \u20ac\u00a013 million.
Vopak - Pacific Canada project
In the fourth quarter of 2022, Vopak has classified capitalized development costs, a right-of-use asset and a related lease liability as held for sale. These relate to the Pacific Canada Project that Vopak is developing, for which a sales transaction is expected to be closed in 2023.
Boskalis - Lamnalco
As a result of obtaining control over Boskalis, the company also obtained an indirect investment in the joint venture Smit Lamnalco. Taking into account the earlier announcement by Boskalis that it was reviewing its position as shareholder in the joint venture, HAL considered this investment as \u201cheld for sale\u201d in its purchase price allocation. At the end of 2022, Smit Lamnalco is carried at a value of \u20ac\u00a0228.3 million in the books of HAL. If Smit Lamnalco were to be divested for a different amount, this would lead to a capital gain or loss in the books of HAL.
The other assets held for sale refer to land and buildings and related mortgages.
The movement in the net asset held for sale during periods are as follows.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 176.4 | 2,293.3 |
Consolidation | 233.2 | - |
Addition | 95.5 | 585.8 |
Disposal | (238.7) | (2,702.7) |
Exchange differences | (5.0) | - |
Balance on December 31 | 261.4 | 176.4 |
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately \u00adbefore classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is \u00adupdated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
A discontinued operation is a component of the Company\u2019s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
At the reporting date the composition of total assets held for sale and related liabilities was as follows.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Property, plant and equipment | 71.4 | 131.2 |
Right-of-use assets | 4.0 | 22.4 |
Intangible assets | - | 37.4 |
Investments in associates and joint arrangements | 228.3 | 26.5 |
Other non-current assets | - | 1.4 |
Current assets | - | 7.7 |
Total assets held for sale | 303.7 | 226.6 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current liabilities | 42.3 | 43.6 |
Current liabilities | - | 6.6 |
Total liabilities related to assets held for sale | 42.3 | 50.2 |
| \u00a0 | \u00a0 | \u00a0 |
Total net assets held for sale | 261.4 | 176.4 |
In May 2022, Vopak completed the divestment of its Canadian terminals (refer to note 3). At year-end 2021, the net assets held for sale for these terminals amounted to \u20ac\u00a0104.6 million. Also in May 2022, Vopak completed the divestment of its CRL terminal in Kandla, India, (refer to notes 3 and 8). At year-end 2021, the net assets held for sale for this terminal amounted to \u20ac\u00a037.5 million. In December 2022, Vopak completed the divestment of its 100% shareholding in Agencies B.V. and its 50% shareholding in Diize B.V.
On February 7, 2022, a joint venture in which HAL had an 85.5% equity interest sold an apartment building in Bellevue, a suburb of Seattle, consisting of 279 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a075 million and a pre-tax capital gain of \u20ac\u00a050 million. This apartment building was included in assets held for sale at year-end 2021 for \u20ac\u00a026.5 million. On May 2, 2022, HAL completed the sale of its ownership interest in Orthopedie Investments Holding B.V. (\u2018Livit\u2019).On May 31, 2022, HAL sold its ownership interest in Floramedia Group B.V. (\u2018Floramedia\u2019). On July 8, 2022, HAL sold its ownership interest in MYLAPS. Refer to note 3 for details on these divestments. On August 16, 2022, a joint venture in which HAL had a 90% equity interest sold an apartment building in Beacon Hill, a neighborhood in southeast Seattle, consisting of 139 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a027 million and a pre-tax capital gain of \u20ac\u00a013 million.
Vopak - Pacific Canada project
In the fourth quarter of 2022, Vopak has classified capitalized development costs, a right-of-use asset and a related lease liability as held for sale. These relate to the Pacific Canada Project that Vopak is developing, for which a sales transaction is expected to be closed in 2023.
Boskalis - Lamnalco
As a result of obtaining control over Boskalis, the company also obtained an indirect investment in the joint venture Smit Lamnalco. Taking into account the earlier announcement by Boskalis that it was reviewing its position as shareholder in the joint venture, HAL considered this investment as \u201cheld for sale\u201d in its purchase price allocation. At the end of 2022, Smit Lamnalco is carried at a value of \u20ac\u00a0228.3 million in the books of HAL. If Smit Lamnalco were to be divested for a different amount, this would lead to a capital gain or loss in the books of HAL.
The other assets held for sale refer to land and buildings and related mortgages.
The movement in the net asset held for sale during periods are as follows.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 176.4 | 2,293.3 |
Consolidation | 233.2 | - |
Addition | 95.5 | 585.8 |
Disposal | (238.7) | (2,702.7) |
Exchange differences | (5.0) | - |
Balance on December 31 | 261.4 | 176.4 |
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately \u00adbefore classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is \u00adupdated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
A discontinued operation is a component of the Company\u2019s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
At the reporting date the composition of total assets held for sale and related liabilities was as follows.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Property, plant and equipment | 71.4 | 131.2 |
Right-of-use assets | 4.0 | 22.4 |
Intangible assets | - | 37.4 |
Investments in associates and joint arrangements | 228.3 | 26.5 |
Other non-current assets | - | 1.4 |
Current assets | - | 7.7 |
Total assets held for sale | 303.7 | 226.6 |
| \u00a0 | \u00a0 | \u00a0 |
Non-current liabilities | 42.3 | 43.6 |
Current liabilities | - | 6.6 |
Total liabilities related to assets held for sale | 42.3 | 50.2 |
| \u00a0 | \u00a0 | \u00a0 |
Total net assets held for sale | 261.4 | 176.4 |
In May 2022, Vopak completed the divestment of its Canadian terminals (refer to note 3). At year-end 2021, the net assets held for sale for these terminals amounted to \u20ac\u00a0104.6 million. Also in May 2022, Vopak completed the divestment of its CRL terminal in Kandla, India, (refer to notes 3 and 8). At year-end 2021, the net assets held for sale for this terminal amounted to \u20ac\u00a037.5 million. In December 2022, Vopak completed the divestment of its 100% shareholding in Agencies B.V. and its 50% shareholding in Diize B.V.
On February 7, 2022, a joint venture in which HAL had an 85.5% equity interest sold an apartment building in Bellevue, a suburb of Seattle, consisting of 279 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a075 million and a pre-tax capital gain of \u20ac\u00a050 million. This apartment building was included in assets held for sale at year-end 2021 for \u20ac\u00a026.5 million. On May 2, 2022, HAL completed the sale of its ownership interest in Orthopedie Investments Holding B.V. (\u2018Livit\u2019).On May 31, 2022, HAL sold its ownership interest in Floramedia Group B.V. (\u2018Floramedia\u2019). On July 8, 2022, HAL sold its ownership interest in MYLAPS. Refer to note 3 for details on these divestments. On August 16, 2022, a joint venture in which HAL had a 90% equity interest sold an apartment building in Beacon Hill, a neighborhood in southeast Seattle, consisting of 139 apartments. The sale resulted in proceeds to HAL of \u20ac\u00a027 million and a pre-tax capital gain of \u20ac\u00a013 million.
Vopak - Pacific Canada project
In the fourth quarter of 2022, Vopak has classified capitalized development costs, a right-of-use asset and a related lease liability as held for sale. These relate to the Pacific Canada Project that Vopak is developing, for which a sales transaction is expected to be closed in 2023.
Boskalis - Lamnalco
As a result of obtaining control over Boskalis, the company also obtained an indirect investment in the joint venture Smit Lamnalco. Taking into account the earlier announcement by Boskalis that it was reviewing its position as shareholder in the joint venture, HAL considered this investment as \u201cheld for sale\u201d in its purchase price allocation. At the end of 2022, Smit Lamnalco is carried at a value of \u20ac\u00a0228.3 million in the books of HAL. If Smit Lamnalco were to be divested for a different amount, this would lead to a capital gain or loss in the books of HAL.
The other assets held for sale refer to land and buildings and related mortgages.
The movement in the net asset held for sale during periods are as follows.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 176.4 | 2,293.3 |
Consolidation | 233.2 | - |
Addition | 95.5 | 585.8 |
Disposal | (238.7) | (2,702.7) |
Exchange differences | (5.0) | - |
Balance on December 31 | 261.4 | 176.4 |
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately \u00adbefore classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is \u00adupdated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
A discontinued operation is a component of the Company\u2019s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts are to be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable at the reporting date. This assessment is based on the facts and circumstances at that date, including the level of commitment from potential buyers as may be reflected in an executed letter of intent. These facts and circumstances may change and this could result in a situation where assets are divested that were not classified as held for sale at year-end. Immediately \u00adbefore classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is \u00adupdated in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amount and fair value less costs of disposal. Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and potentially adjusted subsequently. Impairment losses on initial classification as held for sale are included in the income statement. Subsequent to classification as held for sale the depreciation, amortization and impairment of intangible assets, property, plant and equipment and right-of-use assets are no longer recognized in the consolidated statement of income. In addition, if applicable, equity accounting ceases.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-625": { "value": "A discontinued operation is a component of the Company\u2019s business that represents a separate, major line of business or geographical area of operations, or is a company acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-495": { "value": "When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.
The issued and fully paid up share capital at December 31, 2022, consists of 88,598,887 shares of which 6,337 are held as treasury stock by the Company.
Movements in the number of shares were as follows:
x 1,000 | Issued shares | Treasury shares |
|---|---|---|
Balance on January 1, 2021 | 85,385.1 | 73.5 |
Sale and transfer of treasury shares | - | (27.0) |
Stock dividend and purchase of treasury shares | 1,344.6 | 44.5 |
Shares granted | - | (65.0) |
Balance on December 31, 2021 | 86,729.7 | 26.0 |
| \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2022 | 86,729.7 | 26.0 |
Sale and transfer of treasury shares | - | (20.2) |
Stock dividend and purchase of treasury shares | 1,869.2 | 0.5 |
Balance on December 31, 2022 | 88,598.9 | 6.3 |
x 1,000 | Dec. 31, 2022 |
|---|---|
Authorized shares | 90,000.0 |
Outstanding shares | 88,592.6 |
Par value (HAL Holding N.V.) (in euro) | 0.02 |
Share capital (in millions of euro) | 1.8 |
The treasury shares referred to are HAL Trust Shares held by HAL Holding N.V. and are not expected to be cancelled. Each share has one voting right.
A 2021-related dividend of \u20ac\u00a0494.2 million (excluding dividend on treasury shares) or \u20ac\u00a05.70 per Share was distributed on June 17, 2022 (2021: \u20ac\u00a0200.5 million or \u20ac\u00a04.70 per Share), of which \u20ac\u00a0247.1 million in cash and \u20ac\u00a0247.1 million in Shares. Shareholders received one new Share for 46.4 existing Shares held. The calculation of the 2021 earnings per Share has been adjusted to take account of this stock dividend (in accordance with IAS 33.64).
The conversion ratio was determined based on the volume-weighted average share price of HAL Trust Shares traded on Euronext in Amsterdam during the period May 23, 2022, through June 10, 2022. Accordingly, 1,869,174 Shares were issued on June 17, 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-496": { "value": "When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.
The issued and fully paid up share capital at December 31, 2022, consists of 88,598,887 shares of which 6,337 are held as treasury stock by the Company.
Movements in the number of shares were as follows:
x 1,000 | Issued shares | Treasury shares |
|---|---|---|
Balance on January 1, 2021 | 85,385.1 | 73.5 |
Sale and transfer of treasury shares | - | (27.0) |
Stock dividend and purchase of treasury shares | 1,344.6 | 44.5 |
Shares granted | - | (65.0) |
Balance on December 31, 2021 | 86,729.7 | 26.0 |
| \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2022 | 86,729.7 | 26.0 |
Sale and transfer of treasury shares | - | (20.2) |
Stock dividend and purchase of treasury shares | 1,869.2 | 0.5 |
Balance on December 31, 2022 | 88,598.9 | 6.3 |
x 1,000 | Dec. 31, 2022 |
|---|---|
Authorized shares | 90,000.0 |
Outstanding shares | 88,592.6 |
Par value (HAL Holding N.V.) (in euro) | 0.02 |
Share capital (in millions of euro) | 1.8 |
The treasury shares referred to are HAL Trust Shares held by HAL Holding N.V. and are not expected to be cancelled. Each share has one voting right.
A 2021-related dividend of \u20ac\u00a0494.2 million (excluding dividend on treasury shares) or \u20ac\u00a05.70 per Share was distributed on June 17, 2022 (2021: \u20ac\u00a0200.5 million or \u20ac\u00a04.70 per Share), of which \u20ac\u00a0247.1 million in cash and \u20ac\u00a0247.1 million in Shares. Shareholders received one new Share for 46.4 existing Shares held. The calculation of the 2021 earnings per Share has been adjusted to take account of this stock dividend (in accordance with IAS 33.64).
The conversion ratio was determined based on the volume-weighted average share price of HAL Trust Shares traded on Euronext in Amsterdam during the period May 23, 2022, through June 10, 2022. Accordingly, 1,869,174 Shares were issued on June 17, 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-627": { "value": "When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.
When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.
A 2021-related dividend of \u20ac\u00a0494.2 million (excluding dividend on treasury shares) or \u20ac\u00a05.70 per Share was distributed on June 17, 2022 (2021: \u20ac\u00a0200.5 million or \u20ac\u00a04.70 per Share), of which \u20ac\u00a0247.1 million in cash and \u20ac\u00a0247.1 million in Shares. Shareholders received one new Share for 46.4 existing Shares held. The calculation of the 2021 earnings per Share has been adjusted to take account of this stock dividend (in accordance with IAS 33.64).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-498": { "value": "Other reserves include the cumulative valuation reserve, the cash flow hedge reserve and the cumulative currency translation reserve.
The cumulative valuation reserve includes the unrealized results, net of tax, on financial assets classified as fair value through other comprehensive income.
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place.
The cumulative currency translation reserve includes all exchange differences resulting from the translation of the financial statements of foreign entities. It also includes the exchange differences on liabilities and the effective currency component of fair value changes of derivative financial instruments, net of tax, to the extent that they are part of an effective net investment hedge relationship.
In millions of euro | Cumulative valuation reserve | Cash flow hedge reserve | Cumulative currency translation reserve | Total other reserves |
|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2021 | 20.8 | (137.2) | (156.7) | (273.1) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Change in fair value of financial assets at fair value through other comprehensive income | 16.7 | - | - | 16.7 |
Translation of foreign subsidiaries, including share of associates and joint arrangements1 | - | - | 317.5 | 317.5 |
Effective portion of hedging instruments, including share of associates and joint arrangements | - | 12.8 | - | 12.8 |
Reclassification | - | 19.8 | - | 19.8 |
Balance on December 31, 2021 | 37.5 | (104.6) | 160.8 | 93.7 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Change in fair value of financial assets at fair value through other comprehensive income | (13.5) | - | - | (13.5) |
Translation of foreign subsidiaries, including share of associates and joint arrangements | - | - | 63.4 | 63.4 |
Effective portion of hedging instruments, including share of associates and joint arrangements | - | 159.1 | - | 159.1 |
Reclassification | - | 30.1 | - | 30.1 |
Other | - | 0.7 | - | 0.7 |
Balance on December 31, 2022 | 24.0 | 85.3 | 224.2 | 333.5 |
The cash flow hedge reserve contains the effective part of the accumulated change in the fair value of the cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet taken place. The table below provides an overview of the estimated maturity profile of the cash flow hedge reserve.
Use of cash flow hedge reserve | \u00a0 |
|---|---|
< 1 year | 49.4 |
1-5 years | 12.1 |
> 5 years | 23.8 |
| \u00a0 | 85.3 |
Deferred tax is recognized using the liability method on taxable temporary differences between the tax base and the accounting base of items included in the consolidated financial statements. Temporary differences are not provided if they relate to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit or differences relating to investments in subsidiaries, associates and joint ventures to the extent that the reversal of the temporary differences are controlled by the Company and it is probable that they will not reverse in the foreseeable future. Withholding tax and any other tax due for unremitted earnings of subsidiaries are not recognized as deferred tax liability unless there is an intention to distribute these earnings in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, at the year end. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax is recognized in the consolidated statement of income unless it relates to items recognized through other comprehensive income.
Tax assets and liabilities are offset when there is a legally enforceable right to set off the recognized amounts and that there is an intent to either settle on a net basis, or to realize the asset and settle the liability simultaneously.
Critical accounting estimates and judgments
Deferred tax assets, including those arising from carry-forward losses, are recognized if it is likely that taxable profits will be available against which losses can be set off. Management exercises judgment to establish the extent to which expected future profits substantiate the recognition of a deferred tax asset.
The movement in deferred tax assets and liabilities during the period is set out on the next page.
| \u00a0 | Carry-forward losses | PP&E | Leases | Intangibles | Inventories | Other | Offset | Total |
|---|---|---|---|---|---|---|---|---|
Assets | 57.4 | 14.6 | 199.5 | 3.7 | 22.7 | 65.2 | (267.2) | 95.9 |
Liabilities | - | (187.2) | (186.3) | (115.4) | (7.8) | (131.1) | 267.2 | (360.6) |
Balance on January 1, 2021 | 57.4 | (172.6) | 13.2 | (111.7) | 14.9 | (65.9) | - | (264.7) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Credited/(charged) to net income - continued operations (restated) | 24.4 | (33.1) | 1.1 | 12.5 | (16.5) | 1.6 | - | (10.0) |
Credited/(charged) to net income - discontinued operations | (2.2) | (0.6) | (1.0) | (0.8) | 0.6 | 2.3 | - | (1.7) |
Credited/(charged) to OCI | - | - | - | 0.1 | - | (17.4) | - | (17.3) |
Acquisitions and purchase price accounting adjustments | 2.2 | (0.1) | (0.2) | (104.1) | (0.3) | (9.7) | - | (112.2) |
Divestitures | - | 11.9 | - | - | - | (4.5) | - | 7.4 |
Other | - | - | - | - | - | (1.0) | - | (1.0) |
Reclassifications to held for sale | 0.4 | 0.3 | 1.8 | 0.9 | (0.6) | 6.1 | - | 8.9 |
Reclassifications | 0.5 | 0.8 | (0.2) | (0.1) | - | (0.9) | - | 0.1 |
Exchange differences | 4.2 | (8.8) | - | (3.9) | 1.7 | (4.5) | - | (11.3) |
Balance on December 31, 2021 | 86.9 | (202.2) | 14.7 | (207.1) | (0.2) | (93.9) | - | (401.8) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 86.9 | 23.9 | 218.4 | 10.9 | 22.9 | 61.7 | (295.9) | 128.8 |
Liabilities | - | (226.1) | (203.7) | (218.0) | (23.1) | (155.6) | 295.9 | (530.6) |
Balance on January 1, 2022 | 86.9 | (202.2) | 14.7 | (207.1) | (0.2) | (93.9) | - | (401.8) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Credited/(charged) to net income - continued operations | (12.8) | 49.8 | (79.3) | 21.6 | 5.9 | (6.9) | - | (21.7) |
Credited/(charged) to OCI | - | - | - | - | - | (26.3) | - | (26.3) |
Acquisitions and purchase price accounting adjustments | 2.8 | (61.3) | (0.3) | (90.6) | 1.5 | 10.9 | - | (137.0) |
Divestitures | (6.5) | (1.8) | (0.1) | 0.4 | - | 0.1 | - | (7.9) |
Other | - | - | - | - | - | 2.7 | - | 2.7 |
Reclassifications | - | (0.2) | 0.5 | (5.4) | 2.1 | 3.0 | - | - |
Exchange differences | 4.4 | (10.4) | 0.6 | (4.9) | 1.0 | (4.7) | - | (14.0) |
Balance on December 31, 2022 | 74.8 | (226.1) | (63.9) | (286.0) | 10.3 | (115.1) | - | (606.0) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 74.8 | 19.0 | 140.5 | 7.5 | 33.5 | 43.5 | (231.1) | 87.7 |
Liabilities | - | (245.1) | (204.4) | (293.5) | (23.2) | (158.6) | 231.1 | (693.7) |
Balance on December 31, 2022 | 74.8 | (226.1) | (63.9) | (286.0) | 10.3 | (115.1) | - | (606.0) |
The portion of the deferred tax liabilities that is expected to be recovered within 12 months amounts to \u20ac\u00a030.3 million (2021: \u20ac\u00a020.3 million). The portion of the deferred tax assets that is expected to be recovered within 12 months amounts to \u20ac\u00a034.8 million (2021: \u20ac\u00a032.7 million).
Unused tax losses for which deferred tax assets have not fully been recognized are as follows:
Expiration | 2022 | 2021 |
|---|---|---|
2022 | - | 1.9 |
2023 | 4.2 | 0.8 |
2024 | 5.7 | 0.2 |
2025 | 10.9 | 5.2 |
2026 | 12.7 | 4.5 |
2027 and further years | 105.7 | 50.5 |
No expiration date | 1,632.1 | 867.6 |
Total continuing operations | 1,771.3 | 930.7 |
Discontinued operations | - | - |
| \u00a0 | 1,771.3 | 930.7 |
The increase in the unused tax losses for which deferred tax assets have not fully been recognized is due to the impairments in Botlek and Europoort at Vopak that did not lead to recognition of deferred tax assets as insufficient profits are expected to be available as well as the first time consolidation of Boskalis.
Deferred tax assets for which the utilization is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences amount to \u20ac\u00a087.7 million (2021: \u20ac\u00a0128.8 million).
Deferred tax assets of \u20ac\u00a042.9 million (2021: \u20ac\u00a077.7 million) relate to entities that suffered a loss in either the current or the preceding period.\u00a0Their recognition is supported by projections of future taxable income and deferred tax liabilities against which they can be offset. Unused tax losses with no expiration date include tax losses relating to acquired entities. These tax losses relate to business models that were different than the activities of the entity at the moment of acquisition. This is an important reason for the fact that these losses have not (fully) been valued.
Unused tax credits for which deferred tax assets have not been fully recognized are not significant.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-632": { "value": "Deferred tax is recognized using the liability method on taxable temporary differences between the tax base and the accounting base of items included in the consolidated financial statements. Temporary differences are not provided if they relate to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit or differences relating to investments in subsidiaries, associates and joint ventures to the extent that the reversal of the temporary differences are controlled by the Company and it is probable that they will not reverse in the foreseeable future. Withholding tax and any other tax due for unremitted earnings of subsidiaries are not recognized as deferred tax liability unless there is an intention to distribute these earnings in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, at the year end. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax is recognized in the consolidated statement of income unless it relates to items recognized through other comprehensive income.
Tax assets and liabilities are offset when there is a legally enforceable right to set off the recognized amounts and that there is an intent to either settle on a net basis, or to realize the asset and settle the liability simultaneously.
Critical accounting estimates and judgments
Deferred tax assets, including those arising from carry-forward losses, are recognized if it is likely that taxable profits will be available against which losses can be set off. Management exercises judgment to establish the extent to which expected future profits substantiate the recognition of a deferred tax asset.
The Company has both defined benefit and defined contribution plans.
Defined benefit plans
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension charges for defined benefit plans are based on actuarial calculations and calculated in accordance with the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated statement of income so as to spread the regular costs over the service lives of employees in accordance with the advice of independent qualified actuaries who carry out a full valuation of the plans every year. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related liability. The plan assets are measured at fair value. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Current and past service costs, interest components and administrative costs are recognized immediately in the consolidated statement of income. A net defined benefit asset is only recognized to the extent the surplus in the pension plan can be realized during the life of the plan, through refund or reduced future contributions, or at the settlement of the plan.
Defined contribution plans
A defined contribution plan is a pension plan under which the Company pays contributions to a publicly or privately administered pension insurance plan on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Critical accounting estimates and judgments
The defined benefit obligation is determined on the basis of assumptions for future developments in variables such as salary increase, price index increase, life expectancy and discount rate. All assumptions are assessed at the reporting date. Changes in the assumptions may significantly affect the liabilities and pension costs under the defined benefit plans. The weighted average of these assumptions as well as sensitivities of key assumptions are disclosed in this note.
The net amounts recognized in the statement of financial position for pension benefits are as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Pension benefit assets | 55.3 | 58.5 |
Pension benefit liabilities | (109.7) | (105.0) |
| \u00a0 | (54.4) | (46.5) |
The net pension benefit liability consists of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Present value of funded obligations | (404.6) | (450.2) |
Fair value of plan assets | 422.4 | 496.0 |
Impact from asset ceiling | (19.4) | (26.4) |
Surplus/(deficit) of funded obligations | (1.6) | 19.4 |
Present value of unfunded obligations | (52.8) | (65.9) |
Total defined benefit plans | (54.4) | (46.5) |
Net asset/(liability) in the statement of financial position | (54.4) | (46.5) |
Pension benefit liabilities
The pension liabilities of \u20ac\u00a0109.7 million mainly relate to pension plans at Boskalis (\u20ac\u00a048.9 million), primarily a closed insured pension plan in the Netherlands, and a pension plan of Westag (\u20ac\u00a022.4 million), a subsidiary of Broadview Holding B.V. , in Germany. Also included are two Formica pension plans in the United Kingdom with a net liability of nil.
Westag plan
The pension plan of Westag is unfunded and payments are made from Westag\u2019s operating cash flow. Participants are insured against the consequences of old age, disability and death. The pension plan is closed to new participants. The defined benefit liability is calculated based on expected, salary-independent, old-age and disability pension payments per full year of staff membership in the company.
Pension supervision in Germany
The Westag pension plan operates under the German Pension Reform Act and is overseen by the Federal Financial Supervisory Authority BaFin.
Boskalis plans
This primarily relates to a closed insured pension plan in the Netherlands, for which future cash inflows consist of the company\u2019s entitlement to excess returns achieved by the insurance company and future cash outflows for premiums for price indexation of insured pensions. The net defined benefit obligation for this pension plan is based on an estimate of this future cash outflow for premiums. The company\u2019s entitlement to excess returns is not accounted for as an asset. Both the annual income from excess returns and expense for premiums for price indexation continue to be recognized through the statement of other comprehensive income. Therefore the expected impact of the defined benefit pension plans on future statements of profit or loss is not significant.
Formica plans United Kingdom
At December 31, 2022, the assets of certain plans at Formica (\u20ac\u00a0109.6 million) exceeded the obligations of the plans (\u20ac\u00a093.8 million) by \u20ac\u00a015.8 million. The surplus in these pension plans has not been recognized since it is not possible to recognize any economic benefit from refunds or reductions in future contributions. Both plans are closed for new entrants and the future benefit accrual has been frozen with effect of August 31, 2018, when a defined contribution plan was introduced. The benefits of the existing members were not affected by the closure of the scheme. The pension plans provide benefits upon retirement (based on final pay), death, disability and termination. Both plans are operated by separate pension trustees.
Pension supervision in the United Kingdom
The Formica plans operate under the regulatory framework of the Pensions Act 2004, as overseen by The Pensions Regulator. According to a 2018 UK High Court ruling, most UK defined benefit plans are expected to be required to provide additional benefits to their participants regarding guaranteed minimum pensions. This is expected to affect one of the plans and an estimated 1.5% allowance was applied in calculating the defined benefit obligation.
Pension benefit assets
The pension benefit assets of \u20ac\u00a055.3 million relate fully to a surplus of a pension fund in the Netherlands (the \u2018pension fund\u2019) that insures its participants against the consequences of old age, death and disability. The Company and its employees currently do not pay contributions to these pension plans. The pension fund has the legal structure of a foundation. The (actuarial) risks related to the pension plan consist of demographic risks (primarily life expectancy) and financial risks (primarily discount rate, future increases in salaries, and return on plan assets) and are regularly reviewed by the board of the pension fund. The board of the pension fund is the most senior governing body of the pension fund and is composed of equal numbers of employer and employee representatives (including pensioners). Modification of the pension plan requires the approval of the Company. The minimum required funding level for the pension fund is 104%. The pension fund had a funded level of 197% at year-end 2021. The funding level at December 31, 2022, was preliminary calculated at 194%. The pension asset is calculated, in accordance with IFRIC 14, as the lower of the surplus and the present value of the future service cost using assumptions (including the discount rate) consistent with those used to determine the defined benefit obligation, taking into account minimum funding requirements.
Pension supervision in the Netherlands
Pension funds in the Netherlands are overseen by the Authority for the Financial Markets (AFM) and the Dutch Central Bank (DNB). An annual report including an actuarial review on the plan is prepared in accordance with legal requirements. Additional reports are prepared periodically in accordance with IFRS requirements.
Multi-employer plans
Multi-employer pension plans are defined benefit plans classified as defined contribution, as the information received from these plans is not detailed per employee and per company. In case of a deficit in the multi-employer plans, future pension premiums may increase. There are no multi-employer plans for which the Group is significant in respect to the total plan. Certain multi-employer plans have indicated they have no reliable and consistent basis on which to attribute the pension obligations, plan assets and the absolute and relative share of the Group in the fund and on which to allocate income and expenses to the individual member companies of these pension funds. As a result, appropriate calculations for these defined benefit plans cannot be preformed and they are recognized in these financial statements as a defined contribution plan.
The movement in the net provision for defined benefit plans is as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | (46.5) | (89.8) |
Pension charge defined benefit plans continuing operations | (12.7) | (11.5) |
Pension charge defined benefit plans discontinued operations | - | (5.1) |
Consolidation | (39.9) | (0.5) |
Contributions | 8.3 | 7.4 |
Remeasurement effects | 32.7 | 54.8 |
Benefits paid for unfunded plans | - | 0.9 |
Reclassification to held for sale | - | (6.9) |
Plan amendments, settlements and curtailments | 0.9 | - |
Exchange differences and other | 2.8 | 4.2 |
Balance on December 31 | (54.4) | (46.5) |
In 2022, the remeasurement effects of \u20ac\u00a032.7 million are primarily the result of higher discount rates and lower returns on plan assets. In 2021, the remeasurement effects of \u20ac\u00a054.8 million were primarily the result of higher returns on plan assets.
The amounts recognized in the consolidated statement of income are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Current service costs | 11.2 | 9.9 |
Interest expense/(income) | 0.1 | 0.5 |
Plan amendments, settlements and curtailments | - | 0.1 |
Administrative costs | 0.9 | 0.8 |
Total defined benefit costs | 12.2 | 11.3 |
Other costs | 112.2 | 79.3 |
Pension charges related to continuing operations | 124.4 | 90.6 |
Other costs mainly include costs related to defined contribution plans and multi-employer plans classified as defined contribution plans, as referred to above.
Movements in the defined benefit obligation, for both funded and unfunded plans, and plan assets and related asset ceilings, are as follows:
| \u00a0 | Plan assets | \u00a0 | Obligation | \u00a0 | Asset ceiling | |||
|---|---|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | \u00a0 | 2022 | 2021 | \u00a0 | 2022 | 2021 |
Balance on January 1 | 496.0 | 467.9 | \u00a0 | 516.1 | 535.6 | \u00a0 | 26.4 | 22.1 |
Consolidation | 72.7 | 0.2 | \u00a0 | 112.6 | 0.7 | \u00a0 | - | - |
Service cost | - | - | \u00a0 | 11.2 | 9.8 | \u00a0 | - | - |
Interest income | 10.2 | 7.7 | \u00a0 | - | - | \u00a0 | - | - |
Interest expense | - | - | \u00a0 | 10.3 | 8.1 | \u00a0 | - | - |
Pension charges related to discontinued operations | - | 1.4 | \u00a0 | - | 6.5 | \u00a0 | - | - |
Employer contributions | 8.3 | 7.4 | \u00a0 | - | - | \u00a0 | - | - |
Return on plan assets (excluding amounts included in interest income) | (142.6) | 35.2 | \u00a0 | - | - | \u00a0 | - | - |
Experience adjustments | - | - | \u00a0 | 25.5 | (2.9) | \u00a0 | - | - |
Change in financial assumptions | - | - | \u00a0 | (199.5) | (12.4) | \u00a0 | (6.2) | 2.3 |
Change in demographic assumptions | - | - | \u00a0 | 4.9 | (6.6) | \u00a0 | - | - |
Plan amendments, settlements and curtailments | - | (12.9) | \u00a0 | - | (12.8) | \u00a0 | - | - |
Benefits paid | (21.6) | (17.5) | \u00a0 | (25.6) | (24.6) | \u00a0 | - | - |
Reclassification | - | - | \u00a0 | 0.1 | (1.5) | \u00a0 | - | 0.1 |
Reclassification to held for sale | - | (15.0) | \u00a0 | - | (6.5) | \u00a0 | - | - |
Exchange differences and other | (0.6) | 21.6 | \u00a0 | 1.8 | 22.7 | \u00a0 | (0.8) | 1.9 |
Balance on December 31 | 422.4 | 496.0 | \u00a0 | 457.4 | 516.1 | \u00a0 | 19.4 | 26.4 |
The Company expects to contribute \u20ac\u00a021.3 million to defined benefit plans in 2023. The increase mainly relates to expected indexation of certain pension benefits.
The expected maturity analysis of undiscounted pension benefits is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Less than 1 year | 21.7 | 18.8 |
1-2 years | 23.7 | 19.0 |
2-5 years | 64.8 | 60.3 |
> 5 years | 970.8 | 708.5 |
| \u00a0 | 1,081.0 | 806.6 |
The principal weighted-average assumptions used were:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Discount rate/return on assets | 4.66% | 1.79% |
Future inflation rate | 2.76% | 2.46% |
Future salary increases | 2.72% | 2.47% |
Life expectancy in years: | \u00a0 | \u00a0 |
Age 65 for men | 18.8 | 20.3 |
Age 65 for women | 21.1 | 22.8 |
Age 65 in 20 years for men | 20.3 | 22.0 |
Age 65 in 20 years for women | 22.5 | 24.4 |
The latest available mortality tables were used. The discount rates used in the determination of defined benefit obligations and pension charges are based on high-quality corporate bonds (AA- rated) with a duration matching the duration of the pension benefit liabilities.
Plan assets include as of December 31, 2022:
| \u00a0 | Level 1 | Level 2 | Level 3 | Total | Total (%) |
|---|---|---|---|---|---|
Equity instruments | 141.9 | 14.0 | - | 155.9 | 36.9% |
Debt instruments | 54.0 | 78.4 | 0.1 | 132.5 | 31.4% |
Cash and cash equivalents | 15.0 | - | - | 15.0 | 3.6% |
Other | 1.2 | 1.7 | 116.1 | 119.0 | 28.1% |
| \u00a0 | 212.1 | 94.1 | 116.2 | 422.4 | 100.0% |
The amounts in level 3 mainly relate to insurance policies that provide coverage for the related pension obligations.
Plan assets included as of December 31, 2021:
| \u00a0 | Level 1 | Level 2 | Level 3 | Total | Total (%) |
|---|---|---|---|---|---|
Equity instruments | 174.4 | 25.4 | - | 199.8 | 40.3% |
Debt instruments | 36.8 | 152.2 | 0.1 | 189.1 | 38.1% |
Cash and cash equivalents | 19.3 | - | - | 19.3 | 3.9% |
Other | 5.0 | 2.1 | 80.7 | 87.8 | 17.7% |
| \u00a0 | 235.5 | 179.7 | 80.8 | 496.0 | 100.0% |
The sensitivity of the defined benefit obligation to changes in the weighted-average principal assumptions is as follows:
| \u00a0 | \u00a0 | Impact on obligation | |
|---|---|---|---|
| \u00a0 | Change | Increase | Decrease |
Discount rate/return on assets | 1.00% | (44.4) | 55.2 |
Future inflation rate | 1.00% | 30.4 | (28.2) |
Future salary increases | 0.25% | 1.9 | (1.8) |
Life expectancy | 1 year | 12.6 | N/A |
The plan liabilities are calculated using a discount rate set with reference to high-quality corporate bond yields. If plan assets underperform this yield, this will create a deficit. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans\u2019 bond holdings. The majority of the plans\u2019 obligations are to provide benefits for the lifetime of the members, therefore increases in life expectancy will result in an increase in the plans\u2019 liabilities.
Short-term employee benefits
Wages, salaries, social security contributions, annual leave, sickness absenteeism, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognized as an expense as the related service is provided by the employee of the Company. A liability is recognized for the amount expected to be paid under short-term cash bonus plans if there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Termination benefits
Termination benefits are recognized as an expense when the Company and its subsidiaries are committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognized as an expense if an offer has been made of voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period they are discounted to their present value.
Share-based compensation
The compensation cost for share-based payment plans is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period). Refer to note 34 for more details on share-based payment plans.
Participation by management of unquoted subsidiaries
Management of certain subsidiaries own non-controlling interests in the capital of these subsidiaries. With respect to certain subsidiaries, the Company has the conditional obligation to acquire these equity instruments for cash. Obligations to acquire non-controlling interest are fair valued, generally, based on a multiple of EBITA less net debt, with measurement differences recorded as employee expense in the consolidated statement of income in accordance with IAS19. Multiples applied are either contractually determined or, generally, in accordance with those applied in the section on estimated value of the subsidiaries and associates.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Wages and salaries | 1,586.6 | 1,277.5 |
Social security costs | 217.8 | 189.2 |
Pension costs | 124.4 | 90.6 |
Other | 162.0 | 148.5 |
Continuing operations | 2,090.8 | 1,705.8 |
Discontinued operations | - | 659.8 |
Total | 2,090.8 | 2,365.6 |
The number of persons employed by the Company and its subsidiaries at the end of 2022 was 31,144 (2021: 27,443) on a full-time equivalent basis.
Expenses related to share-based compensation consist of:
| \u00a0 | 2022 | 2021 |
|---|---|---|
HAL Holding N.V. | \u00a0 | \u00a0 |
Share Plan1 | 3.3 | 2.5 |
Vopak | \u00a0 | \u00a0 |
Long-Term Share Plans1 | 3.3 | 7.8 |
Long-Term Cash Plans2 | 0.7 | 0.7 |
Safilo | \u00a0 | \u00a0 |
Stock Option Plans1 | 0.7 | - |
Unquoted subsidiaries | \u00a0 | \u00a0 |
Cash Plans2 | 24.6 | 25.3 |
| \u00a0 | 32.6 | 36.3 |
Liabilities recognized in relation to cash-settled share-based compensation are comprised of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Vopak | \u00a0 | \u00a0 |
Long-Term Cash Plans | 0.7 | 2.7 |
Unquoted subsidiaries | \u00a0 | \u00a0 |
Cash Plans | 82.6 | 56.2 |
| \u00a0 | 83.3 | 58.9 |
The current part of this liability of \u20ac\u00a015.7 million (2021: \u20ac\u00a016.0 million) is included under current other financial liabilities and the non-current part of \u20ac\u00a067.6 million (2021: \u20ac\u00a042.9 million) under non-current other financial liabilities.
The HAL Supervisory Board has the power to grant Executive Board members shares HAL Trust.
The granted, unvested shares can be summarized as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Outstanding shares on January 1 | 65 | 20 |
Granted | - | 65 |
Vested | - | (20) |
Outstanding shares on December 31 | 65 | 65 |
The Supervisory Board resolved, on November 19, 2014, to grant each of Messrs. A.A. van \u2018t Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of 19,500 shares HAL Trust. These shares vested in 2019 and are restricted until November 19, 2024.
On May 18, 2016, the Supervisory Board resolved to grant Mr. M.F. Groot, chairman of the Executive Board, 20,000 shares HAL Trust, under the condition precedent that he was still employed with the Company on June 1, 2021. These shares vested on June 1, 2021, and are restricted until June 1, 2026.
The Supervisory Board granted on September 5, 2021, to Messrs. M.F. Groot, A.A. van 't Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of respectively 25,000, 20,000 and 20,000 shares HAL Trust. These shares will vest on September 5, 2024 and are restricted until September 5, 2031.
Long-Term Share Plans (LTSP)
The LTSPs reward participants for the increase in Vopak\u2019s earnings per share (Vopak\u2019s EPS) performance during a three-year performance period, from their respective start dates in 2020, 2021 and 2022 at a pre-set Vopak EPS target. If a considerable, ambitious improvement in Vopak\u2019s EPS has been achieved during the three-year performance period, a long-term remuneration will be awarded. The 2019 LTSP was vested and settled during 2022.
The conditional awards granted under the LTSPs 2020-2022 can be summarized as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Outstanding conditional awards on January 1 | 344 | 315 |
Granted | 177 | 134 |
Forfeited | - | (6) |
Exercised | (27) | - |
Settled | (93) | (99) |
Outstanding conditional awards on December 31 | 401 | 344 |
The weighted-average fair value of the equity-settled LTSP awards granted in 2022 of \u20ac\u00a025.14 (2021: \u20ac\u00a035.60) has been determined based on Vopak\u2019s share price at the grant date.
Cash plans
The cash plans provide eligible participants with a right to participate in unlisted subsidiaries\u2019 growth in EBITA, subject to meeting the applicable vesting conditions. Obligations with respect to these plans are fair valued, generally, based on a multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates.
Employment benefits for the Executive Board, charged to the income statement, are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Members of the Executive Board | \u00a0 | \u00a0 |
Short-term employee benefits | 3.9 | 9.1 |
Post-employment benefits | 1.7 | 0.9 |
Share-based compensation | 3.3 | 2.5 |
| \u00a0 | 8.9 | 12.5 |
For details on share-based compensation plans refer to note 34.
The fixed 2022 remuneration for the Supervisory Directors of HAL Holding N.V. was \u20ac\u00a00.4 million (2021: \u20ac\u00a00.4 million) in total.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-634": { "value": "The Company has both defined benefit and defined contribution plans.
Defined benefit plans
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension charges for defined benefit plans are based on actuarial calculations and calculated in accordance with the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated statement of income so as to spread the regular costs over the service lives of employees in accordance with the advice of independent qualified actuaries who carry out a full valuation of the plans every year. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related liability. The plan assets are measured at fair value. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Current and past service costs, interest components and administrative costs are recognized immediately in the consolidated statement of income. A net defined benefit asset is only recognized to the extent the surplus in the pension plan can be realized during the life of the plan, through refund or reduced future contributions, or at the settlement of the plan.
Defined contribution plans
A defined contribution plan is a pension plan under which the Company pays contributions to a publicly or privately administered pension insurance plan on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Critical accounting estimates and judgments
The defined benefit obligation is determined on the basis of assumptions for future developments in variables such as salary increase, price index increase, life expectancy and discount rate. All assumptions are assessed at the reporting date. Changes in the assumptions may significantly affect the liabilities and pension costs under the defined benefit plans. The weighted average of these assumptions as well as sensitivities of key assumptions are disclosed in this note.
Short-term employee benefits
Wages, salaries, social security contributions, annual leave, sickness absenteeism, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognized as an expense as the related service is provided by the employee of the Company. A liability is recognized for the amount expected to be paid under short-term cash bonus plans if there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Termination benefits
Termination benefits are recognized as an expense when the Company and its subsidiaries are committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognized as an expense if an offer has been made of voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period they are discounted to their present value.
Share-based compensation
The compensation cost for share-based payment plans is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period). Refer to note 34 for more details on share-based payment plans.
Participation by management of unquoted subsidiaries
Management of certain subsidiaries own non-controlling interests in the capital of these subsidiaries. With respect to certain subsidiaries, the Company has the conditional obligation to acquire these equity instruments for cash. Obligations to acquire non-controlling interest are fair valued, generally, based on a multiple of EBITA less net debt, with measurement differences recorded as employee expense in the consolidated statement of income in accordance with IAS19. Multiples applied are either contractually determined or, generally, in accordance with those applied in the section on estimated value of the subsidiaries and associates.
A provision is recognized for a present legal or constructive obligation as a result of past events, when it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made (for onerous contracts refer to note 12). Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
The composition and movements in provisions is as follows:
| \u00a0 | Environmental | Employee related | Claims & regulatory | Onerous contracts | Warranty | Other | Total |
|---|---|---|---|---|---|---|---|
Balance on January 1, 2021 | 21.0 | 29.0 | 35.1 | 21.5 | 17.3 | 39.4 | 163.3 |
Addition to provision | 5.6 | 23.0 | 2.5 | 2.2 | 12.1 | 9.8 | 55.2 |
Consolidation | - | - | - | 3.5 | 0.2 | 0.2 | 3.9 |
Utilized during the year | (2.2) | (22.6) | (3.8) | (16.3) | (9.3) | (9.5) | (63.7) |
Released | (0.6) | (3.0) | (20.0) | (3.5) | (0.7) | (2.9) | (30.7) |
Net addition related to discontinued operations | - | 6.0 | (10.3) | - | 0.4 | 0.5 | (3.4) |
Reclassification to held for sale | (2.7) | (5.9) | 10.3 | - | (0.4) | (0.5) | 0.8 |
Exchange differences | 0.5 | - | - | - | 0.2 | - | 0.7 |
Reclassifications and other movements | - | (0.5) | - | - | - | (3.5) | (4.0) |
Balance on December 31, 2021 | 21.6 | 26.0 | 13.8 | 7.4 | 19.8 | 33.5 | 122.1 |
Current | 8.4 | 15.6 | - | 0.4 | 3.6 | 23.9 | 51.9 |
Non-current | 13.2 | 10.4 | 13.8 | 7.0 | 16.2 | 9.6 | 70.2 |
Balance on December 31, 2021 | 21.6 | 26.0 | 13.8 | 7.4 | 19.8 | 33.5 | 122.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Addition to provision | 14.3 | 9.7 | 4.9 | 39.2 | 64.6 | 5.3 | 138.0 |
Consolidation | 1.4 | 8.3 | 1.6 | 69.2 | 56.5 | 4.4 | 141.4 |
Utilized during the year | (4.9) | (15.3) | (8.1) | (33.2) | (20.7) | (8.0) | (90.2) |
Released | (0.3) | (5.4) | - | (0.2) | (0.9) | (0.9) | (7.7) |
Reclassification to held for sale | - | (0.7) | - | - | (0.2) | - | (0.9) |
Exchange differences | 0.1 | 0.1 | - | 0.5 | 0.3 | 0.2 | 1.2 |
Reclassifications and other movements | - | (0.1) | 14.3 | 35.7 | 5.3 | (13.7) | 41.5 |
Balance on December 31, 2022 | 32.2 | 22.6 | 26.5 | 118.6 | 124.7 | 20.8 | 345.4 |
Current | 5.7 | 7.7 | 7.9 | 66.7 | 80.2 | 15.1 | 183.3 |
Non-current | 26.5 | 14.9 | 18.6 | 51.9 | 44.5 | 5.7 | 162.1 |
Balance on December 31, 2022 | 32.2 | 22.6 | 26.5 | 118.6 | 124.7 | 20.8 | 345.4 |
Environmental
The environmental provisions primarily relate to historical contaminations of locations where Vopak terminals are located.
Onerous contracts
The increase in provision for onerous contracts is mainly due to the consolidation of Boskalis. The provision relates primarily to construction and offshore services contracts (refer to note 12).
Warranty
Warranty provisions relate to multiple projects, mainly at Boskalis.
A provision is recognized for a present legal or constructive obligation as a result of past events, when it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made (for onerous contracts refer to note 12). Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Debt and other financial liabilities is comprised of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Debt | 5,025.7 | 3,731.4 |
Other financial liabilities | 177.3 | 133.4 |
| \u00a0 | 5,203.0 | 3,864.8 |
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Non-current debt and other financial liabilities | \u00a0 | \u00a0 |
Mortgage loans | 464.3 | 272.7 |
Private placements | 1,899.5 | 2,054.2 |
Other loans | 592.7 | 590.3 |
Total non-current debt | 2,956.5 | 2,917.2 |
Non-current other financial liabilities | 150.2 | 119.7 |
Total non-current debt and other financial liabilities | 3,106.7 | 3,036.9 |
| \u00a0 | \u00a0 | \u00a0 |
Current debt and other financial liabilities | \u00a0 | \u00a0 |
Bank overdrafts | 1,193.4 | 709.7 |
Current portion of long-term debt | 874.9 | 103.1 |
Other loans | 0.9 | 1.4 |
Total current debt | 2,069.2 | 814.2 |
Current other financial liabilities | 27.1 | 13.7 |
Total current debt and other financial liabilities | 2,096.3 | 827.9 |
| \u00a0 | \u00a0 | \u00a0 |
Total debt and other financial liabilities | 5,203.0 | 3,864.8 |
Mortgage loans are secured by mortgages and pledges on vessels, real estate, inventory and receivables with a corresponding carrying value of \u20ac\u00a0632.1 million (2021: \u20ac\u00a0492.1 million). These are non-possessory pledges, which means that only in case of default under the mortgage loan agreements, the lender will have the right to sell the vessels, real estate or inventory and receive the cash flows from the receivables. The other loans are secured\u00a0to an amount of \u20ac\u00a0847.7 million (2021: \u20ac\u00a0958.6 million) by non-possessory pledges on machinery and equipment, receivables, inventories and other current assets.
The debt position relates for \u20ac\u00a02,359.7 million (47.0%) to Vopak (2021: \u20ac\u00a02,287.2 million, 61.3%). This debt mainly consists of unsecured private placements in the U.S. and Asian markets. The average remaining maturity at the end of 2022 was 4.3 years (2021: 4.7 years).
Current bank debt includes amounts drawn by HAL Holding N.V. at two banks for a total amount of \u20ac\u00a0576 million. These loans are collateralized by fixed-income securities included in the marketable securities and need to be repaid prior to December 31, 2023. The loan/commitment-to-value covenant ratio of 70% was met during 2022.
The summary of debt per currency is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Euro | 3,132.3 | 1,795.0 |
U.S. dollar | 1,533.0 | 1,407.2 |
Singapore dollar | 139.6 | 139.8 |
Other currencies | 220.8 | 389.4 |
| \u00a0 | 5,025.7 | 3,731.4 |
For 100% of the bank debt, the applicable covenants were complied with or waived during 2022 (2021: 100%). The table below provides details on certain company-specific covenants that applied in 2022.
| \u00a0 | Debt | Required | Actual |
|---|---|---|---|
Boskalis | 392.3 | \u00a0 | \u00a0 |
Maximum net debt:EBITDA ratio | \u00a0 | 3.00 | (0.70) |
Minimum interest cover ratio | \u00a0 | 4.00 | 42.00 |
Vopak | 2,359.7 | \u00a0 | \u00a0 |
Maximum senior net debt:EBITDA ratio | \u00a0 | 3.75 - 4.00 | 2.65 |
Minimum interest cover ratio | \u00a0 | 3.50 | 8.40 |
Other | 2,273.7 | \u00a0 | \u00a0 |
Total debt | 5,025.7 | \u00a0 | \u00a0 |
Included in other financial liabilities is the obligation to acquire equity instruments in certain subsidiaries from the management of these subsidiaries and liabilities related to share-based payment plans for an aggregate amount of \u20ac\u00a083.3 million (2021: \u20ac\u00a058.9 million), of which \u20ac\u00a067.6 million (2021: \u20ac\u00a042.9 million) is included as non-current liabilities. Reference is made to note 34 on share-based compensation.
Also included are obligations related to options on non-controlling interest and deferred/contingent payments with respect to acquisitions for \u20ac\u00a079.1 million (2021: \u20ac\u00a059.6 million) and other liabilities of \u20ac\u00a015.0 million (2021: \u20ac\u00a014.9 million). These liabilities expire during 2023 through 2025. In 2020, Safilo entered into reciprocal option agreements with a view to acquiring the non-controlling interest in Blenders and Priv\u00e9 Revaux. In 2022, these options were revalued for an update to the business plans, leading to a \u20ac\u00a031.2 million revaluation gain and a reduction of the liability. In 2022, the CEO and certain other employees of Priv\u00e9 Revaux resigned and, pursuant to the contractual terms, Safilo early exercised its call option on their non-controlling interest in the company in exchange for a nominal amount. As a result, the ownership interest in Priv\u00e9 Revaux increased from 64.2% to 82.8%.
The fair value of debt and other financial liabilities is disclosed in note 36.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-503": { "value": "Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Debt and other financial liabilities is comprised of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Debt | 5,025.7 | 3,731.4 |
Other financial liabilities | 177.3 | 133.4 |
| \u00a0 | 5,203.0 | 3,864.8 |
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Non-current debt and other financial liabilities | \u00a0 | \u00a0 |
Mortgage loans | 464.3 | 272.7 |
Private placements | 1,899.5 | 2,054.2 |
Other loans | 592.7 | 590.3 |
Total non-current debt | 2,956.5 | 2,917.2 |
Non-current other financial liabilities | 150.2 | 119.7 |
Total non-current debt and other financial liabilities | 3,106.7 | 3,036.9 |
| \u00a0 | \u00a0 | \u00a0 |
Current debt and other financial liabilities | \u00a0 | \u00a0 |
Bank overdrafts | 1,193.4 | 709.7 |
Current portion of long-term debt | 874.9 | 103.1 |
Other loans | 0.9 | 1.4 |
Total current debt | 2,069.2 | 814.2 |
Current other financial liabilities | 27.1 | 13.7 |
Total current debt and other financial liabilities | 2,096.3 | 827.9 |
| \u00a0 | \u00a0 | \u00a0 |
Total debt and other financial liabilities | 5,203.0 | 3,864.8 |
Mortgage loans are secured by mortgages and pledges on vessels, real estate, inventory and receivables with a corresponding carrying value of \u20ac\u00a0632.1 million (2021: \u20ac\u00a0492.1 million). These are non-possessory pledges, which means that only in case of default under the mortgage loan agreements, the lender will have the right to sell the vessels, real estate or inventory and receive the cash flows from the receivables. The other loans are secured\u00a0to an amount of \u20ac\u00a0847.7 million (2021: \u20ac\u00a0958.6 million) by non-possessory pledges on machinery and equipment, receivables, inventories and other current assets.
The debt position relates for \u20ac\u00a02,359.7 million (47.0%) to Vopak (2021: \u20ac\u00a02,287.2 million, 61.3%). This debt mainly consists of unsecured private placements in the U.S. and Asian markets. The average remaining maturity at the end of 2022 was 4.3 years (2021: 4.7 years).
Current bank debt includes amounts drawn by HAL Holding N.V. at two banks for a total amount of \u20ac\u00a0576 million. These loans are collateralized by fixed-income securities included in the marketable securities and need to be repaid prior to December 31, 2023. The loan/commitment-to-value covenant ratio of 70% was met during 2022.
The summary of debt per currency is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Euro | 3,132.3 | 1,795.0 |
U.S. dollar | 1,533.0 | 1,407.2 |
Singapore dollar | 139.6 | 139.8 |
Other currencies | 220.8 | 389.4 |
| \u00a0 | 5,025.7 | 3,731.4 |
For 100% of the bank debt, the applicable covenants were complied with or waived during 2022 (2021: 100%). The table below provides details on certain company-specific covenants that applied in 2022.
| \u00a0 | Debt | Required | Actual |
|---|---|---|---|
Boskalis | 392.3 | \u00a0 | \u00a0 |
Maximum net debt:EBITDA ratio | \u00a0 | 3.00 | (0.70) |
Minimum interest cover ratio | \u00a0 | 4.00 | 42.00 |
Vopak | 2,359.7 | \u00a0 | \u00a0 |
Maximum senior net debt:EBITDA ratio | \u00a0 | 3.75 - 4.00 | 2.65 |
Minimum interest cover ratio | \u00a0 | 3.50 | 8.40 |
Other | 2,273.7 | \u00a0 | \u00a0 |
Total debt | 5,025.7 | \u00a0 | \u00a0 |
Included in other financial liabilities is the obligation to acquire equity instruments in certain subsidiaries from the management of these subsidiaries and liabilities related to share-based payment plans for an aggregate amount of \u20ac\u00a083.3 million (2021: \u20ac\u00a058.9 million), of which \u20ac\u00a067.6 million (2021: \u20ac\u00a042.9 million) is included as non-current liabilities. Reference is made to note 34 on share-based compensation.
Also included are obligations related to options on non-controlling interest and deferred/contingent payments with respect to acquisitions for \u20ac\u00a079.1 million (2021: \u20ac\u00a059.6 million) and other liabilities of \u20ac\u00a015.0 million (2021: \u20ac\u00a014.9 million). These liabilities expire during 2023 through 2025. In 2020, Safilo entered into reciprocal option agreements with a view to acquiring the non-controlling interest in Blenders and Priv\u00e9 Revaux. In 2022, these options were revalued for an update to the business plans, leading to a \u20ac\u00a031.2 million revaluation gain and a reduction of the liability. In 2022, the CEO and certain other employees of Priv\u00e9 Revaux resigned and, pursuant to the contractual terms, Safilo early exercised its call option on their non-controlling interest in the company in exchange for a nominal amount. As a result, the ownership interest in Priv\u00e9 Revaux increased from 64.2% to 82.8%.
The fair value of debt and other financial liabilities is disclosed in note 36.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-638": { "value": "Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Debt is initially recognized at fair value, less any directly related transaction costs. When debt instruments are designated as being part of a fair value hedge relationship, the debt is carried at amortized cost, adjusted for the fair value of the risk being hedged, with changes in value shown in the consolidated statement of income. Other debt is subsequently carried at amortized cost, using the effective interest method. Convertible (equity-linked) borrowings that include a cash-settlement option are carried at amortized cost using an effective interest rate deemed appropriate for the risk profile of an equivalent financial instrument without the conversion component.
Other financial liabilities include contingent considerations related to acquisitions and obligations to acquire non-controlling interests from management of certain subsidiaries. These are initially recognized and subsequently measured at fair value with remeasurement differences recorded as financial income or expense in the consolidated statement of income. Refer to note 36 on fair value measurement.
Debt and other financial liabilities are classified as current unless the Company has an unconditional right to defer settlement until at least twelve months after statement of financial position date.
Fees paid with respect to loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and subsequently amortized over the lifetime of the facility. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Mortgage loans are secured by mortgages and pledges on vessels, real estate, inventory and receivables with a corresponding carrying value of \u20ac\u00a0632.1 million (2021: \u20ac\u00a0492.1 million). These are non-possessory pledges, which means that only in case of default under the mortgage loan agreements, the lender will have the right to sell the vessels, real estate or inventory and receive the cash flows from the receivables. The other loans are secured\u00a0to an amount of \u20ac\u00a0847.7 million (2021: \u20ac\u00a0958.6 million) by non-possessory pledges on machinery and equipment, receivables, inventories and other current assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-505": { "value": "Revenue is recognized in the period in which the performance obligation from the underlying contract has been satisfied. In most sales transactions this is at the point in time when control over a product or service has been transferred to the customer. Revenue is shown net of sales tax, value-added tax, discounts, rebates, expected returns and amounts collected on behalf of third parties. A contract with a customer may comprise of multiple distinct performance obligations that require separation. In general, the total consideration under the contract is allocated to performance obligations based on stand-alone selling prices. The timing of revenue recognition depends on the type of performance obligation, as described below.
Sale of goods
The group operates physical retail stores and webstores in the Quoted minority interests and Unquoted segments. Sales on a wholesale basis are present in the Quoted minority interest and Unquoted segments. Revenue is recognized when the product is sold to the customer and control over the product has been transferred to the customer in return for (a right to) payment.
For retail sales, revenue recognition generally coincides with the physical transfer of the product to the customer. Revenue is then recognized at the transaction price, gross of (credit card) fees payable for the transaction which are recorded in selling cost. For rights issued under a customer loyalty program, through vouchers and by way of other future discounts or awards, a contract liability is incurred as a reduction to revenue. Revenue is further reduced and a refund liability is recognized for applicable rights of return. An asset reflecting the right to returned goods is recognized, reducing the cost of sales, at the carrying amount of those goods, net of expected refurbishment cost for returns that are not scrapped. In general, when a replacement product is not an acceptable alternative, the transaction price is refunded. An expected-value calculation based on accumulated experience is used to determine the amounts recognized as a refund liability. Where loyalty programs are in place, revenue allocated to the awards is recognized based on (anticipated) expiration and when the awards are redeemed.
For wholesale and franchise sales the timing of revenue recognition depends on when the products are delivered, with full discretion by the customer or franchisee over the sales channel and price to re-sell the products. Revenue recognition depends on individual customer terms and may occur when the products have been shipped or delivered to a specific location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or objective evidence has been obtained that all criteria for acceptance have been satisfied. Volume incentives apply to various wholesale contracts and reduce related revenues. Depending on the contract, these incentives are either paid at the end of the contract period as a rebate, or provide a right to a discount in the next contractual period. In case of rebates, a refund liability is recorded at the time of the transaction, as a reduction to revenue. The group periodically reviews the expected transaction price for the goods and services provided under the contract and adjusts the revenues from the contract and the refund liability accordingly. Discounts to be provided in future periods based on current year sales are considered a separate performance obligation, reducing current year revenue, and are recognized as a contract liability. The contract liability is recognized as revenue in the consolidated statement of income based on (anticipated) expiration and when the discounts are redeemed. A receivable is recognized for wholesale deliveries when payment has become unconditional. No element of financing is deemed present as payment terms are consistent with market practice. Any prepayments by customers are not considered revenue but are accounted for as contract liabilities.
Obligations to provide a refund under the standard warranty terms are recognized as a provision. Where warranties exceed these standard terms either in time, extent or through the inclusion of (additional) services it is recognized as distinct performance obligation and part of revenues is allocated and recognized over the period covered by the extended warranties. Extended warranties are considered services to be rendered and included under contract liabilities until revenue is recognized.
Provision of services
The group provides storage services in its Quoted minority interest segment and a range of other services, including shipping, staffing and financial services, in its Unquoted segment. Revenue from providing services is recognized in the period in which the services are rendered. Tank storage rentals, including minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period when these services are rendered, as clients simultaneously consume and benefit from the services at the moment that these are rendered. Revenues from excess throughputs and other services are recognized in the period in which they are provided.
For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, based on costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in the consolidated statement of income in the period in which the circumstances that give rise to the revision become known by management. Contracts for the rendering of services typically do not exceed a duration of twelve months, except for framework agreements for which prices are variable or periodically renegotiated.
Modifications of property, plant and equipment paid upfront by customers are accounted for as a contract liability and recognized in the consolidated statement of income over the contractual period on a straight-line basis.
In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered exceed the payment, depending on the specific terms of the contract, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized. If the contract includes an hourly fee, revenue is recognized in the amount to which there is a right to invoice. No element of financing is deemed present as payment terms are consistent with market practice.
License revenues
Franchise rights are accounted for as rights to access the franchisor\u2019s intellectual property. Any fixed fee allocated to those rights is generally recognized over the term of the franchise agreement. Franchise fees that are based on a percentage of sales are recognized at the time of the sale. Access to (digital) content is recognized over time for subscription contracts and at a point in time for usage-based contracts. License revenues are presented within rendering of services.
Construction and offshore contracting activities
The group provides (integration of) goods and services through its construction and offshore contracting businesses in the Unquoted segment, including housing, greenhouse, civil infrastructure and maritime construction. Revenue and results from the these businesses are determined by reference to the latest estimate of the total selling price of the contract, after taking into account claims that have been accepted by the client or that derive from enforceable rights, are highly probable to lead to revenue and can be reliably measured. Such revenue is recognized over time, using the percentage-of-completion method, using a completion rate determined by reference to estimated cost of completed works (input method) and reviewed against progress of the works.
Recognition of revenues and results for property development activities commences only when a contract with a customer for the (further) development and sale of such property has been signed. These contracts generally involve the delivery of both land and buildings. Revenues related to (further) development of the land and the construction of buildings are recognized as set out above. Revenues and results from sale of the land positions are realized at the signing date if the land is transferred to the buyer directly, or through inclusion of land and land-related expenses in the cost basis for determination of project completion, if it remains an integral part of the project under development.
Construction, development and offshore services contracts of the group are frequently subject to variation orders that affect the scope and/or price of the contract and that amend existing performance obligations. Variation orders that are highly probable, cannot be reversed and for which payment is legally enforceable constitute contract modifications. These modifications are accounted for through a cumulative catch-up adjustment.
A provision for onerous contracts is formed against operating expenses when future contract losses are known and can be reliably measured. Additional information on judgement and estimates in relation to construction, development and offshore services contracts are included in note 12.
The Company\u2019s 2022 revenue can be disaggregated as follows:
2022 | Europe | USA & Canada | Asia | Other | Total | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | \u00a0 | \u00a0 | \u00a0 | ||||
Sale of goods | 3,179.3 | 878.5 | 302.5 | 254.5 | 4,614.8 | 1,072.4 | 3,542.4 |
Construction and offshore contracting activities | 1,977.1 | 91.5 | 630.3 | 60.4 | 2,759.3 | - | 2,759.3 |
Provision of services | 1,466.0 | 286.3 | 507.8 | 387.1 | 2,647.2 | 1,341.6 | 1,305.6 |
| \u00a0 | 6,622.4 | 1,256.3 | 1,440.6 | 702.0 | 10,021.3 | 2,414.0 | 7,607.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from other sources | 48.9 | 14.1 | 11.8 | 8.2 | 83.0 | 64.4 | 18.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue | 6,671.3 | 1,270.4 | 1,452.4 | 710.2 | 10,104.3 | 2,478.4 | 7,625.9 |
The Company\u2019s 2021 revenue can be disaggregated as follows:
2021 | Europe | USA & Canada | Asia | Other | Total | Optical retail | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||
Sale of goods | 3,337.8 | 976.2 | 549.3 | 371.3 | 5,234.6 | - | 2,163.8 | 3,070.8 |
Construction and offshore contracting activities | 1,271.7 | 55.3 | 9.2 | 34.2 | 1,370.4 | - | - | 1,370.4 |
Provision of services | 527.9 | 8.8 | 15.6 | 11.6 | 563.9 | - | - | 563.9 |
| \u00a0 | 5,137.4 | 1,040.3 | 574.1 | 417.1 | 7,168.9 | - | 2,163.8 | 5,005.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from other sources | 13.1 | 8.8 | 8.9 | 13.6 | 44.4 | - | 41.1 | 3.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue from continuing operations | 5,150.5 | 1,049.1 | 583.0 | 430.7 | 7,213.3 | - | 2,204.9 | 5,008.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from discontinued operations | 1,747.9 | 35.6 | - | 107.6 | 1,891.1 | 1,891.1 | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue | 6,898.4 | 1,084.7 | 583.0 | 538.3 | 9,104.4 | 1,891.1 | 2,204.9 | 5,008.4 |
Expected future revenues from continuing operations can be specified as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Future revenues expected to be realized in one year | 3,898.6 | 1,284.8 |
Future revenues expected to be realized between one and two years | 2,242.9 | 436.5 |
Future revenues expected to be realized between two and five years | 1,453.3 | 158.4 |
Future revenues expected to be realized beyond five years | 274.1 | - |
Future revenues in order book | 7,868.9 | 1,879.7 |
Future revenues from current projects | 2,405.4 | 1,102.6 |
Future revenues in order book primarily relates to housing, greenhouse, civil infrastructure and maritime construction, office furniture and industrial businesses. Future revenues from current projects mainly relate to the unfulfilled part of extended (service-type) warranties and construction contracts.
The table below provides a reconciliation of the contract liabilities for the periods presented.
| \u00a0 | Deferred revenue construction and offshore service contracts | Other deferred revenues | Customer prepayments | Total |
|---|---|---|---|---|
Balance on January 1, 2021 | 81.6 | 73.3 | 28.5 | 183.4 |
Payments received | 628.5 | 62.8 | 93.6 | 784.9 |
Consolidation | 13.3 | - | - | 13.3 |
Increase from new contracts with customers | 1.0 | - | - | 1.0 |
Recognized as revenue in current period | (564.1) | (73.4) | (60.6) | (698.1) |
Exchange differences and other | - | 3.2 | 4.8 | 8.0 |
Balance on December 31, 2021 | 160.3 | 65.9 | 66.3 | 292.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2022 | 160.3 | 65.9 | 66.3 | 292.5 |
Payments received | 730.1 | 104.3 | 51.5 | 885.9 |
Consolidation | 430.3 | 0.5 | - | 430.8 |
Increase from new contracts with customers | - | - | 0.2 | 0.2 |
Recognized as revenue in current period | (781.1) | (90.9) | (87.7) | (959.7) |
Reclassification | 42.9 | 4.3 | (2.6) | 44.6 |
Exchange differences and other | 2.1 | 3.1 | 1.9 | 7.1 |
Balance on December 31, 2022 | 584.6 | 87.2 | 29.6 | 701.4 |
The amounts due to customers relate mainly to construction contracts (refer to note 12).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-506": { "value": "Revenue is recognized in the period in which the performance obligation from the underlying contract has been satisfied. In most sales transactions this is at the point in time when control over a product or service has been transferred to the customer. Revenue is shown net of sales tax, value-added tax, discounts, rebates, expected returns and amounts collected on behalf of third parties. A contract with a customer may comprise of multiple distinct performance obligations that require separation. In general, the total consideration under the contract is allocated to performance obligations based on stand-alone selling prices. The timing of revenue recognition depends on the type of performance obligation, as described below.
Sale of goods
The group operates physical retail stores and webstores in the Quoted minority interests and Unquoted segments. Sales on a wholesale basis are present in the Quoted minority interest and Unquoted segments. Revenue is recognized when the product is sold to the customer and control over the product has been transferred to the customer in return for (a right to) payment.
For retail sales, revenue recognition generally coincides with the physical transfer of the product to the customer. Revenue is then recognized at the transaction price, gross of (credit card) fees payable for the transaction which are recorded in selling cost. For rights issued under a customer loyalty program, through vouchers and by way of other future discounts or awards, a contract liability is incurred as a reduction to revenue. Revenue is further reduced and a refund liability is recognized for applicable rights of return. An asset reflecting the right to returned goods is recognized, reducing the cost of sales, at the carrying amount of those goods, net of expected refurbishment cost for returns that are not scrapped. In general, when a replacement product is not an acceptable alternative, the transaction price is refunded. An expected-value calculation based on accumulated experience is used to determine the amounts recognized as a refund liability. Where loyalty programs are in place, revenue allocated to the awards is recognized based on (anticipated) expiration and when the awards are redeemed.
For wholesale and franchise sales the timing of revenue recognition depends on when the products are delivered, with full discretion by the customer or franchisee over the sales channel and price to re-sell the products. Revenue recognition depends on individual customer terms and may occur when the products have been shipped or delivered to a specific location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or objective evidence has been obtained that all criteria for acceptance have been satisfied. Volume incentives apply to various wholesale contracts and reduce related revenues. Depending on the contract, these incentives are either paid at the end of the contract period as a rebate, or provide a right to a discount in the next contractual period. In case of rebates, a refund liability is recorded at the time of the transaction, as a reduction to revenue. The group periodically reviews the expected transaction price for the goods and services provided under the contract and adjusts the revenues from the contract and the refund liability accordingly. Discounts to be provided in future periods based on current year sales are considered a separate performance obligation, reducing current year revenue, and are recognized as a contract liability. The contract liability is recognized as revenue in the consolidated statement of income based on (anticipated) expiration and when the discounts are redeemed. A receivable is recognized for wholesale deliveries when payment has become unconditional. No element of financing is deemed present as payment terms are consistent with market practice. Any prepayments by customers are not considered revenue but are accounted for as contract liabilities.
Obligations to provide a refund under the standard warranty terms are recognized as a provision. Where warranties exceed these standard terms either in time, extent or through the inclusion of (additional) services it is recognized as distinct performance obligation and part of revenues is allocated and recognized over the period covered by the extended warranties. Extended warranties are considered services to be rendered and included under contract liabilities until revenue is recognized.
Provision of services
The group provides storage services in its Quoted minority interest segment and a range of other services, including shipping, staffing and financial services, in its Unquoted segment. Revenue from providing services is recognized in the period in which the services are rendered. Tank storage rentals, including minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period when these services are rendered, as clients simultaneously consume and benefit from the services at the moment that these are rendered. Revenues from excess throughputs and other services are recognized in the period in which they are provided.
For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, based on costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in the consolidated statement of income in the period in which the circumstances that give rise to the revision become known by management. Contracts for the rendering of services typically do not exceed a duration of twelve months, except for framework agreements for which prices are variable or periodically renegotiated.
Modifications of property, plant and equipment paid upfront by customers are accounted for as a contract liability and recognized in the consolidated statement of income over the contractual period on a straight-line basis.
In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered exceed the payment, depending on the specific terms of the contract, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized. If the contract includes an hourly fee, revenue is recognized in the amount to which there is a right to invoice. No element of financing is deemed present as payment terms are consistent with market practice.
License revenues
Franchise rights are accounted for as rights to access the franchisor\u2019s intellectual property. Any fixed fee allocated to those rights is generally recognized over the term of the franchise agreement. Franchise fees that are based on a percentage of sales are recognized at the time of the sale. Access to (digital) content is recognized over time for subscription contracts and at a point in time for usage-based contracts. License revenues are presented within rendering of services.
Construction and offshore contracting activities
The group provides (integration of) goods and services through its construction and offshore contracting businesses in the Unquoted segment, including housing, greenhouse, civil infrastructure and maritime construction. Revenue and results from the these businesses are determined by reference to the latest estimate of the total selling price of the contract, after taking into account claims that have been accepted by the client or that derive from enforceable rights, are highly probable to lead to revenue and can be reliably measured. Such revenue is recognized over time, using the percentage-of-completion method, using a completion rate determined by reference to estimated cost of completed works (input method) and reviewed against progress of the works.
Recognition of revenues and results for property development activities commences only when a contract with a customer for the (further) development and sale of such property has been signed. These contracts generally involve the delivery of both land and buildings. Revenues related to (further) development of the land and the construction of buildings are recognized as set out above. Revenues and results from sale of the land positions are realized at the signing date if the land is transferred to the buyer directly, or through inclusion of land and land-related expenses in the cost basis for determination of project completion, if it remains an integral part of the project under development.
Construction, development and offshore services contracts of the group are frequently subject to variation orders that affect the scope and/or price of the contract and that amend existing performance obligations. Variation orders that are highly probable, cannot be reversed and for which payment is legally enforceable constitute contract modifications. These modifications are accounted for through a cumulative catch-up adjustment.
A provision for onerous contracts is formed against operating expenses when future contract losses are known and can be reliably measured. Additional information on judgement and estimates in relation to construction, development and offshore services contracts are included in note 12.
The Company\u2019s 2022 revenue can be disaggregated as follows:
2022 | Europe | USA & Canada | Asia | Other | Total | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | \u00a0 | \u00a0 | \u00a0 | ||||
Sale of goods | 3,179.3 | 878.5 | 302.5 | 254.5 | 4,614.8 | 1,072.4 | 3,542.4 |
Construction and offshore contracting activities | 1,977.1 | 91.5 | 630.3 | 60.4 | 2,759.3 | - | 2,759.3 |
Provision of services | 1,466.0 | 286.3 | 507.8 | 387.1 | 2,647.2 | 1,341.6 | 1,305.6 |
| \u00a0 | 6,622.4 | 1,256.3 | 1,440.6 | 702.0 | 10,021.3 | 2,414.0 | 7,607.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from other sources | 48.9 | 14.1 | 11.8 | 8.2 | 83.0 | 64.4 | 18.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue | 6,671.3 | 1,270.4 | 1,452.4 | 710.2 | 10,104.3 | 2,478.4 | 7,625.9 |
The Company\u2019s 2021 revenue can be disaggregated as follows:
2021 | Europe | USA & Canada | Asia | Other | Total | Optical retail | Quoted | Unquoted |
|---|---|---|---|---|---|---|---|---|
Revenue from contracts with customers | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||
Sale of goods | 3,337.8 | 976.2 | 549.3 | 371.3 | 5,234.6 | - | 2,163.8 | 3,070.8 |
Construction and offshore contracting activities | 1,271.7 | 55.3 | 9.2 | 34.2 | 1,370.4 | - | - | 1,370.4 |
Provision of services | 527.9 | 8.8 | 15.6 | 11.6 | 563.9 | - | - | 563.9 |
| \u00a0 | 5,137.4 | 1,040.3 | 574.1 | 417.1 | 7,168.9 | - | 2,163.8 | 5,005.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from other sources | 13.1 | 8.8 | 8.9 | 13.6 | 44.4 | - | 41.1 | 3.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue from continuing operations | 5,150.5 | 1,049.1 | 583.0 | 430.7 | 7,213.3 | - | 2,204.9 | 5,008.4 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue from discontinued operations | 1,747.9 | 35.6 | - | 107.6 | 1,891.1 | 1,891.1 | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total revenue | 6,898.4 | 1,084.7 | 583.0 | 538.3 | 9,104.4 | 1,891.1 | 2,204.9 | 5,008.4 |
Expected future revenues from continuing operations can be specified as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Future revenues expected to be realized in one year | 3,898.6 | 1,284.8 |
Future revenues expected to be realized between one and two years | 2,242.9 | 436.5 |
Future revenues expected to be realized between two and five years | 1,453.3 | 158.4 |
Future revenues expected to be realized beyond five years | 274.1 | - |
Future revenues in order book | 7,868.9 | 1,879.7 |
Future revenues from current projects | 2,405.4 | 1,102.6 |
Future revenues in order book primarily relates to housing, greenhouse, civil infrastructure and maritime construction, office furniture and industrial businesses. Future revenues from current projects mainly relate to the unfulfilled part of extended (service-type) warranties and construction contracts.
The table below provides a reconciliation of the contract liabilities for the periods presented.
| \u00a0 | Deferred revenue construction and offshore service contracts | Other deferred revenues | Customer prepayments | Total |
|---|---|---|---|---|
Balance on January 1, 2021 | 81.6 | 73.3 | 28.5 | 183.4 |
Payments received | 628.5 | 62.8 | 93.6 | 784.9 |
Consolidation | 13.3 | - | - | 13.3 |
Increase from new contracts with customers | 1.0 | - | - | 1.0 |
Recognized as revenue in current period | (564.1) | (73.4) | (60.6) | (698.1) |
Exchange differences and other | - | 3.2 | 4.8 | 8.0 |
Balance on December 31, 2021 | 160.3 | 65.9 | 66.3 | 292.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2022 | 160.3 | 65.9 | 66.3 | 292.5 |
Payments received | 730.1 | 104.3 | 51.5 | 885.9 |
Consolidation | 430.3 | 0.5 | - | 430.8 |
Increase from new contracts with customers | - | - | 0.2 | 0.2 |
Recognized as revenue in current period | (781.1) | (90.9) | (87.7) | (959.7) |
Reclassification | 42.9 | 4.3 | (2.6) | 44.6 |
Exchange differences and other | 2.1 | 3.1 | 1.9 | 7.1 |
Balance on December 31, 2022 | 584.6 | 87.2 | 29.6 | 701.4 |
The amounts due to customers relate mainly to construction contracts (refer to note 12).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-643": { "value": "Revenue is recognized in the period in which the performance obligation from the underlying contract has been satisfied. In most sales transactions this is at the point in time when control over a product or service has been transferred to the customer. Revenue is shown net of sales tax, value-added tax, discounts, rebates, expected returns and amounts collected on behalf of third parties. A contract with a customer may comprise of multiple distinct performance obligations that require separation. In general, the total consideration under the contract is allocated to performance obligations based on stand-alone selling prices. The timing of revenue recognition depends on the type of performance obligation, as described below.
Sale of goods
The group operates physical retail stores and webstores in the Quoted minority interests and Unquoted segments. Sales on a wholesale basis are present in the Quoted minority interest and Unquoted segments. Revenue is recognized when the product is sold to the customer and control over the product has been transferred to the customer in return for (a right to) payment.
For retail sales, revenue recognition generally coincides with the physical transfer of the product to the customer. Revenue is then recognized at the transaction price, gross of (credit card) fees payable for the transaction which are recorded in selling cost. For rights issued under a customer loyalty program, through vouchers and by way of other future discounts or awards, a contract liability is incurred as a reduction to revenue. Revenue is further reduced and a refund liability is recognized for applicable rights of return. An asset reflecting the right to returned goods is recognized, reducing the cost of sales, at the carrying amount of those goods, net of expected refurbishment cost for returns that are not scrapped. In general, when a replacement product is not an acceptable alternative, the transaction price is refunded. An expected-value calculation based on accumulated experience is used to determine the amounts recognized as a refund liability. Where loyalty programs are in place, revenue allocated to the awards is recognized based on (anticipated) expiration and when the awards are redeemed.
For wholesale and franchise sales the timing of revenue recognition depends on when the products are delivered, with full discretion by the customer or franchisee over the sales channel and price to re-sell the products. Revenue recognition depends on individual customer terms and may occur when the products have been shipped or delivered to a specific location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or objective evidence has been obtained that all criteria for acceptance have been satisfied. Volume incentives apply to various wholesale contracts and reduce related revenues. Depending on the contract, these incentives are either paid at the end of the contract period as a rebate, or provide a right to a discount in the next contractual period. In case of rebates, a refund liability is recorded at the time of the transaction, as a reduction to revenue. The group periodically reviews the expected transaction price for the goods and services provided under the contract and adjusts the revenues from the contract and the refund liability accordingly. Discounts to be provided in future periods based on current year sales are considered a separate performance obligation, reducing current year revenue, and are recognized as a contract liability. The contract liability is recognized as revenue in the consolidated statement of income based on (anticipated) expiration and when the discounts are redeemed. A receivable is recognized for wholesale deliveries when payment has become unconditional. No element of financing is deemed present as payment terms are consistent with market practice. Any prepayments by customers are not considered revenue but are accounted for as contract liabilities.
Obligations to provide a refund under the standard warranty terms are recognized as a provision. Where warranties exceed these standard terms either in time, extent or through the inclusion of (additional) services it is recognized as distinct performance obligation and part of revenues is allocated and recognized over the period covered by the extended warranties. Extended warranties are considered services to be rendered and included under contract liabilities until revenue is recognized.
Provision of services
The group provides storage services in its Quoted minority interest segment and a range of other services, including shipping, staffing and financial services, in its Unquoted segment. Revenue from providing services is recognized in the period in which the services are rendered. Tank storage rentals, including minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period when these services are rendered, as clients simultaneously consume and benefit from the services at the moment that these are rendered. Revenues from excess throughputs and other services are recognized in the period in which they are provided.
For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, based on costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in the consolidated statement of income in the period in which the circumstances that give rise to the revision become known by management. Contracts for the rendering of services typically do not exceed a duration of twelve months, except for framework agreements for which prices are variable or periodically renegotiated.
Modifications of property, plant and equipment paid upfront by customers are accounted for as a contract liability and recognized in the consolidated statement of income over the contractual period on a straight-line basis.
In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered exceed the payment, depending on the specific terms of the contract, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized. If the contract includes an hourly fee, revenue is recognized in the amount to which there is a right to invoice. No element of financing is deemed present as payment terms are consistent with market practice.
License revenues
Franchise rights are accounted for as rights to access the franchisor\u2019s intellectual property. Any fixed fee allocated to those rights is generally recognized over the term of the franchise agreement. Franchise fees that are based on a percentage of sales are recognized at the time of the sale. Access to (digital) content is recognized over time for subscription contracts and at a point in time for usage-based contracts. License revenues are presented within rendering of services.
Construction and offshore contracting activities
The group provides (integration of) goods and services through its construction and offshore contracting businesses in the Unquoted segment, including housing, greenhouse, civil infrastructure and maritime construction. Revenue and results from the these businesses are determined by reference to the latest estimate of the total selling price of the contract, after taking into account claims that have been accepted by the client or that derive from enforceable rights, are highly probable to lead to revenue and can be reliably measured. Such revenue is recognized over time, using the percentage-of-completion method, using a completion rate determined by reference to estimated cost of completed works (input method) and reviewed against progress of the works.
Recognition of revenues and results for property development activities commences only when a contract with a customer for the (further) development and sale of such property has been signed. These contracts generally involve the delivery of both land and buildings. Revenues related to (further) development of the land and the construction of buildings are recognized as set out above. Revenues and results from sale of the land positions are realized at the signing date if the land is transferred to the buyer directly, or through inclusion of land and land-related expenses in the cost basis for determination of project completion, if it remains an integral part of the project under development.
Construction, development and offshore services contracts of the group are frequently subject to variation orders that affect the scope and/or price of the contract and that amend existing performance obligations. Variation orders that are highly probable, cannot be reversed and for which payment is legally enforceable constitute contract modifications. These modifications are accounted for through a cumulative catch-up adjustment.
A provision for onerous contracts is formed against operating expenses when future contract losses are known and can be reliably measured. Additional information on judgement and estimates in relation to construction, development and offshore services contracts are included in note 12.
Revenue is recognized in the period in which the performance obligation from the underlying contract has been satisfied. In most sales transactions this is at the point in time when control over a product or service has been transferred to the customer. Revenue is shown net of sales tax, value-added tax, discounts, rebates, expected returns and amounts collected on behalf of third parties. A contract with a customer may comprise of multiple distinct performance obligations that require separation. In general, the total consideration under the contract is allocated to performance obligations based on stand-alone selling prices. The timing of revenue recognition depends on the type of performance obligation, as described below.
For wholesale and franchise sales the timing of revenue recognition depends on when the products are delivered, with full discretion by the customer or franchisee over the sales channel and price to re-sell the products. Revenue recognition depends on individual customer terms and may occur when the products have been shipped or delivered to a specific location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or objective evidence has been obtained that all criteria for acceptance have been satisfied. Volume incentives apply to various wholesale contracts and reduce related revenues. Depending on the contract, these incentives are either paid at the end of the contract period as a rebate, or provide a right to a discount in the next contractual period. In case of rebates, a refund liability is recorded at the time of the transaction, as a reduction to revenue. The group periodically reviews the expected transaction price for the goods and services provided under the contract and adjusts the revenues from the contract and the refund liability accordingly. Discounts to be provided in future periods based on current year sales are considered a separate performance obligation, reducing current year revenue, and are recognized as a contract liability. The contract liability is recognized as revenue in the consolidated statement of income based on (anticipated) expiration and when the discounts are redeemed. A receivable is recognized for wholesale deliveries when payment has become unconditional. No element of financing is deemed present as payment terms are consistent with market practice. Any prepayments by customers are not considered revenue but are accounted for as contract liabilities.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscountsAndRebatesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-645": { "value": "For retail sales, revenue recognition generally coincides with the physical transfer of the product to the customer. Revenue is then recognized at the transaction price, gross of (credit card) fees payable for the transaction which are recorded in selling cost. For rights issued under a customer loyalty program, through vouchers and by way of other future discounts or awards, a contract liability is incurred as a reduction to revenue. Revenue is further reduced and a refund liability is recognized for applicable rights of return. An asset reflecting the right to returned goods is recognized, reducing the cost of sales, at the carrying amount of those goods, net of expected refurbishment cost for returns that are not scrapped. In general, when a replacement product is not an acceptable alternative, the transaction price is refunded. An expected-value calculation based on accumulated experience is used to determine the amounts recognized as a refund liability. Where loyalty programs are in place, revenue allocated to the awards is recognized based on (anticipated) expiration and when the awards are redeemed.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCustomerLoyaltyProgrammesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-507": { "value": "Income from marketable securities and deposits includes realized and unrealized capital gains and losses, impairment losses, interest, dividends and management fees.
Capital gains and losses represent the change in market value of the marketable securities. Interest income on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest rate method. Dividends are recognized when the right to receive payment is established.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Net capital gains / (losses) | (179.0) | 85.3 |
Interest income / (expense) | 40.8 | (13.6) |
Dividends | 21.2 | 8.7 |
Management fees | (2.7) | (0.4) |
| \u00a0 | (119.7) | 80.0 |
Income from marketable securities and deposits includes realized and unrealized capital gains and losses, impairment losses, interest, dividends and management fees.
Capital gains and losses represent the change in market value of the marketable securities. Interest income on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest rate method. Dividends are recognized when the right to receive payment is established.
The 2022 net other income of \u20ac\u00a0127.8 million relates mainly to the capital gains realized on the sale of the Company\u2019s interests in MYLAPS, Livit and Floramedia, capital gains and losses on sale of subsidiaries by Vopak, capital gains realized on the disposal of property, plant and equipment, negative goodwill realized in acquisitions and a capital gains on the dilution of an associate by Vopak. Reference is made to note 3 for further details on negative goodwill and disposals and note 8 for the dilution result on associates. The 2021 net other income of \u20ac\u00a03,512.6 million related mainly to the capital gain realized on the sale of the Company\u2019s 76.72% shareholding in GrandVision N.V.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-656": { "value": "Termination benefits
Termination benefits are recognized as an expense when the Company and its subsidiaries are committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognized as an expense if an offer has been made of voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period they are discounted to their present value.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-511": { "value": "The number of persons employed by the Company and its subsidiaries at the end of 2022 was 31,144 (2021: 27,443) on a full-time equivalent basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-512": { "value": "Operating expenses, including marketing and information and communication technology, are recognized in the consolidated statement of income when incurred.
Other operating expenses include the following:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Marketing and publicity | 215.4 | 172.6 |
Staffing expenses Atlas Professionals | 145.4 | 157.8 |
Information and communication technology | 137.8 | 115.7 |
Royalty expenses | 59.4 | 55.3 |
Housing | 44.3 | 26.3 |
Other | 937.0 | 688.3 |
Continuing operations | 1,539.3 | 1,216.0 |
Discontinued operations | - | 285.5 |
Total | 1,539.3 | 1,501.5 |
Research and development costs expensed, included in other, amounted to \u20ac\u00a029.3 million (2021: \u20ac\u00a025.1 million). Expenses recognized in the consolidated statement of income in respect of low-value asset leases and short-term leases amounted to \u20ac\u00a032.2 million and in respect of variable lease payments \u20ac\u00a07.4 million was expensed (2021: \u20ac\u00a019.7 million, respectively \u20ac\u00a05.1 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-513": { "value": "Operating expenses, including marketing and information and communication technology, are recognized in the consolidated statement of income when incurred.
Other operating expenses include the following:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Marketing and publicity | 215.4 | 172.6 |
Staffing expenses Atlas Professionals | 145.4 | 157.8 |
Information and communication technology | 137.8 | 115.7 |
Royalty expenses | 59.4 | 55.3 |
Housing | 44.3 | 26.3 |
Other | 937.0 | 688.3 |
Continuing operations | 1,539.3 | 1,216.0 |
Discontinued operations | - | 285.5 |
Total | 1,539.3 | 1,501.5 |
Research and development costs expensed, included in other, amounted to \u20ac\u00a029.3 million (2021: \u20ac\u00a025.1 million). Expenses recognized in the consolidated statement of income in respect of low-value asset leases and short-term leases amounted to \u20ac\u00a032.2 million and in respect of variable lease payments \u20ac\u00a07.4 million was expensed (2021: \u20ac\u00a019.7 million, respectively \u20ac\u00a05.1 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-659": { "value": "Operating expenses, including marketing and information and communication technology, are recognized in the consolidated statement of income when incurred.
Research and development costs expensed, included in other, amounted to \u20ac\u00a029.3 million (2021: \u20ac\u00a025.1 million). Expenses recognized in the consolidated statement of income in respect of low-value asset leases and short-term leases amounted to \u20ac\u00a032.2 million and in respect of variable lease payments \u20ac\u00a07.4 million was expensed (2021: \u20ac\u00a019.7 million, respectively \u20ac\u00a05.1 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-515": { "value": "Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (\u2018earn-out\u2019 liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
Interest income and expense on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest method.
Financial income and expense include:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Financial expense | 272.2 | 209.3 |
Other financial income | (146.5) | (90.2) |
Net finance costs continuing operations | 125.7 | 119.1 |
Net finance costs discontinued operations | - | 17.4 |
| \u00a0 | 125.7 | 136.5 |
Financial expense includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest expense on lease liabilities | 31.9 | 28.6 |
Other interest expense | 167.2 | 121.3 |
Exchange differences, net of hedges1 | 42.0 | 43.2 |
Derivatives, not included in hedge accounting | 14.7 | - |
Other | 16.4 | 16.2 |
Continuing operations | 272.2 | 209.3 |
Discontinued operations | - | 18.4 |
| \u00a0 | 272.2 | 227.7 |
Other financial income includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest income | 5.5 | 2.4 |
Exchange differences | 77.9 | 46.3 |
Derivatives, not included in hedge accounting | 2.8 | 7.6 |
Revaluation of options on non-controlling interests | 31.2 | 27.4 |
Revaluation of earn-out liabilities | 18.9 | - |
Other | 10.2 | 6.5 |
Continuing operations | 146.5 | 90.2 |
Discontinued operations | - | 1.0 |
| \u00a0 | 146.5 | 91.2 |
The revaluation of options on non-controlling interests relates to the revaluation of reciprocal put and call options concluded by Safilo with respect to the non-controlling interest in Blenders and Priv\u00e9 Revaux (refer to note 22). The revaluation of earn-out liabilities relates to the release of an earn-out liability in relation to Prodrive (refer to notes 8 and 35).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-516": { "value": "Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (\u2018earn-out\u2019 liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
Interest income and expense on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest method.
Financial income and expense include:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Financial expense | 272.2 | 209.3 |
Other financial income | (146.5) | (90.2) |
Net finance costs continuing operations | 125.7 | 119.1 |
Net finance costs discontinued operations | - | 17.4 |
| \u00a0 | 125.7 | 136.5 |
Financial expense includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest expense on lease liabilities | 31.9 | 28.6 |
Other interest expense | 167.2 | 121.3 |
Exchange differences, net of hedges1 | 42.0 | 43.2 |
Derivatives, not included in hedge accounting | 14.7 | - |
Other | 16.4 | 16.2 |
Continuing operations | 272.2 | 209.3 |
Discontinued operations | - | 18.4 |
| \u00a0 | 272.2 | 227.7 |
Other financial income includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest income | 5.5 | 2.4 |
Exchange differences | 77.9 | 46.3 |
Derivatives, not included in hedge accounting | 2.8 | 7.6 |
Revaluation of options on non-controlling interests | 31.2 | 27.4 |
Revaluation of earn-out liabilities | 18.9 | - |
Other | 10.2 | 6.5 |
Continuing operations | 146.5 | 90.2 |
Discontinued operations | - | 1.0 |
| \u00a0 | 146.5 | 91.2 |
The revaluation of options on non-controlling interests relates to the revaluation of reciprocal put and call options concluded by Safilo with respect to the non-controlling interest in Blenders and Priv\u00e9 Revaux (refer to note 22). The revaluation of earn-out liabilities relates to the release of an earn-out liability in relation to Prodrive (refer to notes 8 and 35).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-517": { "value": "Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (\u2018earn-out\u2019 liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
Interest income and expense on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest method.
Financial income and expense include:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Financial expense | 272.2 | 209.3 |
Other financial income | (146.5) | (90.2) |
Net finance costs continuing operations | 125.7 | 119.1 |
Net finance costs discontinued operations | - | 17.4 |
| \u00a0 | 125.7 | 136.5 |
Financial expense includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest expense on lease liabilities | 31.9 | 28.6 |
Other interest expense | 167.2 | 121.3 |
Exchange differences, net of hedges1 | 42.0 | 43.2 |
Derivatives, not included in hedge accounting | 14.7 | - |
Other | 16.4 | 16.2 |
Continuing operations | 272.2 | 209.3 |
Discontinued operations | - | 18.4 |
| \u00a0 | 272.2 | 227.7 |
Other financial income includes:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Interest income | 5.5 | 2.4 |
Exchange differences | 77.9 | 46.3 |
Derivatives, not included in hedge accounting | 2.8 | 7.6 |
Revaluation of options on non-controlling interests | 31.2 | 27.4 |
Revaluation of earn-out liabilities | 18.9 | - |
Other | 10.2 | 6.5 |
Continuing operations | 146.5 | 90.2 |
Discontinued operations | - | 1.0 |
| \u00a0 | 146.5 | 91.2 |
The revaluation of options on non-controlling interests relates to the revaluation of reciprocal put and call options concluded by Safilo with respect to the non-controlling interest in Blenders and Priv\u00e9 Revaux (refer to note 22). The revaluation of earn-out liabilities relates to the release of an earn-out liability in relation to Prodrive (refer to notes 8 and 35).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-661": { "value": "Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (\u2018earn-out\u2019 liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-662": { "value": "Financial income includes income on cash and cash equivalents and income on financial assets not included in marketable securities and deposits or in other financial assets. Financial expense includes net finance costs in relation to financial liabilities. Fair value changes of (embedded) derivatives not included in a hedge relationship, fair value changes of contingent consideration related to acquisitions (\u2018earn-out\u2019 liabilities) and results from foreign currency translation of monetary items can be either financial income or expense.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-663": { "value": "Interest income and expense on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest method.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-518": { "value": "The current income tax charge is calculated on the basis of the tax law enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries have operations, taking into account tax-exempt income and tax losses carried forward. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretations. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Income tax is recognized in the consolidated statement of income unless it relates to items recognized in the consolidated statement of comprehensive income or in the consolidated statement of changes in equity. Where the final outcome of tax-related provisions is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Critical accounting estimates and judgments
Significant judgment is required in determining the worldwide provision for income tax, as subsidiaries are subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain. Provisions for anticipated tax audit issues are recognized based on management\u2019s estimates of whether additional taxes will be due.
| \u00a0 | 2022 | 2021 |
|---|---|---|
Current income taxes | 163.6 | 154.8 |
Deferred income taxes | 21.7 | 10.0 |
Income tax from continuing operations | 185.3 | 164.8 |
Income tax from discontinued operations | - | 43.2 |
| \u00a0 | 185.3 | 208.0 |
Income taxes differ from the theoretical amount that would arise using the domestic tax rates applicable to profits of taxable entities in the countries concerned, as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Profit before income tax from continuing operations | 681.2 | 4,346.1 |
Less: after-tax share of results from associates and joint ventures | (875.4) | (341.1) |
Less: non-taxable other income (sale of subsidiaries and associates) | (127.8) | (3,512.6) |
Adjusted profit before income tax | (322.0) | 492.4 |
Income tax expense | 185.3 | 164.8 |
Effective tax rate (%) on continuing operations | (57.5) | 33.5 |
| \u00a0 | 2022 | 2021 | ||
|---|---|---|---|---|
Composition | Amount | % | Amount | % |
Weighted-average statutory tax rate | (93.9) | 29.2 | 120.5 | 24.5 |
Goodwill impairment | 76.1 | (23.6) | - | - |
Recognition of tax losses1 | 176.0 | (54.7) | 22.7 | 4.6 |
Non-taxable income | (37.8) | 11.7 | (21.1) | (4.3) |
Non-deductible expenses | 69.7 | (21.6) | 29.0 | 5.9 |
Adjustment tax provisions and PY adjustments | (4.9) | 1.5 | 15.3 | 3.1 |
Rate changes | 0.1 | - | (1.6) | (0.3) |
Effective tax (rate) on continuing operations | 185.3 | (57.5) | 164.8 | 33.5 |
Impact from discontinued operations | - | \u00a0 | 43.2 | \u00a0 |
Effective tax | 185.3 | \u00a0 | 208.0 | \u00a0 |
The 2022 effective tax rate is affected by a non-tax deductible goodwill impairment of \u20ac\u00a0312 million and non-tax deductible exceptional losses at Vopak of \u20ac\u00a0463 million. Excluding these items the effective tax rate was 40.8%.
The impairments in Botlek and Europoort at Vopak did not lead to recognition of deferred tax assets as insufficient taxable profits are expected to be available. This explains to a large extent, together with a derecognition of deferred tax assets in the Dutch fiscal unity of Vopak, the effect of recognition of tax losses in the above table.
The effect of non-taxable income in the above table primarily relates to non-taxable financial income (revaluation of earn-out liabilities and options on non-controlling interests) and income subject to tonnage tax.
The effect of non-deductible expenses primarily relates to a decrease of the value of the fixed-income portfolio (included in marketable securities) of \u20ac\u00a0147 million which is non-tax deductible and expenses which are non-tax deductible under local tax law. This explains to a large extent the increase in the (revised) effective tax rate from 33.5% to 40.8%
Taxes recognized in other comprehensive income:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
On changes in the fair value of financial assets measured through other comprehensive income | - | 0.4 |
On changes in the fair value of cash flow hedges | (19.2) | (3.7) |
On translation and related hedges | - | (2.4) |
On changes in defined benefit obligations | (7.1) | (12.8) |
| \u00a0 | (26.3) | (18.5) |
The current income tax charge is calculated on the basis of the tax law enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries have operations, taking into account tax-exempt income and tax losses carried forward. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretations. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Income tax is recognized in the consolidated statement of income unless it relates to items recognized in the consolidated statement of comprehensive income or in the consolidated statement of changes in equity. Where the final outcome of tax-related provisions is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Critical accounting estimates and judgments
Significant judgment is required in determining the worldwide provision for income tax, as subsidiaries are subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain. Provisions for anticipated tax audit issues are recognized based on management\u2019s estimates of whether additional taxes will be due.
Earnings per Share for profit attributable to the owners of parent are calculated by dividing the profit attributable to the owners of parent by the time-weighted average number of outstanding Shares. The calculation of the previous year earnings per Share is adjusted to take into account the stock dividend paid in the current year, in respect of the previous year, in accordance with IAS\u00a033.64.
The calculation of the time-weighted average number of outstanding shares is as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Issued and outstanding Shares at January 1 | 86,704 | 85,312 |
Sale and transfer of treasury shares | 11 | 16 |
Purchase of treasury shares | - | (14) |
Dividend paid in stock | 1,009 | 722 |
Average number of outstanding Shares at December 31 | 87,724 | 86,036 |
There was no dilutive effect on earnings per Share in the years presented.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-667": { "value": "Earnings per Share for profit attributable to the owners of parent are calculated by dividing the profit attributable to the owners of parent by the time-weighted average number of outstanding Shares. The calculation of the previous year earnings per Share is adjusted to take into account the stock dividend paid in the current year, in respect of the previous year, in accordance with IAS\u00a033.64.
| \u00a0 | Notes | 2022 | 2021 |
|---|---|---|---|
Profit before taxes from continuing operations | \u00a0 | 681.2 | 4,346.1 |
Profit before taxes from discontinued operations | \u00a0 | - | 443.1 |
Depreciation and impairments | 1,022.9 | 481.0 | |
Depreciation and impairments right-of-use assets | 156.8 | 132.3 | |
Amortization and impairments | 459.8 | 129.4 | |
Badwill recognized on acquisitions | (6.6) | - | |
(Profit)/loss on sale of other financial assets and marketable securities | 24 | 179.0 | (85.3) |
Fair value gain on remeasurement of previously held equity interest | 25 | (656.2) | - |
Results from associates and joint ventures, net of impairments | 8, 25 | (269.2) | (386.2) |
(Profit)/loss on sale of property, plant, equipment and investment properties | 27 | - | (0.1) |
Profit on assets and liabilities held for sale | 27 | (121.3) | (3,510.7) |
Net financial expense | 30 | 125.7 | 136.5 |
Other movements in provisions and pension benefits | \u00a0 | 16.8 | (149.6) |
Dividend from associates and joint ventures | \u00a0 | 313.2 | 291.8 |
Changes in working capital | \u00a0 | (114.2) | 30.2 |
Cash generated from operating activities | \u00a0 | 1,787.9 | 1,858.5 |
Changes in working capital, excluding exchange differences and the effect of acquisitions:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Accounts receivable | 4.2 | (106.1) |
Inventories | (2.2) | (151.2) |
Other current assets | (55.3) | 68.5 |
Accounts payable / accrued expenses | (60.9) | 219.0 |
| \u00a0 | (114.2) | 30.2 |
The Company and its subsidiaries operate a number of equity-settled and cash-settled share- based compensation plans. Under the plans these entities receive services from employees as consideration for respectively ordinary shares of the respective entity or for the cash equivalent to the value of the underlying ordinary shares of the respective entity.
For equity-settled share-based compensation plans, the fair value is determined at the date of grant and expensed in the consolidated statement of income with a corresponding adjustment directly in equity. For cash-settled share-based compensation plans, the fair value is determined at the date of the grant and is re-measured at each reporting date until the liability is settled.
The compensation is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period).
Expenses related to share-based compensation consist of:
| \u00a0 | 2022 | 2021 |
|---|---|---|
HAL Holding N.V. | \u00a0 | \u00a0 |
Share Plan1 | 3.3 | 2.5 |
Vopak | \u00a0 | \u00a0 |
Long-Term Share Plans1 | 3.3 | 7.8 |
Long-Term Cash Plans2 | 0.7 | 0.7 |
Safilo | \u00a0 | \u00a0 |
Stock Option Plans1 | 0.7 | - |
Unquoted subsidiaries | \u00a0 | \u00a0 |
Cash Plans2 | 24.6 | 25.3 |
| \u00a0 | 32.6 | 36.3 |
Liabilities recognized in relation to cash-settled share-based compensation are comprised of:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Vopak | \u00a0 | \u00a0 |
Long-Term Cash Plans | 0.7 | 2.7 |
Unquoted subsidiaries | \u00a0 | \u00a0 |
Cash Plans | 82.6 | 56.2 |
| \u00a0 | 83.3 | 58.9 |
The current part of this liability of \u20ac\u00a015.7 million (2021: \u20ac\u00a016.0 million) is included under current other financial liabilities and the non-current part of \u20ac\u00a067.6 million (2021: \u20ac\u00a042.9 million) under non-current other financial liabilities.
The HAL Supervisory Board has the power to grant Executive Board members shares HAL Trust.
The granted, unvested shares can be summarized as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Outstanding shares on January 1 | 65 | 20 |
Granted | - | 65 |
Vested | - | (20) |
Outstanding shares on December 31 | 65 | 65 |
The Supervisory Board resolved, on November 19, 2014, to grant each of Messrs. A.A. van \u2018t Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of 19,500 shares HAL Trust. These shares vested in 2019 and are restricted until November 19, 2024.
On May 18, 2016, the Supervisory Board resolved to grant Mr. M.F. Groot, chairman of the Executive Board, 20,000 shares HAL Trust, under the condition precedent that he was still employed with the Company on June 1, 2021. These shares vested on June 1, 2021, and are restricted until June 1, 2026.
The Supervisory Board granted on September 5, 2021, to Messrs. M.F. Groot, A.A. van 't Hof and J.N. van Wiechen, members of the Executive Board, a one-time allotment of respectively 25,000, 20,000 and 20,000 shares HAL Trust. These shares will vest on September 5, 2024 and are restricted until September 5, 2031.
Long-Term Share Plans (LTSP)
The LTSPs reward participants for the increase in Vopak\u2019s earnings per share (Vopak\u2019s EPS) performance during a three-year performance period, from their respective start dates in 2020, 2021 and 2022 at a pre-set Vopak EPS target. If a considerable, ambitious improvement in Vopak\u2019s EPS has been achieved during the three-year performance period, a long-term remuneration will be awarded. The 2019 LTSP was vested and settled during 2022.
The conditional awards granted under the LTSPs 2020-2022 can be summarized as follows:
x 1,000 | 2022 | 2021 |
|---|---|---|
Outstanding conditional awards on January 1 | 344 | 315 |
Granted | 177 | 134 |
Forfeited | - | (6) |
Exercised | (27) | - |
Settled | (93) | (99) |
Outstanding conditional awards on December 31 | 401 | 344 |
The weighted-average fair value of the equity-settled LTSP awards granted in 2022 of \u20ac\u00a025.14 (2021: \u20ac\u00a035.60) has been determined based on Vopak\u2019s share price at the grant date.
Cash plans
The cash plans provide eligible participants with a right to participate in unlisted subsidiaries\u2019 growth in EBITA, subject to meeting the applicable vesting conditions. Obligations with respect to these plans are fair valued, generally, based on a multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates.
The Company and its subsidiaries operate a number of equity-settled and cash-settled share- based compensation plans. Under the plans these entities receive services from employees as consideration for respectively ordinary shares of the respective entity or for the cash equivalent to the value of the underlying ordinary shares of the respective entity.
For equity-settled share-based compensation plans, the fair value is determined at the date of grant and expensed in the consolidated statement of income with a corresponding adjustment directly in equity. For cash-settled share-based compensation plans, the fair value is determined at the date of the grant and is re-measured at each reporting date until the liability is settled.
The compensation is recognized as an expense on a straight-line basis over the vesting period. The amounts expensed are adjusted over the vesting period for changes in the estimate of number of shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions (e.g. profitability growth targets or continued employment over a specified time period).
Assets that have an indefinite useful life are tested for impairment annually, while all non-current assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss on non-financial assets is recognized in the consolidated statement of income for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and an asset\u2019s value in use. Goodwill is allocated to groups of cash-generating units (CGU\u2019s) for the purpose of impairment testing. A CGU is in no event larger than the operating segment it belongs to.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s 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 discontinued operations, impairment testing requires management to determine whether the carrying value of the discontinued operation does not exceed the fair value less cost of disposal.
The recoverable amounts in impairment testing are determined based on the value in use and fair value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples\u00a0is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The primary impairment test for the Company relates to annual goodwill impairment testing. Property, plant and equipment as well as joint ventures and associates are reviewed and, when required, tested.
Critical accounting estimates and judgments
The recoverable amounts in impairment testing are determined based on the value in use and fair
value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and (terminal) growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The following impairment losses, net of reversals, are recognized:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Property, plant and equipment | 451.5 | 60.2 |
Investment properties | - | 0.1 |
Goodwill | 312.1 | - |
Other intangibles | 0.3 | 16.3 |
Right of use assets | 1.1 | - |
Investments in associates and joint arrangements | 162.0 | 43.5 |
| \u00a0 | 927.0 | 120.1 |
Impairment losses by segment are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted | 445.5 | 1.0 |
Quoted minority interests | 481.5 | 119.1 |
| \u00a0 | 927.0 | 120.1 |
Impairment losses, net of reversals, are included as follows in the consolidated statement of income:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Amortization and impairment of intangible assets | 312.3 | 16.3 |
Depreciation and impairment of property, plant, equipment, right-of-use assets and investment properties | 452.7 | 60.3 |
Share of results of associates and joint arrangements | 162.0 | 43.5 |
| \u00a0 | 927.0 | 120.1 |
All impairments are included in the exceptional items (note 2).
Property, plant and equipment
With respect to Vopak, in performing the impairment test, Vopak management made an assessment of whether cash-generating units (CGU) will be able to generate positive net cash flows that are sufficient to support the value of the intangible assets, property, plant and equipment and financial assets included in the cash-generating unit. For value-in-use calculations, the assessment is based on estimates of future expected cash flows on the basis of the budget for the coming year and two subsequent plan years, which form the basis for a 15-year discounted cash flow model. For oil-related assets, the assessment is impacted by the energy transition and the forecast period is extended from a 15-year period to include the period in which the energy transition is expected to take place. Key assumptions applied are the expected occupancy, the estimated storage rate per cubic meter (for revenues not covered by long-term contracts), sustaining capital expenditures, expected (decreasing) growth rates (where relevant based on most recent IEA energy transition scenarios) and the estimated terminal value, together with the applied discount rates. The discount rates are based on long-term government bonds, adjusted for a risk premium and specific country risks. The equity market risk premium was assumed 6.5% by Vopak management (2021: 6.5%). There is significant uncertainty towards the impact of the energy transition on the projected cash flows and these remain subject to continuous review and monitoring by Vopak management.
Vopak management has assessed that the value in use for a very limited number of terminals is lower than the carrying amount. For these individual terminals, the fair value less cost of disposal was calculated. Fair value less cost of disposal calculations are primarily based either on comparable market multiples and/or (indicative non-) binding bids or discounted cash flow models from the perspective of a willing buyer in an orderly transaction. When the fair value less cost of disposal of a terminal is based on (preliminary) offers received from interested parties (level 2 fair value), Vopak management has assessed that these offers are a good reflection of the fair value of the terminals concerned and assessed whether it is probable that these terminals will be sold in the near future resulting in a situation where the carrying amount will be recovered principally through a sale instead of through continued use. The value in use and fair value less cost of disposal assessments may change over time, amongst others due to changes in the business environment and/or outcomes of decisions taken by management, and when applicable could result in (reversal of) impairment. For impaired CGUs the recoverable amount from the value-in-use calculation exceeded the estimated fair value less cost of disposal. The pre-tax discount rates used for the value-in-use assessment of impaired cash-generating units ranged from 6.5% to 12.1% (2021: 9% to 9.2%) reflecting the current market assessments for the relevant geographical locations. The Vopak share of the recoverable amount of the impaired cash-generating units in total is \u20ac\u00a0858 million.
2022
Vopak - Europoort terminal
For the cash-generating unit Europoort an impairment of \u20ac\u00a0240.0 million was recognized in the first half of 2022. By accelerating into new energies and repurposing some of its assets, the terminal will reduce its capacity by 2030 and will use the available land for new energy investments. Over time, this will reduce Vopak\u2019s exposure to oil assets in line with its ambition to increase the relative exposure of industrials, gas and new energies. Transition in the energy markets is expected to impact the long-term revenue prospects of Europoort, in addition to current dynamics related to inflation pressure, utility prices, labor and material costs. The combined impact of these items caused the CGU\u2019s carrying amount to exceed its recoverable amount, leading to an impairment.
Vopak - Botlek terminal
In the first half of 2022, an impairment of \u20ac\u00a0190.0 million was recorded for the cash-generating unit Botlek. The Botlek CGU is performing below Vopak\u2019s minimum return levels, which is driven by lower revenue projections in addition to challenging conditions related to, among others, inflation pressure, utility prices and labor costs.
Vopak - Colombia terminals
In the fourth quarter of 2022, an impairment of \u20ac\u00a017.1 million was recorded for the cash-generating unit. The decrease in recoverable value is primarily related to the business environment in which the terminals currently operate and forecasted competition.
Vopak - cancelled projects
Vopak recorded an impairment of \u20ac\u00a01.7 million on a business development project for the Belgium terminal Eurotank due to Vopak\u2019s decision to discontinue the project.
2021
Vopak Bahia las Minas terminal - Panama
In the first half year of 2021, an incremental impairment was recognized for the Vopak Bahia las Minas terminal in Panama for the amount of \u20ac\u00a071.0 million, of which \u20ac\u00a055.1 million related to property, plant and equipment and \u20ac\u00a015.9 to other intangible assets. This impairment is the result of a further deteriorating business environment and lower occupancy rates.
Goodwill
Unquoted
Goodwill for the unquoted segment has been tested for impairment losses at a level that reflects the way the operations are managed and with which the goodwill would naturally be associated. Management reviews the unquoted business performance on an entity level. Goodwill is also monitored on this level.
The recoverable amount of cash-generating units is generally determined based on the calculation of their value in use. These calculations use cash flow projections covering a five-year period. Cash flows beyond this five-year period are extrapolated using an estimated growth rate of nil. In 2022 the value-in-use method was applied to 51.7% of the goodwill tested (2021: all). For 48.3% (2021: none) of the goodwill tested, the fair value less cost of disposal was used, this related to Pro Gamers Group. These percentages do not take into account the goodwill related to the Boskalis acquisition, discussed below.
Key assumptions used for value-in-use calculations are included as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Unquoted investments | \u00a0 | \u00a0 |
Weighted-average increase in revenues | 6.6% | 5.9% |
Weighted-average gross margin | 54.5% | 56.0% |
Weighted-average pre-tax discount rate | 15.6% | 13.1% |
Growth rate beyond year five | 0.0% | 0.0% |
For impairment tests using fair value less cost of disposal calculations the key assumptions have been individually disclosed, below.
Impairment testing during the year resulted in impairment charges on the goodwill of Pro Gamers Group of \u20ac\u00a0312.1 million (HAL share \u20ac\u00a0200.0 million), in the Unquoted segment. This was primarily the result of a contraction of the markets for graphical cards and other computer components, the significant increase of container freight prices and a decrease in sales as a result of the war in Ukraine, combined with a significant increase in the weighted-average cost of capital, as risk-free rates, debt spreads and beta for the peer group experienced a sharp increase. The recoverable value of \u20ac\u00a0510.2 million was based on a five-year discounted cash flow model using a pre-tax WACC of 15.94% and a terminal growth rate of 1.5%, applying the fair value less cost of disposal method.
The valuation models include certain assumptions with respect to revenue growth, margin development, discount rates and terminal growth rates. A negative development of 2% in these assumptions would result in a potential (further) impairment charge on goodwill for the Unquoted segment as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
2% lower increase in revenues | 97.8 | 2.5 |
2% increase in the discount rate | 88.4 | 11.5 |
2% lower gross margin | 241.0 | 18.7 |
If the cash flows beyond the five-year period were extrapolated using an estimated growth rate of 2%, the value in use of the cash-generating units within the Unquoted segment that indicated a potential impairment in the above sensitivity analyses would increase by \u20ac\u00a0352.7 million (2021: \u20ac\u00a037.6 million).
The goodwill recognized as a result of the Boskalis transaction in 2022 (refer to note 3) was tested by comparison of the performance since acquisition with the business enterprise valuation underlying the purchase price allocation. The business enterprise valuation was based on a five-year discounted cash flow model using a weighted-average pre-tax WACC of 11.1% and a 1.6% terminal growth rate. No impairment was recognized.
Quoted
Vopak and Safilo are both listed entities. At the year-end 2022 the stock\u00a0market value of the ownership interest in Safilo exceeded its carrying value by \u20ac\u00a0105.4 million. At the end of 2022, the stock\u00a0market value of the ownership interest in Vopak exceeded its carrying value by \u20ac\u00a0170.0 million. These stock market values qualify as level 1 in the fair value hierarchy.
The goodwill at the level of Safilo (\u20ac\u00a034.9 million) has been tested on a single cash-generating unit basis using a five-year projection based on the financial projections for the period 2023-2027, which confirm the main goals and strategies as defined in the 2023-2027 business plan. This value-in-use model includes a weighted-average cost of capital (WACC) of 10.12% and a 2.07% terminal growth rate beyond the explicit forecast period (2021: 7.93%, respectively 1.90%). Applying alternative scenarios with a 30% decrease of EBITDA or with an increase of the WACC by 3.0% also does not lead to impairment.
Other intangibles
The total amount of impairments recognized on other intangibles was \u20ac\u00a00.3 million (2021: \u20ac\u00a016.3 million). There were no reversals of impairment (2021: nil).
Associates and joint arrangements
2022
Prodrive Technologies
At year-end 2022, an impairment of \u20ac\u00a0129.6 million was recognized on the associate Prodrive Technologies. An impairment trigger was recognized due to a combination of supply chain challenges, cost inflation and personnel shortages, which caused the company to fall behind on its expected revenues and results. In addition, discount rates increased significantly as a result of macro-economic factors, further deteriorating the net present value of the company\u2019s future cash flows. The key assumptions applied in the impairment test included a weighted-average cost of capital of 12.2% and a terminal-growth rate after the 10-year forecast period of 1.9%. The fair value less cost of disposal was calculated at \u20ac\u00a081.0 million. An earn-out liability of \u20ac\u00a018.9 million related to the investment in Prodrive was reduced to nil, which led to the recognition of a gain within other financial income (refer to note 30).
Vopak - Colombia LNG terminal
In the second quarter an impairment was recognized for Vopak\u2019s SPEC LNG terminal in Colombia for an amount of \u20ac\u00a036.2 million. Mainly due to unusual weather conditions in recent years, which have brought a significant amount of rain in Colombia, hydropower has been available as the main source of power, which resulted in a reduced utilization of Vopak\u2019s Floating Storage and Regasification Unit (FSRU). In addition, the tight FSRU market associated with the war in Ukraine is leading to the opportunity to reduce FSRU costs becoming remote. As a result of the above there is a decrease in dividend expectations, leading to impairment.
Vopak - German LNG terminal
As a result of Vopak\u2019s divestment of its 33.3% shareholding in the German LNG Terminal GmbH, in the first half of 2022 an impairment reversal of \u20ac\u00a03.8 million was recorded. This reversal partially offsets the 2021 impairment discussed below.
2021
Vopak LNG terminal project - Germany
After a strategic review, Vopak decided to discontinue its active participation in the German LNG project joint venture, leading to an exceptional loss of \u20ac\u00a010.8 million recognized in the third quarter of 2021.
Vopak LNG Terminal Altamira - Mexico
Due to a new commercial agreement in place for the LNG Terminal Altamira in Mexico, the major assets in this joint venture are now held under a finance lease arrangement. As a result, the carrying amount of the joint venture increased significantly and exceeded its recoverable amount resulting in an impairment of the goodwill balance for an amount of \u20ac\u00a032.7 million.
Assets that have an indefinite useful life are tested for impairment annually, while all non-current assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss on non-financial assets is recognized in the consolidated statement of income for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and an asset\u2019s value in use. Goodwill is allocated to groups of cash-generating units (CGU\u2019s) for the purpose of impairment testing. A CGU is in no event larger than the operating segment it belongs to.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s 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 discontinued operations, impairment testing requires management to determine whether the carrying value of the discontinued operation does not exceed the fair value less cost of disposal.
The recoverable amounts in impairment testing are determined based on the value in use and fair value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples\u00a0is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
The primary impairment test for the Company relates to annual goodwill impairment testing. Property, plant and equipment as well as joint ventures and associates are reviewed and, when required, tested.
Critical accounting estimates and judgments
The recoverable amounts in impairment testing are determined based on the value in use and fair
value less costs of disposal of the asset or cash-generating unit. The calculation of these values require the use of estimates. Calculation of the value in use is primarily performed through a discounted cash flow model which requires management to apply judgments around future cash flows, discount rates and (terminal) growth rates. Value-in-use calculations only take into account capital expenditures required to continue the business. In calculating fair value less cost of disposal management may apply a valuation model based on multiples of sales or EBITDA (fair value level 2), for which the selection of relevant market multiples is the primary judgment made by management. Management may also apply a discounted cash flow model (fair value level 3) in which capital expenditures are included that reflect the expansion plans for the business, here the same key judgments apply as in the value-in-use test. Where preliminary or indicative non-binding offers are used as inputs, management needs to assess that these offers are a good reflection of fair value.
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
The following tables provide an analysis of the Company\u2019s financial instruments per line item, stating the classification of the instruments, their fair value and their level within the fair value hierarchy:
December 31, 2022 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 551.5 | - | 551.5 | 551.5 |
- Unquoted equity securities | 3 | 94.0 | - | - | 94.0 | 94.0 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 518.4 | 518.4 | 518.4 |
- Quoted debt securities | 1 | 33.5 | - | 2,806.2 | 2,839.7 | 2,839.7 |
- Unquoted equity securities | 2 | - | - | 2.8 | 2.8 | 2.8 |
Derivatives | 2 | - | - | 98.8 | 98.8 | 98.8 |
Other current assets | \u00a0 | - | 281.1 | - | 281.1 | 281.1 |
Receivables | \u00a0 | - | 1,423.8 | - | 1,423.8 | 1,423.8 |
Cash | \u00a0 | - | 2,043.9 | - | 2,043.9 | 2,043.9 |
Total financial assets | \u00a0 | 127.5 | 4,300.3 | 3,426.2 | 7,854.0 | 7,854.0 |
December 31, 2021 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 782.6 | - | 782.6 | 782.6 |
- Unquoted equity securities | 3 | 83.6 | - | - | 83.6 | 83.6 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 415.7 | 415.7 | 415.7 |
- Quoted debt securities | 1 | 47.7 | - | 3,693.6 | 3,741.3 | 3,741.3 |
- Unquoted equity securities | 2 | - | - | 3.0 | 3.0 | 3.0 |
Derivatives | 2 | - | - | 45.6 | 45.6 | 45.6 |
Other current assets | \u00a0 | - | 222.5 | - | 222.5 | 222.5 |
Receivables | \u00a0 | - | 977.9 | - | 977.9 | 977.9 |
Cash | \u00a0 | - | 2,256.4 | - | 2,256.4 | 2,256.4 |
Total financial assets | \u00a0 | 131.3 | 4,239.4 | 4,157.9 | 8,528.6 | 8,528.6 |
December 31, 2022 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,956.5 | - | 2,956.5 | 3,215.0 |
- Current debt | 2 | \u00a0 | 2,069.2 | - | 2,069.2 | 2,069.2 |
- Other financial liabilities | 2 | \u00a0 | 15.0 | - | 15.0 | 15.0 |
- Other financial liabilities | 3 | \u00a0 | - | 162.4 | 162.4 | 162.4 |
Lease liabilities | 2 | \u00a0 | 1,195.3 | - | 1,195.3 | 1,195.3 |
Derivatives | 2 | \u00a0 | - | 20.5 | 20.5 | 20.5 |
Accounts payable | \u00a0 | \u00a0 | 1,317.0 | - | 1,317.0 | 1,317.0 |
Total financial liabilities | \u00a0 | \u00a0 | 7,553.0 | 182.9 | 7,735.9 | 7,994.4 |
December 31, 2021 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,917.2 | - | 2,917.2 | 3,201.0 |
- Current debt | 2 | \u00a0 | 814.2 | - | 814.2 | 814.2 |
- Other financial liabilities | 2 | \u00a0 | 14.9 | - | 14.9 | 14.9 |
- Other financial liabilities | 3 | \u00a0 | - | 118.5 | 118.5 | 118.5 |
Lease liabilities | 2 | \u00a0 | 1,072.5 | - | 1,072.5 | 1,072.5 |
Derivatives | 2 | \u00a0 | - | 17.2 | 17.2 | 17.2 |
Accounts payable | \u00a0 | \u00a0 | 1,040.6 | - | 1,040.6 | 1,040.6 |
Total financial liabilities | \u00a0 | \u00a0 | 5,859.4 | 135.7 | 5,995.1 | 6,278.9 |
Valuation techniques used to value level 2 financial instruments include, for unquoted securities, quoted market prices or dealer quotes for similar instruments. Derivatives and debt instruments are valued using present value calculations of estimated future cash flows, based on observable yield curves and forward exchange rates. These calculations include credit spreads based on recent borrowing contracts and observable credit information on counterparties.
Level 3 financial instruments include contingent considerations that are remeasured based on the achievement of agreed business targets, taking into account the effect of discounting.
There were no transfers between levels 1, 2 and 3 during the period.
A reconciliation of level 3 financial liabilities for the period is given below:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 118.5 | 141.6 |
Additions | 69.5 | 16.4 |
Consolidation | 19.7 | - |
Settlements | (26.1) | (35.6) |
(Gains)/losses through income continuing operations | (25.9) | (8.9) |
Exchange differences | 6.7 | 5.0 |
Balance on December 31 | 162.4 | 118.5 |
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
The following tables provide an analysis of the Company\u2019s financial instruments per line item, stating the classification of the instruments, their fair value and their level within the fair value hierarchy:
December 31, 2022 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 551.5 | - | 551.5 | 551.5 |
- Unquoted equity securities | 3 | 94.0 | - | - | 94.0 | 94.0 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 518.4 | 518.4 | 518.4 |
- Quoted debt securities | 1 | 33.5 | - | 2,806.2 | 2,839.7 | 2,839.7 |
- Unquoted equity securities | 2 | - | - | 2.8 | 2.8 | 2.8 |
Derivatives | 2 | - | - | 98.8 | 98.8 | 98.8 |
Other current assets | \u00a0 | - | 281.1 | - | 281.1 | 281.1 |
Receivables | \u00a0 | - | 1,423.8 | - | 1,423.8 | 1,423.8 |
Cash | \u00a0 | - | 2,043.9 | - | 2,043.9 | 2,043.9 |
Total financial assets | \u00a0 | 127.5 | 4,300.3 | 3,426.2 | 7,854.0 | 7,854.0 |
December 31, 2021 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 782.6 | - | 782.6 | 782.6 |
- Unquoted equity securities | 3 | 83.6 | - | - | 83.6 | 83.6 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 415.7 | 415.7 | 415.7 |
- Quoted debt securities | 1 | 47.7 | - | 3,693.6 | 3,741.3 | 3,741.3 |
- Unquoted equity securities | 2 | - | - | 3.0 | 3.0 | 3.0 |
Derivatives | 2 | - | - | 45.6 | 45.6 | 45.6 |
Other current assets | \u00a0 | - | 222.5 | - | 222.5 | 222.5 |
Receivables | \u00a0 | - | 977.9 | - | 977.9 | 977.9 |
Cash | \u00a0 | - | 2,256.4 | - | 2,256.4 | 2,256.4 |
Total financial assets | \u00a0 | 131.3 | 4,239.4 | 4,157.9 | 8,528.6 | 8,528.6 |
December 31, 2022 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,956.5 | - | 2,956.5 | 3,215.0 |
- Current debt | 2 | \u00a0 | 2,069.2 | - | 2,069.2 | 2,069.2 |
- Other financial liabilities | 2 | \u00a0 | 15.0 | - | 15.0 | 15.0 |
- Other financial liabilities | 3 | \u00a0 | - | 162.4 | 162.4 | 162.4 |
Lease liabilities | 2 | \u00a0 | 1,195.3 | - | 1,195.3 | 1,195.3 |
Derivatives | 2 | \u00a0 | - | 20.5 | 20.5 | 20.5 |
Accounts payable | \u00a0 | \u00a0 | 1,317.0 | - | 1,317.0 | 1,317.0 |
Total financial liabilities | \u00a0 | \u00a0 | 7,553.0 | 182.9 | 7,735.9 | 7,994.4 |
December 31, 2021 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,917.2 | - | 2,917.2 | 3,201.0 |
- Current debt | 2 | \u00a0 | 814.2 | - | 814.2 | 814.2 |
- Other financial liabilities | 2 | \u00a0 | 14.9 | - | 14.9 | 14.9 |
- Other financial liabilities | 3 | \u00a0 | - | 118.5 | 118.5 | 118.5 |
Lease liabilities | 2 | \u00a0 | 1,072.5 | - | 1,072.5 | 1,072.5 |
Derivatives | 2 | \u00a0 | - | 17.2 | 17.2 | 17.2 |
Accounts payable | \u00a0 | \u00a0 | 1,040.6 | - | 1,040.6 | 1,040.6 |
Total financial liabilities | \u00a0 | \u00a0 | 5,859.4 | 135.7 | 5,995.1 | 6,278.9 |
Valuation techniques used to value level 2 financial instruments include, for unquoted securities, quoted market prices or dealer quotes for similar instruments. Derivatives and debt instruments are valued using present value calculations of estimated future cash flows, based on observable yield curves and forward exchange rates. These calculations include credit spreads based on recent borrowing contracts and observable credit information on counterparties.
Level 3 financial instruments include contingent considerations that are remeasured based on the achievement of agreed business targets, taking into account the effect of discounting.
There were no transfers between levels 1, 2 and 3 during the period.
A reconciliation of level 3 financial liabilities for the period is given below:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 118.5 | 141.6 |
Additions | 69.5 | 16.4 |
Consolidation | 19.7 | - |
Settlements | (26.1) | (35.6) |
(Gains)/losses through income continuing operations | (25.9) | (8.9) |
Exchange differences | 6.7 | 5.0 |
Balance on December 31 | 162.4 | 118.5 |
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
The following tables provide an analysis of the Company\u2019s financial instruments per line item, stating the classification of the instruments, their fair value and their level within the fair value hierarchy:
December 31, 2022 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 551.5 | - | 551.5 | 551.5 |
- Unquoted equity securities | 3 | 94.0 | - | - | 94.0 | 94.0 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 518.4 | 518.4 | 518.4 |
- Quoted debt securities | 1 | 33.5 | - | 2,806.2 | 2,839.7 | 2,839.7 |
- Unquoted equity securities | 2 | - | - | 2.8 | 2.8 | 2.8 |
Derivatives | 2 | - | - | 98.8 | 98.8 | 98.8 |
Other current assets | \u00a0 | - | 281.1 | - | 281.1 | 281.1 |
Receivables | \u00a0 | - | 1,423.8 | - | 1,423.8 | 1,423.8 |
Cash | \u00a0 | - | 2,043.9 | - | 2,043.9 | 2,043.9 |
Total financial assets | \u00a0 | 127.5 | 4,300.3 | 3,426.2 | 7,854.0 | 7,854.0 |
December 31, 2021 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 782.6 | - | 782.6 | 782.6 |
- Unquoted equity securities | 3 | 83.6 | - | - | 83.6 | 83.6 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 415.7 | 415.7 | 415.7 |
- Quoted debt securities | 1 | 47.7 | - | 3,693.6 | 3,741.3 | 3,741.3 |
- Unquoted equity securities | 2 | - | - | 3.0 | 3.0 | 3.0 |
Derivatives | 2 | - | - | 45.6 | 45.6 | 45.6 |
Other current assets | \u00a0 | - | 222.5 | - | 222.5 | 222.5 |
Receivables | \u00a0 | - | 977.9 | - | 977.9 | 977.9 |
Cash | \u00a0 | - | 2,256.4 | - | 2,256.4 | 2,256.4 |
Total financial assets | \u00a0 | 131.3 | 4,239.4 | 4,157.9 | 8,528.6 | 8,528.6 |
December 31, 2022 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,956.5 | - | 2,956.5 | 3,215.0 |
- Current debt | 2 | \u00a0 | 2,069.2 | - | 2,069.2 | 2,069.2 |
- Other financial liabilities | 2 | \u00a0 | 15.0 | - | 15.0 | 15.0 |
- Other financial liabilities | 3 | \u00a0 | - | 162.4 | 162.4 | 162.4 |
Lease liabilities | 2 | \u00a0 | 1,195.3 | - | 1,195.3 | 1,195.3 |
Derivatives | 2 | \u00a0 | - | 20.5 | 20.5 | 20.5 |
Accounts payable | \u00a0 | \u00a0 | 1,317.0 | - | 1,317.0 | 1,317.0 |
Total financial liabilities | \u00a0 | \u00a0 | 7,553.0 | 182.9 | 7,735.9 | 7,994.4 |
December 31, 2021 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,917.2 | - | 2,917.2 | 3,201.0 |
- Current debt | 2 | \u00a0 | 814.2 | - | 814.2 | 814.2 |
- Other financial liabilities | 2 | \u00a0 | 14.9 | - | 14.9 | 14.9 |
- Other financial liabilities | 3 | \u00a0 | - | 118.5 | 118.5 | 118.5 |
Lease liabilities | 2 | \u00a0 | 1,072.5 | - | 1,072.5 | 1,072.5 |
Derivatives | 2 | \u00a0 | - | 17.2 | 17.2 | 17.2 |
Accounts payable | \u00a0 | \u00a0 | 1,040.6 | - | 1,040.6 | 1,040.6 |
Total financial liabilities | \u00a0 | \u00a0 | 5,859.4 | 135.7 | 5,995.1 | 6,278.9 |
Valuation techniques used to value level 2 financial instruments include, for unquoted securities, quoted market prices or dealer quotes for similar instruments. Derivatives and debt instruments are valued using present value calculations of estimated future cash flows, based on observable yield curves and forward exchange rates. These calculations include credit spreads based on recent borrowing contracts and observable credit information on counterparties.
Level 3 financial instruments include contingent considerations that are remeasured based on the achievement of agreed business targets, taking into account the effect of discounting.
There were no transfers between levels 1, 2 and 3 during the period.
A reconciliation of level 3 financial liabilities for the period is given below:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 118.5 | 141.6 |
Additions | 69.5 | 16.4 |
Consolidation | 19.7 | - |
Settlements | (26.1) | (35.6) |
(Gains)/losses through income continuing operations | (25.9) | (8.9) |
Exchange differences | 6.7 | 5.0 |
Balance on December 31 | 162.4 | 118.5 |
Classification
The classification of financial assets is detailed in the notes on derivatives and other financial assets. The classification of financial liabilities is detailed in the notes on debt and other financial liabilities and derivatives.
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
The following tables provide an analysis of the Company\u2019s financial instruments per line item, stating the classification of the instruments, their fair value and their level within the fair value hierarchy:
December 31, 2022 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 551.5 | - | 551.5 | 551.5 |
- Unquoted equity securities | 3 | 94.0 | - | - | 94.0 | 94.0 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 518.4 | 518.4 | 518.4 |
- Quoted debt securities | 1 | 33.5 | - | 2,806.2 | 2,839.7 | 2,839.7 |
- Unquoted equity securities | 2 | - | - | 2.8 | 2.8 | 2.8 |
Derivatives | 2 | - | - | 98.8 | 98.8 | 98.8 |
Other current assets | \u00a0 | - | 281.1 | - | 281.1 | 281.1 |
Receivables | \u00a0 | - | 1,423.8 | - | 1,423.8 | 1,423.8 |
Cash | \u00a0 | - | 2,043.9 | - | 2,043.9 | 2,043.9 |
Total financial assets | \u00a0 | 127.5 | 4,300.3 | 3,426.2 | 7,854.0 | 7,854.0 |
December 31, 2021 | Fair value level | Fair value through other comprehensive income | Financial assets at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Unquoted debt securities | 2 | - | 782.6 | - | 782.6 | 782.6 |
- Unquoted equity securities | 3 | 83.6 | - | - | 83.6 | 83.6 |
Marketable securities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Quoted equity securities | 1 | - | - | 415.7 | 415.7 | 415.7 |
- Quoted debt securities | 1 | 47.7 | - | 3,693.6 | 3,741.3 | 3,741.3 |
- Unquoted equity securities | 2 | - | - | 3.0 | 3.0 | 3.0 |
Derivatives | 2 | - | - | 45.6 | 45.6 | 45.6 |
Other current assets | \u00a0 | - | 222.5 | - | 222.5 | 222.5 |
Receivables | \u00a0 | - | 977.9 | - | 977.9 | 977.9 |
Cash | \u00a0 | - | 2,256.4 | - | 2,256.4 | 2,256.4 |
Total financial assets | \u00a0 | 131.3 | 4,239.4 | 4,157.9 | 8,528.6 | 8,528.6 |
December 31, 2022 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,956.5 | - | 2,956.5 | 3,215.0 |
- Current debt | 2 | \u00a0 | 2,069.2 | - | 2,069.2 | 2,069.2 |
- Other financial liabilities | 2 | \u00a0 | 15.0 | - | 15.0 | 15.0 |
- Other financial liabilities | 3 | \u00a0 | - | 162.4 | 162.4 | 162.4 |
Lease liabilities | 2 | \u00a0 | 1,195.3 | - | 1,195.3 | 1,195.3 |
Derivatives | 2 | \u00a0 | - | 20.5 | 20.5 | 20.5 |
Accounts payable | \u00a0 | \u00a0 | 1,317.0 | - | 1,317.0 | 1,317.0 |
Total financial liabilities | \u00a0 | \u00a0 | 7,553.0 | 182.9 | 7,735.9 | 7,994.4 |
December 31, 2021 | Fair value level | \u00a0 | Financial liabilities at amortized cost | Fair value through profit and loss | Total book value | Total fair value |
|---|---|---|---|---|---|---|
Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Debt and other financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
- Non-current debt | 2 | \u00a0 | 2,917.2 | - | 2,917.2 | 3,201.0 |
- Current debt | 2 | \u00a0 | 814.2 | - | 814.2 | 814.2 |
- Other financial liabilities | 2 | \u00a0 | 14.9 | - | 14.9 | 14.9 |
- Other financial liabilities | 3 | \u00a0 | - | 118.5 | 118.5 | 118.5 |
Lease liabilities | 2 | \u00a0 | 1,072.5 | - | 1,072.5 | 1,072.5 |
Derivatives | 2 | \u00a0 | - | 17.2 | 17.2 | 17.2 |
Accounts payable | \u00a0 | \u00a0 | 1,040.6 | - | 1,040.6 | 1,040.6 |
Total financial liabilities | \u00a0 | \u00a0 | 5,859.4 | 135.7 | 5,995.1 | 6,278.9 |
Valuation techniques used to value level 2 financial instruments include, for unquoted securities, quoted market prices or dealer quotes for similar instruments. Derivatives and debt instruments are valued using present value calculations of estimated future cash flows, based on observable yield curves and forward exchange rates. These calculations include credit spreads based on recent borrowing contracts and observable credit information on counterparties.
Level 3 financial instruments include contingent considerations that are remeasured based on the achievement of agreed business targets, taking into account the effect of discounting.
There were no transfers between levels 1, 2 and 3 during the period.
A reconciliation of level 3 financial liabilities for the period is given below:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Balance on January 1 | 118.5 | 141.6 |
Additions | 69.5 | 16.4 |
Consolidation | 19.7 | - |
Settlements | (26.1) | (35.6) |
(Gains)/losses through income continuing operations | (25.9) | (8.9) |
Exchange differences | 6.7 | 5.0 |
Balance on December 31 | 162.4 | 118.5 |
Fair value measurement
A number of the accounting policies and disclosures require the determination of fair value for financial instruments. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
The fair values calculated are classified into three categories depending on the inputs used in the valuation technique. Where available, fair values are derived from quoted prices for identical instruments (level 1). In the absence of such information, other observable inputs, either directly or indirectly, are used to estimate fair values (level 2). Where insufficient observable market data is available, the best applicable unobservable inputs are used to perform the valuation (level 3). The valuation techniques used per type of financial instrument are described in more detail below.
Equity securities
The Company holds direct investments in equity securities and indirect investments in equity securities through managed portfolios. When available, the Company uses quoted market (bid) prices in active markets to determine the fair value of its investments in equity securities (level 1). Fair values for unquoted shares are estimated using valuation techniques such as discounted cash flow analysis, using expected future cash flows and a market-related discount rate, or a market-multiples approach (level 2 or\u00a03).
Investment funds
Investment funds include private equity funds. The fair values of investments held in unquoted investment funds are determined by the Company after taking into consideration information provided by the fund managers and the liquidity of the investments. The Company reviews the valuations and performs analytical procedures to ensure the fair values are appropriate (level 2 or 3).
Debt securities and own debt
The Company uses quoted market (bid) prices in active markets to determine the fair value of its debt investments (level 1). When the Company cannot make use of quoted market prices, market prices from indices, corroborating broker quotes or discounted cash flow analyses, using expected future cash flows and market-related discount rates, are used (level 2).
Other liabilities
Obligations to acquire non-controlling interests are fair valued, generally, based on a contractual multiple of EBITA less net debt. Multiples applied are either contractually determined or in accordance with those applied in calculating estimated value of the subsidiaries and associates (level 3). Contingent considerations are fair valued based on the expected cash outflows, taking into account the effects of discounting (level 3).
Derivatives
Where quoted market prices (level 1) are not available, other valuation techniques and corroborating broker quotes are used that maximize the use of observable inputs. These valuation techniques include option pricing and discounted cash flow analysis, using expected future cash flows and a market-related discount rate. The models used incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, expected volatility and interest rate curves (generally level 2).
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities and accrued liabilities.
The Company\u2019s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
There were no transfers between levels 1, 2 and 3 during the period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-682": { "value": "Impairment
The Company applies the expected credit loss model to determine a loss allowance on its financial assets, loan commitments and financial guarantee contracts, except for equity investments and derivative financial instruments. This requires the use of both historical (loss) data and forward-looking information. The allowance is initially calculated as the potential credit loss over the next twelve months.
Should credit risk on the instrument have increased significantly since initial recognition, the loss allowance is determined as the potential credit loss over the remaining lifetime of the instrument. This is calculated using expected cash flows from the instrument at a revised discount rate. To determine whether a significant increase in credit risk or an impairment has occurred the Company takes into account various factors, including actual or expected credit rating downgrades of the instrument or issuer, adverse changes in business, financial or economic conditions of the debtor, covenant breaches, waivers or amendments and past-due information. For trade receivables and contract assets the Company applies the simplified approach, which uses a lifetime expected loss allowance from inception. The changes in loss allowance recognized by the Company are recorded as impairment gains or losses in the consolidated statement of income with an adjustment to the carrying value for assets measured at amortized cost. For assets measured at fair value through other comprehensive income a corresponding entry is made in other comprehensive income. Any credit loss not yet provided for is recognized in the consolidated statement of income as incurred.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a current, legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The offset is limited to the amount actually expected to be offset.
Derivatives are measured at fair value with any related transaction costs expensed as incurred. Reference is made to the accounting policies in note 36 on fair value measurement. The treatment
of changes in the fair value of derivatives depends on their use, as explained below.
Cash flow hedge
Derivatives held to hedge the uncertainty in timing or amount of future forecasted cash flows are
classified as being part of cash flow hedge relationships. For effective hedges, gains and losses
from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are recycled in the consolidated statement of income at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, or if the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of income immediately.
Net investment hedge
The Company applies hedge accounting to certain investments in foreign operations. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. In the event of disposal or partial disposal of an interest in a foreign operation either through sale or as a result of a repayment of capital, the cumulative exchange difference is recognized in the consolidated statement of income.
Fair value hedge
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Company designates the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk being hedged, with changes going to the consolidated statement of income. Gains and losses on the corresponding derivative are also recognized in the consolidated statement of income. The amounts recognized are offset in income to the extent that the hedge is effective. When the relationship no longer meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortized using the effective interest method.
Derivatives for which hedge accounting is not applied
Derivatives not classified as hedges are carried at fair value with changes being recognized in the consolidated statement of income.
Derivatives are classified as follows in the statement of financial position:
| \u00a0 | Assets | \u00a0 | Liabilities | ||
|---|---|---|---|---|---|
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 | \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
Equity derivatives | - | - | \u00a0 | (0.2) | (0.6) |
Fuel derivatives | 2.3 | - | \u00a0 | (0.4) | - |
Interest rate derivatives | 9.9 | 0.2 | \u00a0 | (1.0) | (5.6) |
Currency derivatives | 86.6 | 45.4 | \u00a0 | (18.9) | (11.0) |
| \u00a0 | 98.8 | 45.6 | \u00a0 | (20.5) | (17.2) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current | 75.6 | 9.8 | \u00a0 | (18.0) | (11.6) |
Non-current | 23.2 | 35.8 | \u00a0 | (2.5) | (5.6) |
| \u00a0 | 98.8 | 45.6 | \u00a0 | (20.5) | (17.2) |
For an overview of the movements in the cash flow hedge reserve in equity, reference is made
to note 18. Information on fair value measurement of derivatives is included in note 36, disclosure on financial risk management, including hedging, is provided in note 38.
Derivatives are measured at fair value with any related transaction costs expensed as incurred. Reference is made to the accounting policies in note 36 on fair value measurement. The treatment
of changes in the fair value of derivatives depends on their use, as explained below.
Cash flow hedge
Derivatives held to hedge the uncertainty in timing or amount of future forecasted cash flows are
classified as being part of cash flow hedge relationships. For effective hedges, gains and losses
from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are recycled in the consolidated statement of income at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, or if the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of income immediately.
Net investment hedge
The Company applies hedge accounting to certain investments in foreign operations. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. In the event of disposal or partial disposal of an interest in a foreign operation either through sale or as a result of a repayment of capital, the cumulative exchange difference is recognized in the consolidated statement of income.
Fair value hedge
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Company designates the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk being hedged, with changes going to the consolidated statement of income. Gains and losses on the corresponding derivative are also recognized in the consolidated statement of income. The amounts recognized are offset in income to the extent that the hedge is effective. When the relationship no longer meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortized using the effective interest method.
Derivatives for which hedge accounting is not applied
Derivatives not classified as hedges are carried at fair value with changes being recognized in the consolidated statement of income.
Derivatives are measured at fair value with any related transaction costs expensed as incurred. Reference is made to the accounting policies in note 36 on fair value measurement. The treatment
of changes in the fair value of derivatives depends on their use, as explained below.
Cash flow hedge
Derivatives held to hedge the uncertainty in timing or amount of future forecasted cash flows are
classified as being part of cash flow hedge relationships. For effective hedges, gains and losses
from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are recycled in the consolidated statement of income at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, or if the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of income immediately.
Net investment hedge
The Company applies hedge accounting to certain investments in foreign operations. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. In the event of disposal or partial disposal of an interest in a foreign operation either through sale or as a result of a repayment of capital, the cumulative exchange difference is recognized in the consolidated statement of income.
Fair value hedge
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Company designates the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk being hedged, with changes going to the consolidated statement of income. Gains and losses on the corresponding derivative are also recognized in the consolidated statement of income. The amounts recognized are offset in income to the extent that the hedge is effective. When the relationship no longer meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortized using the effective interest method.
Derivatives for which hedge accounting is not applied
Derivatives not classified as hedges are carried at fair value with changes being recognized in the consolidated statement of income.
Cash flow hedge
Derivatives held to hedge the uncertainty in timing or amount of future forecasted cash flows are
classified as being part of cash flow hedge relationships. For effective hedges, gains and losses
from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are recycled in the consolidated statement of income at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, or if the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the consolidated statement of income immediately.
Net investment hedge
The Company applies hedge accounting to certain investments in foreign operations. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognized through other comprehensive income. Any ineffective elements of the hedge are recognized in the consolidated statement of income. In the event of disposal or partial disposal of an interest in a foreign operation either through sale or as a result of a repayment of capital, the cumulative exchange difference is recognized in the consolidated statement of income.
Fair value hedge
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Company designates the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk being hedged, with changes going to the consolidated statement of income. Gains and losses on the corresponding derivative are also recognized in the consolidated statement of income. The amounts recognized are offset in income to the extent that the hedge is effective. When the relationship no longer meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortized using the effective interest method.
The Company is exposed to credit risk, liquidity risk and market risk. Market risk primarily relates to movements in exchange rates, interest rates and the market value of investments in equity securities.
Financial risk management activities are carried out both on a central level and on the level of individual subsidiaries and controlled minority interests (Vopak and Safilo). For managing these risks, both derivative and non-derivative financial instruments are used.
Risks related to discontinued operations are not included in this paragraph as these assets are held for sale and there is a high probability that the assets will be recovered through a sale rather than through continuing use.
Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations, including committed credit facilities extended to the Company. Credit risk on trade receivables, finance lease receivables and contract assets is generally monitored and managed on the level of each subsidiary and on the level of the controlled minority interests. These receivables generally have short payment periods, reference is made to note 11 for more information on trade receivables and note 12 for more information on contract assets.
Credit risk with respect to bonds, loans, derivatives, other financial instruments, cash and cash equivalents and credit facilities is managed by the Company for the Real estate and Liquid portfolio segments. Debt securities are mainly managed by external asset managers. The mandate to these managers stipulate that only investments in highly liquid, investment-grade bonds with an average S&P credit rating of A is allowed. These portfolios have a maximum average duration of two years. The Company mitigates its credit risk on cash and cash equivalents by spreading these assets over highly rated counterparties, applying regularly reviewed counterparty exposure limits that take into account their credit rating. A similar approach applies to credit facilities. The credit risk on the aforementioned financial instruments with respect to the other segments is managed by the respective subsidiary or controlled minority interest. The expected credit losses recognized in the consolidated statement of income for these financial instruments is insignificant for both years presented. There was no indication as at the statement of financial position date that these financial instruments will not be recovered, other than as already provided for.
The maximum exposure to credit risk is the carrying value of the consolidated financial assets, excluding equity securities, which can be specified by segment as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 3,076.4 | 1,582.0 |
Quoted minority interests | 885.2 | 807.5 |
Real estate | 28.7 | 18.0 |
Liquid portfolio | 3,370.9 | 5,189.4 |
Other | 250.0 | 500.0 |
| \u00a0 | 7,611.2 | 8,096.9 |
The category other comprises an amount of \u20ac\u00a0250 million (2021: \u20ac\u00a0500 million) representing the part of the proceeds from the sale of GrandVision N.V. that is held in escrow, at BGL BNP Paribas S.A., for potential liabilities of HAL under the sale and purchase agreement. This amount is held in escrow until July 3, 2023.
These financial assets can be further specified as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Loans | 100.8 | 103.8 |
Trade receivables | 1,423.8 | 977.9 |
Contract assets | 372.4 | 70.6 |
Marketable securities and deposits | 2,839.7 | 3,741.3 |
Derivative financial instruments | 98.8 | 45.6 |
Other financial assets | 450.7 | 678.8 |
Other current assets | 281.1 | 222.5 |
Cash and cash equivalents | 2,043.9 | 2,256.4 |
| \u00a0 | 7,611.2 | 8,096.9 |
Cash and cash equivalents can be specified by segment as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 1,396.1 | 633.3 |
Quoted minority interests | 111.5 | 172.4 |
Real estate | 5.1 | 2.6 |
Liquid portfolio | 531.2 | 1,448.1 |
| \u00a0 | 2,043.9 | 2,256.4 |
For the Liquid portfolio and Real estate segments, cash and cash equivalents were held by counterparties with the following short-term Standard & Poor\u2019s credit ratings:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
A-1+ | 75.7 | - |
A-1 | 362.7 | 1,441.1 |
A-2 | 86.0 | - |
Not rated | 11.9 | 9.6 |
| \u00a0 | 536.3 | 1,450.7 |
The bonds held in the Liquid portfolio can be disaggregated based on their Standard & Poor\u2019s (equivalent) credit ratings as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
AAA | 255.5 | 322.9 |
AA+, AA, AA- | 295.2 | 492.1 |
A+, A, A- | 1,113.3 | 1,426.2 |
BBB+, BBB, BBB- | 1,175.3 | 1,499.7 |
CCC | 0.4 | 0.4 |
| \u00a0 | 2,839.7 | 3,741.3 |
The Company is not exposed to any significant concentration of credit risk.
Liquidity risk is the risk that the financial obligations associated with financial instruments and off-balance sheet commitments cannot be met.
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. The Company has no ability to transfer cash (or other assets) from the entities belonging to the segment Quoted minority interests that may be consolidated in these financial statements (i.e. Vopak and Safilo).
The approach to managing liquidity at the level of the Company is to ensure, as far as possible, that there will be sufficient liquidity to meet liabilities when due, both under normal and stressed conditions, without incurring unacceptable losses or risk damaging the Company\u2019s reputation. The Company seeks to mitigate liquidity risk through its cash reserves held in the Liquid portfolio segment and committed credit facilities entered into at corporate level. Reference is made to the table on cash and cash equivalents per segment above. At the end of 2022, unused committed credit facilities were available to an amount of \u20ac\u00a02,161.8 million (2021: \u20ac\u00a01,565.9 million).
The following tables categorize the consolidated, undiscounted cash flows of non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining lifetime of the contract at the end of the reporting periods. The financial guarantee contracts are contingent liabilities.
| \u00a0 | December 31, 2022 | |||
|---|---|---|---|---|
| \u00a0 | < 1 year | 1-2 years | 3-5 years | > 5 years |
Non-derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Redemption of debt | 2,069.2 | 499.6 | 1,316.7 | 1,157.3 |
Redemption of other financial liabilities | 27.1 | 83.2 | 67.0 | - |
Interest payments | 168.0 | 120.0 | 235.9 | 197.0 |
Payments on lease liabilities | 175.2 | 268.7 | 180.7 | 964.3 |
Accounts payable | 1,317.0 | - | - | - |
Commitments and guarantees provided | 1,362.2 | 156.6 | 148.6 | 250.5 |
Total undiscounted non-derivative financial liabilities | 5,118.7 | 1,128.1 | 1,948.9 | 2,569.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Gross-settled derivative liabilities outflow | 597.2 | 141.0 | 70.3 | 73.2 |
Gross-settled derivative liabilities inflow | (535.2) | (151.3) | (61.2) | (66.6) |
Total gross-settled derivative liabilities | 62.0 | (10.3) | 9.1 | 6.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net-settled derivative liabilities | 1.5 | 1.2 | 1.5 | 1.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted derivative liabilities | 63.5 | (9.1) | 10.6 | 7.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted financial liabilities | 5,182.2 | 1,119.0 | 1,959.5 | 2,576.7 |
| \u00a0 | December 31, 2021 | |||
|---|---|---|---|---|
| \u00a0 | < 1 year | 1-2 years | 3-5 years | > 5 years |
Non-derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Redemption of debt | 814.2 | 600.4 | 1,002.1 | 1,317.0 |
Redemption of other financial liabilities | 13.9 | 41.2 | 72.0 | 6.5 |
Interest payments | 111.9 | 98.6 | 208.0 | 188.1 |
Payments on lease liabilities | 123.8 | 228.1 | 161.7 | 908.2 |
Accounts payable | 1,040.9 | - | - | - |
Commitments and guarantees provided | 447.5 | 11.0 | 22.1 | 0.5 |
Total undiscounted non-derivative financial liabilities | 2,552.2 | 979.3 | 1,465.9 | 2,420.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Gross-settled derivative liabilities outflow | 1,265.9 | - | - | - |
Gross-settled derivative liabilities inflow | (1,254.8) | - | - | - |
Total gross-settled derivative liabilities | 11.1 | - | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net-settled derivative liabilities | 0.6 | - | 0.9 | 5.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted derivative liabilities | 11.7 | - | 0.9 | 5.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted financial liabilities | 2,563.9 | 979.3 | 1,466.8 | 2,425.6 |
The total debt of continuing operations as of December 31, 2022, amounted to \u20ac\u00a05,025.6 million (2021: \u20ac\u00a03,731.4 million). For 100% of the bank debt, the applicable covenants were complied with or waived during 2021 and 2022. Refer to note 22 for details on applicable covenants.
The movements during 2022 and 2021 in the net cash position were as follows:
| \u00a0 | Cash and cash equivalents | Marketable securities and deposits | Total debt | Net (debt) / cash |
|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2021 | 1,427.0 | 175.8 | (3,065.3) | (1,462.5) |
Cash flows | 820.2 | 3,898.9 | (534.2) | 4,184.9 |
Foreign exchange adjustments | 9.2 | 5.7 | (132.9) | (118.0) |
Fair value movements | - | 79.6 | - | 79.6 |
Other non-cash movements | - | - | 1.0 | 1.0 |
Balance on December 31, 2021 | 2,256.4 | 4,160.0 | (3,731.4) | 2,685.0 |
Cash flows | (200.1) | (605.8) | (846.9) | (1,652.8) |
Foreign exchange adjustments | 9.4 | (14.3) | (59.2) | (64.1) |
Fair value movements | - | (179.0) | - | (179.0) |
Reclassification to held for sale | - | - | - | - |
Other non-cash movements | (21.8) | - | (388.1) | (409.9) |
Balance on December 31, 2022 | 2,043.9 | 3,360.9 | (5,025.6) | 379.2 |
This net cash position represents a ratio of 0.2 (2021: net cash ratio of 0.6) when compared to the operating result before depreciation, amortization and impairments, less income from marketable securities and share of profit of associates and joint ventures. The differences between the debt cash flows in the table above and those in the cash flow statement relate to cash flows on other financial liabilities, which are not part of the net cash definition.
Market risk - currency risk
Foreign currency exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. From time to time the Company hedges foreign currency exchange risk arising from significant, highly probable forecast transactions, including acquisitions of subsidiaries. The Company primarily uses foreign currency derivative financial instruments to hedge this risk, matching the critical terms of the hedged item, and in principle applies a hedge ratio of one.
The table below shows the net assets per currency, taking into account debt instruments denominated in foreign currency and related hedging instruments.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
U.S. dollar | 2,077.5 | 1,049.9 |
U.K. pound sterling | 536.3 | 101.6 |
Chinese yuan renminbi | 496.4 | 515.8 |
Singapore dollar | 447.2 | 349.0 |
Canadian dollar | 185.3 | 230.9 |
Hong-Kong dollar | 161.6 | 150.4 |
Brazilian real | 117.0 | 94.0 |
Australian dollar | 108.9 | 68.5 |
Thai baht | 91.9 | 77.6 |
Taiwan dollar | 71.3 | 39.4 |
Saudi riyal | 62.4 | 54.0 |
South African rand | 50.6 | 55.7 |
Other | 390.1 | 184.0 |
Total continuing operations | 4,796.5 | 2,970.8 |
An average change in value of these currencies by 10% would have a pre-tax effect on equity of \u20ac\u00a0479.7 million. Vopak applies hedge accounting to net investments in foreign operations (hedged item) for a nominal amount of \u20ac\u00a0792.9 million (2021: \u20ac\u00a0889.5 million), of which \u20ac\u00a0663.6 million (2021: \u20ac\u00a0695.3 million) was hedged via foreign currency interest bearing debt and \u20ac\u00a0129.3 million (2021: \u20ac\u00a0194.2 million) via derivative financial instruments. The remaining currency exposures relate mainly to investments in foreign operations that the Company does not hedge.
The market value of the currency derivative financial instruments per the consolidated financial statements were as follows.
| \u00a0 | \u00a0 | December 31, 2022 | December 31, 2021 | ||||
|---|---|---|---|---|---|---|---|
| \u00a0 | Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount |
Fair value hedge | < 1 year | 0.7 | (7.7) | 198.9 | 1.5 | (0.5) | 45.8 |
| \u00a0 | \u00a0 | 0.7 | (7.7) | 198.9 | 1.5 | (0.5) | 45.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash flow hedge | < 1 year | 53.9 | (4.6) | 458.4 | 35.1 | (0.3) | 473.4 |
Cash flow hedge | 1-5 years | 10.2 | (2.2) | 212.5 | - | - | - |
Cash flow hedge | > 5 years | 6.6 | - | 66.6 | 0.5 | - | 66.6 |
| \u00a0 | \u00a0 | 70.7 | (6.8) | 737.5 | 35.6 | (0.3) | 540.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net investment hedge | < 1 year | 1.0 | - | 130.3 | - | (3.9) | 189.9 |
| \u00a0 | \u00a0 | 1.0 | - | 130.3 | - | (3.9) | 189.9 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
No hedge accounting | < 1 year | 14.3 | (4.4) | 839.3 | 8.3 | (6.3) | 1,057.2 |
| \u00a0 | \u00a0 | 14.3 | (4.4) | 839.3 | 8.3 | (6.3) | 1,057.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total currency derivative financial instruments | \u00a0 | 86.7 | (18.9) | 1,906.0 | 45.4 | (11.0) | 1,832.9 |
In addition, one of the Company\u2019s consolidated minority interests holds cross-currency interest rate swaps to hedge foreign currency risk on fixed rate debt denominated in U.S. dollar. These interest rate swaps, with a notional amount of \u20ac\u00a0525.2 million (2021: \u20ac\u00a0525.2 million), are included under foreign currency derivatives.
Sensitivity of profit and equity to financial instruments, with respect to exchange rate changes
The value of debt and hedging instruments denominated in currencies other than the functional currency of the entities holding them are subject to exchange rate movements. This primarily relates to instruments denominated in Chinese yuan renminbi, U.S. dollar and Singapore dollar. The aggregate effect on net profit of a 10% depreciation in exchange rates is \u20ac\u00a00.1 million (2021: \u20ac\u00a0(0.7) million), with an equal but opposite effect of a 10% appreciation in exchange rates. The aggregate effect on equity of a 10% appreciation of the foreign currencies against the euro is \u20ac\u00a092.4 million (2021: \u20ac\u00a0104.2 million). The aggregate effect on equity of a 10% depreciation of the foreign currencies against the euro is \u20ac\u00a0(66.7) million (2021: \u20ac\u00a0(81.4) million).
Sensitivity of revenues and profit to the translation of the revenues and results of foreign operations, with respect to exchange rate changes
The result is impacted by translating the result of foreign currency operations. The translation risk of converting the net result of foreign entities into euro mainly concerns the British pound, the Singapore dollar and the U.S. dollar. The sensitivity to these currencies is as follows, excluding the effect of discontinued operations.
| \u00a0 | EUR/USD \u2206 $10ct | EUR/GBP \u2206 \u00a310ct | EUR/SGD \u2206 $10ct | |||
|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Impact on revenues | 131.1 | 103.3 | 49.4 | 21.4 | 129.2 | 15.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Impact on net profit from continuing operations | 15.9 | 19.7 | 1.6 | 0.5 | 5.5 | 4.6 |
Market risk - interest rate risk
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. There is no debt at other segments.
Fixed income investments that are part of the Liquid portfolio are subject to fair value interest rate risk. In view of the short average duration of this portfolio, this risk is limited.
As of December 31, 2022, taking into account interest rate swaps, 55% (2021: 51%) of the total debt of \u20ac\u00a05,025.7 million (2021: \u20ac\u00a03,731.4 million) was at fixed rates for an average period of 4.2 years (2021: 4.1 years).
The market value of the interest rate derivative financial instruments per the consolidated financial statements is shown below.
| \u00a0 | \u00a0 | December 31, 2022 | December 31, 2021 | ||||
|---|---|---|---|---|---|---|---|
| \u00a0 | Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount |
Cash flow hedge | < 1 year | 1.7 | (0.2) | 37.3 | - | - | 0.2 |
Cash flow hedge | 1-5 years | 5.4 | (0.8) | 160.5 | 0.2 | (0.9) | 85.1 |
Cash flow hedge | > 5 years | - | - | - | - | (4.7) | 53.7 |
| \u00a0 | \u00a0 | 7.1 | (1.0) | 197.8 | 0.2 | (5.6) | 139.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
No hedge accounting | 1-5 years | 2.8 | - | 60.0 | - | - | - |
| \u00a0 | \u00a0 | 2.8 | - | 60.0 | - | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total interest rate derivative financial instruments | \u00a0 | 9.9 | (1.0) | 257.8 | 0.2 | (5.6) | 139.0 |
The weighted-average interest rate on total debt was 3.6% (2021: 3.1%).
If variable interest rates in 2022 or 2021 had decreased/increased by 25%, the impact on the consolidated statement of income for the year would have been insignificant.
An increase of 25% in interest rates underlying the calculation of the valuation of interest rate swaps would have had a pre-tax positive impact on equity of \u20ac\u00a013.3 million (2021: \u20ac\u00a01.4 million). An equal but opposite change would have had a pre-tax negative impact on equity of \u20ac\u00a014.0 million (2021: \u20ac\u00a01.4 million negative).
Market risk - price risk
At the end of 2022, the Company had investments in equity securities (included in marketable securities and deposits and other financial assets) amounting to \u20ac\u00a0615.1 million (2021: \u20ac\u00a0502.3 million), based on quoted market prices at the statement of financial position date. If at December 31, 2022, equity markets had fallen 10% overall, the portfolio value could have decreased by 10%, which would have resulted in a negative impact on other reserves of \u20ac\u00a09.4 million (2021: \u20ac\u00a08.4 million) and a negative impact on income of \u20ac\u00a052.1 million (2021: \u20ac\u00a041.9 million). A 10% increase would have had the equal but opposite effect.
The Company has not identified additional financial risk exposures in 2022 compared to the previous year, and its approach to financial risk management remained unchanged.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-544": { "value": "Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations, including committed credit facilities extended to the Company. Credit risk on trade receivables, finance lease receivables and contract assets is generally monitored and managed on the level of each subsidiary and on the level of the controlled minority interests. These receivables generally have short payment periods, reference is made to note 11 for more information on trade receivables and note 12 for more information on contract assets.
Credit risk with respect to bonds, loans, derivatives, other financial instruments, cash and cash equivalents and credit facilities is managed by the Company for the Real estate and Liquid portfolio segments. Debt securities are mainly managed by external asset managers. The mandate to these managers stipulate that only investments in highly liquid, investment-grade bonds with an average S&P credit rating of A is allowed. These portfolios have a maximum average duration of two years. The Company mitigates its credit risk on cash and cash equivalents by spreading these assets over highly rated counterparties, applying regularly reviewed counterparty exposure limits that take into account their credit rating. A similar approach applies to credit facilities. The credit risk on the aforementioned financial instruments with respect to the other segments is managed by the respective subsidiary or controlled minority interest. The expected credit losses recognized in the consolidated statement of income for these financial instruments is insignificant for both years presented. There was no indication as at the statement of financial position date that these financial instruments will not be recovered, other than as already provided for.
The maximum exposure to credit risk is the carrying value of the consolidated financial assets, excluding equity securities, which can be specified by segment as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 3,076.4 | 1,582.0 |
Quoted minority interests | 885.2 | 807.5 |
Real estate | 28.7 | 18.0 |
Liquid portfolio | 3,370.9 | 5,189.4 |
Other | 250.0 | 500.0 |
| \u00a0 | 7,611.2 | 8,096.9 |
The category other comprises an amount of \u20ac\u00a0250 million (2021: \u20ac\u00a0500 million) representing the part of the proceeds from the sale of GrandVision N.V. that is held in escrow, at BGL BNP Paribas S.A., for potential liabilities of HAL under the sale and purchase agreement. This amount is held in escrow until July 3, 2023.
These financial assets can be further specified as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Loans | 100.8 | 103.8 |
Trade receivables | 1,423.8 | 977.9 |
Contract assets | 372.4 | 70.6 |
Marketable securities and deposits | 2,839.7 | 3,741.3 |
Derivative financial instruments | 98.8 | 45.6 |
Other financial assets | 450.7 | 678.8 |
Other current assets | 281.1 | 222.5 |
Cash and cash equivalents | 2,043.9 | 2,256.4 |
| \u00a0 | 7,611.2 | 8,096.9 |
Cash and cash equivalents can be specified by segment as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Unquoted | 1,396.1 | 633.3 |
Quoted minority interests | 111.5 | 172.4 |
Real estate | 5.1 | 2.6 |
Liquid portfolio | 531.2 | 1,448.1 |
| \u00a0 | 2,043.9 | 2,256.4 |
For the Liquid portfolio and Real estate segments, cash and cash equivalents were held by counterparties with the following short-term Standard & Poor\u2019s credit ratings:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
A-1+ | 75.7 | - |
A-1 | 362.7 | 1,441.1 |
A-2 | 86.0 | - |
Not rated | 11.9 | 9.6 |
| \u00a0 | 536.3 | 1,450.7 |
The bonds held in the Liquid portfolio can be disaggregated based on their Standard & Poor\u2019s (equivalent) credit ratings as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
AAA | 255.5 | 322.9 |
AA+, AA, AA- | 295.2 | 492.1 |
A+, A, A- | 1,113.3 | 1,426.2 |
BBB+, BBB, BBB- | 1,175.3 | 1,499.7 |
CCC | 0.4 | 0.4 |
| \u00a0 | 2,839.7 | 3,741.3 |
The Company is not exposed to any significant concentration of credit risk.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-545": { "value": "Liquidity risk is the risk that the financial obligations associated with financial instruments and off-balance sheet commitments cannot be met.
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. The Company has no ability to transfer cash (or other assets) from the entities belonging to the segment Quoted minority interests that may be consolidated in these financial statements (i.e. Vopak and Safilo).
The approach to managing liquidity at the level of the Company is to ensure, as far as possible, that there will be sufficient liquidity to meet liabilities when due, both under normal and stressed conditions, without incurring unacceptable losses or risk damaging the Company\u2019s reputation. The Company seeks to mitigate liquidity risk through its cash reserves held in the Liquid portfolio segment and committed credit facilities entered into at corporate level. Reference is made to the table on cash and cash equivalents per segment above. At the end of 2022, unused committed credit facilities were available to an amount of \u20ac\u00a02,161.8 million (2021: \u20ac\u00a01,565.9 million).
The following tables categorize the consolidated, undiscounted cash flows of non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining lifetime of the contract at the end of the reporting periods. The financial guarantee contracts are contingent liabilities.
| \u00a0 | December 31, 2022 | |||
|---|---|---|---|---|
| \u00a0 | < 1 year | 1-2 years | 3-5 years | > 5 years |
Non-derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Redemption of debt | 2,069.2 | 499.6 | 1,316.7 | 1,157.3 |
Redemption of other financial liabilities | 27.1 | 83.2 | 67.0 | - |
Interest payments | 168.0 | 120.0 | 235.9 | 197.0 |
Payments on lease liabilities | 175.2 | 268.7 | 180.7 | 964.3 |
Accounts payable | 1,317.0 | - | - | - |
Commitments and guarantees provided | 1,362.2 | 156.6 | 148.6 | 250.5 |
Total undiscounted non-derivative financial liabilities | 5,118.7 | 1,128.1 | 1,948.9 | 2,569.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Gross-settled derivative liabilities outflow | 597.2 | 141.0 | 70.3 | 73.2 |
Gross-settled derivative liabilities inflow | (535.2) | (151.3) | (61.2) | (66.6) |
Total gross-settled derivative liabilities | 62.0 | (10.3) | 9.1 | 6.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net-settled derivative liabilities | 1.5 | 1.2 | 1.5 | 1.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted derivative liabilities | 63.5 | (9.1) | 10.6 | 7.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted financial liabilities | 5,182.2 | 1,119.0 | 1,959.5 | 2,576.7 |
| \u00a0 | December 31, 2021 | |||
|---|---|---|---|---|
| \u00a0 | < 1 year | 1-2 years | 3-5 years | > 5 years |
Non-derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Redemption of debt | 814.2 | 600.4 | 1,002.1 | 1,317.0 |
Redemption of other financial liabilities | 13.9 | 41.2 | 72.0 | 6.5 |
Interest payments | 111.9 | 98.6 | 208.0 | 188.1 |
Payments on lease liabilities | 123.8 | 228.1 | 161.7 | 908.2 |
Accounts payable | 1,040.9 | - | - | - |
Commitments and guarantees provided | 447.5 | 11.0 | 22.1 | 0.5 |
Total undiscounted non-derivative financial liabilities | 2,552.2 | 979.3 | 1,465.9 | 2,420.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Gross-settled derivative liabilities outflow | 1,265.9 | - | - | - |
Gross-settled derivative liabilities inflow | (1,254.8) | - | - | - |
Total gross-settled derivative liabilities | 11.1 | - | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net-settled derivative liabilities | 0.6 | - | 0.9 | 5.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted derivative liabilities | 11.7 | - | 0.9 | 5.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total undiscounted financial liabilities | 2,563.9 | 979.3 | 1,466.8 | 2,425.6 |
The total debt of continuing operations as of December 31, 2022, amounted to \u20ac\u00a05,025.6 million (2021: \u20ac\u00a03,731.4 million). For 100% of the bank debt, the applicable covenants were complied with or waived during 2021 and 2022. Refer to note 22 for details on applicable covenants.
The movements during 2022 and 2021 in the net cash position were as follows:
| \u00a0 | Cash and cash equivalents | Marketable securities and deposits | Total debt | Net (debt) / cash |
|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance on January 1, 2021 | 1,427.0 | 175.8 | (3,065.3) | (1,462.5) |
Cash flows | 820.2 | 3,898.9 | (534.2) | 4,184.9 |
Foreign exchange adjustments | 9.2 | 5.7 | (132.9) | (118.0) |
Fair value movements | - | 79.6 | - | 79.6 |
Other non-cash movements | - | - | 1.0 | 1.0 |
Balance on December 31, 2021 | 2,256.4 | 4,160.0 | (3,731.4) | 2,685.0 |
Cash flows | (200.1) | (605.8) | (846.9) | (1,652.8) |
Foreign exchange adjustments | 9.4 | (14.3) | (59.2) | (64.1) |
Fair value movements | - | (179.0) | - | (179.0) |
Reclassification to held for sale | - | - | - | - |
Other non-cash movements | (21.8) | - | (388.1) | (409.9) |
Balance on December 31, 2022 | 2,043.9 | 3,360.9 | (5,025.6) | 379.2 |
This net cash position represents a ratio of 0.2 (2021: net cash ratio of 0.6) when compared to the operating result before depreciation, amortization and impairments, less income from marketable securities and share of profit of associates and joint ventures. The differences between the debt cash flows in the table above and those in the cash flow statement relate to cash flows on other financial liabilities, which are not part of the net cash definition.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-546": { "value": "Market risk - currency risk
Foreign currency exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. From time to time the Company hedges foreign currency exchange risk arising from significant, highly probable forecast transactions, including acquisitions of subsidiaries. The Company primarily uses foreign currency derivative financial instruments to hedge this risk, matching the critical terms of the hedged item, and in principle applies a hedge ratio of one.
The table below shows the net assets per currency, taking into account debt instruments denominated in foreign currency and related hedging instruments.
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
U.S. dollar | 2,077.5 | 1,049.9 |
U.K. pound sterling | 536.3 | 101.6 |
Chinese yuan renminbi | 496.4 | 515.8 |
Singapore dollar | 447.2 | 349.0 |
Canadian dollar | 185.3 | 230.9 |
Hong-Kong dollar | 161.6 | 150.4 |
Brazilian real | 117.0 | 94.0 |
Australian dollar | 108.9 | 68.5 |
Thai baht | 91.9 | 77.6 |
Taiwan dollar | 71.3 | 39.4 |
Saudi riyal | 62.4 | 54.0 |
South African rand | 50.6 | 55.7 |
Other | 390.1 | 184.0 |
Total continuing operations | 4,796.5 | 2,970.8 |
An average change in value of these currencies by 10% would have a pre-tax effect on equity of \u20ac\u00a0479.7 million. Vopak applies hedge accounting to net investments in foreign operations (hedged item) for a nominal amount of \u20ac\u00a0792.9 million (2021: \u20ac\u00a0889.5 million), of which \u20ac\u00a0663.6 million (2021: \u20ac\u00a0695.3 million) was hedged via foreign currency interest bearing debt and \u20ac\u00a0129.3 million (2021: \u20ac\u00a0194.2 million) via derivative financial instruments. The remaining currency exposures relate mainly to investments in foreign operations that the Company does not hedge.
The market value of the currency derivative financial instruments per the consolidated financial statements were as follows.
| \u00a0 | \u00a0 | December 31, 2022 | December 31, 2021 | ||||
|---|---|---|---|---|---|---|---|
| \u00a0 | Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount |
Fair value hedge | < 1 year | 0.7 | (7.7) | 198.9 | 1.5 | (0.5) | 45.8 |
| \u00a0 | \u00a0 | 0.7 | (7.7) | 198.9 | 1.5 | (0.5) | 45.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash flow hedge | < 1 year | 53.9 | (4.6) | 458.4 | 35.1 | (0.3) | 473.4 |
Cash flow hedge | 1-5 years | 10.2 | (2.2) | 212.5 | - | - | - |
Cash flow hedge | > 5 years | 6.6 | - | 66.6 | 0.5 | - | 66.6 |
| \u00a0 | \u00a0 | 70.7 | (6.8) | 737.5 | 35.6 | (0.3) | 540.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net investment hedge | < 1 year | 1.0 | - | 130.3 | - | (3.9) | 189.9 |
| \u00a0 | \u00a0 | 1.0 | - | 130.3 | - | (3.9) | 189.9 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
No hedge accounting | < 1 year | 14.3 | (4.4) | 839.3 | 8.3 | (6.3) | 1,057.2 |
| \u00a0 | \u00a0 | 14.3 | (4.4) | 839.3 | 8.3 | (6.3) | 1,057.2 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total currency derivative financial instruments | \u00a0 | 86.7 | (18.9) | 1,906.0 | 45.4 | (11.0) | 1,832.9 |
In addition, one of the Company\u2019s consolidated minority interests holds cross-currency interest rate swaps to hedge foreign currency risk on fixed rate debt denominated in U.S. dollar. These interest rate swaps, with a notional amount of \u20ac\u00a0525.2 million (2021: \u20ac\u00a0525.2 million), are included under foreign currency derivatives.
Sensitivity of profit and equity to financial instruments, with respect to exchange rate changes
The value of debt and hedging instruments denominated in currencies other than the functional currency of the entities holding them are subject to exchange rate movements. This primarily relates to instruments denominated in Chinese yuan renminbi, U.S. dollar and Singapore dollar. The aggregate effect on net profit of a 10% depreciation in exchange rates is \u20ac\u00a00.1 million (2021: \u20ac\u00a0(0.7) million), with an equal but opposite effect of a 10% appreciation in exchange rates. The aggregate effect on equity of a 10% appreciation of the foreign currencies against the euro is \u20ac\u00a092.4 million (2021: \u20ac\u00a0104.2 million). The aggregate effect on equity of a 10% depreciation of the foreign currencies against the euro is \u20ac\u00a0(66.7) million (2021: \u20ac\u00a0(81.4) million).
Sensitivity of revenues and profit to the translation of the revenues and results of foreign operations, with respect to exchange rate changes
The result is impacted by translating the result of foreign currency operations. The translation risk of converting the net result of foreign entities into euro mainly concerns the British pound, the Singapore dollar and the U.S. dollar. The sensitivity to these currencies is as follows, excluding the effect of discontinued operations.
| \u00a0 | EUR/USD \u2206 $10ct | EUR/GBP \u2206 \u00a310ct | EUR/SGD \u2206 $10ct | |||
|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Impact on revenues | 131.1 | 103.3 | 49.4 | 21.4 | 129.2 | 15.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Impact on net profit from continuing operations | 15.9 | 19.7 | 1.6 | 0.5 | 5.5 | 4.6 |
Market risk - interest rate risk
The risks with respect to the individual entities belonging to the Unquoted and Quoted minority interests segments are managed by these entities. There is no debt at other segments.
Fixed income investments that are part of the Liquid portfolio are subject to fair value interest rate risk. In view of the short average duration of this portfolio, this risk is limited.
As of December 31, 2022, taking into account interest rate swaps, 55% (2021: 51%) of the total debt of \u20ac\u00a05,025.7 million (2021: \u20ac\u00a03,731.4 million) was at fixed rates for an average period of 4.2 years (2021: 4.1 years).
The market value of the interest rate derivative financial instruments per the consolidated financial statements is shown below.
| \u00a0 | \u00a0 | December 31, 2022 | December 31, 2021 | ||||
|---|---|---|---|---|---|---|---|
| \u00a0 | Maturity | Assets | Liabilities | Notional amount | Assets | Liabilities | Notional amount |
Cash flow hedge | < 1 year | 1.7 | (0.2) | 37.3 | - | - | 0.2 |
Cash flow hedge | 1-5 years | 5.4 | (0.8) | 160.5 | 0.2 | (0.9) | 85.1 |
Cash flow hedge | > 5 years | - | - | - | - | (4.7) | 53.7 |
| \u00a0 | \u00a0 | 7.1 | (1.0) | 197.8 | 0.2 | (5.6) | 139.0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
No hedge accounting | 1-5 years | 2.8 | - | 60.0 | - | - | - |
| \u00a0 | \u00a0 | 2.8 | - | 60.0 | - | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total interest rate derivative financial instruments | \u00a0 | 9.9 | (1.0) | 257.8 | 0.2 | (5.6) | 139.0 |
The weighted-average interest rate on total debt was 3.6% (2021: 3.1%).
If variable interest rates in 2022 or 2021 had decreased/increased by 25%, the impact on the consolidated statement of income for the year would have been insignificant.
An increase of 25% in interest rates underlying the calculation of the valuation of interest rate swaps would have had a pre-tax positive impact on equity of \u20ac\u00a013.3 million (2021: \u20ac\u00a01.4 million). An equal but opposite change would have had a pre-tax negative impact on equity of \u20ac\u00a014.0 million (2021: \u20ac\u00a01.4 million negative).
Market risk - price risk
At the end of 2022, the Company had investments in equity securities (included in marketable securities and deposits and other financial assets) amounting to \u20ac\u00a0615.1 million (2021: \u20ac\u00a0502.3 million), based on quoted market prices at the statement of financial position date. If at December 31, 2022, equity markets had fallen 10% overall, the portfolio value could have decreased by 10%, which would have resulted in a negative impact on other reserves of \u20ac\u00a09.4 million (2021: \u20ac\u00a08.4 million) and a negative impact on income of \u20ac\u00a052.1 million (2021: \u20ac\u00a041.9 million). A 10% increase would have had the equal but opposite effect.
The Company has not identified additional financial risk exposures in 2022 compared to the previous year, and its approach to financial risk management remained unchanged.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-547": { "value": "The Company manages its capital to safeguard its ability to continue as a going concern and to provide an adequate return on its invested capital.
The capital structure at the end of the reporting periods is summarized in the table below:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Equity | 13,010.1 | 12,434.7 |
Non-current debt | 2,956.5 | 2,917.2 |
Current debt | 2,069.2 | 814.2 |
Cash and cash equivalents | (2,043.9) | (2,256.4) |
Total capital employed | 15,991.9 | 13,909.7 |
A related party is a person or entity that is related to the Company. These include both people and entities that have, or are subject to, the influence or control of the Company.
Employment benefits for the Executive Board, charged to the income statement, are as follows:
| \u00a0 | 2022 | 2021 |
|---|---|---|
Members of the Executive Board | \u00a0 | \u00a0 |
Short-term employee benefits | 3.9 | 9.1 |
Post-employment benefits | 1.7 | 0.9 |
Share-based compensation | 3.3 | 2.5 |
| \u00a0 | 8.9 | 12.5 |
For details on share-based compensation plans refer to note 34.
The fixed 2022 remuneration for the Supervisory Directors of HAL Holding N.V. was \u20ac\u00a00.4 million (2021: \u20ac\u00a00.4 million) in total.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-691": { "value": "A related party is a person or entity that is related to the Company. These include both people and entities that have, or are subject to, the influence or control of the Company.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
Capital commitments
On December 31, 2022, capital commitments in respect of property, plant and equipment amounted to \u20ac\u00a0265.8 million (2021: \u20ac\u00a0237.0 million) and mainly relate to terminal construction activities at Vopak, vessel-related construction activities at Boskalis and a new build vessel ordered at Anthony Veder.
Financial commitments
At year end, Safilo had contracts with licensors for the production and sale of branded sunglasses and frames. These contracts include guarantees for a minimum amount of production as well as commitments for advertising. These licensing commitments can be summarized as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
No later than 1 year | 89.0 | 68.7 |
Later than 1 year and no later than 5 years | 204.2 | 250.4 |
Later than 5 years | 12.9 | 17.6 |
| \u00a0 | 306.1 | 336.7 |
Commitments and guarantees
The Company and its subsidiaries and controlled minority interests entered into various commitments to provide debt and equity financing. These commitments mainly relate to Boskalis, Vopak, the Real estate segment and acquisitions of HAL. In addition, certain subsidiaries, mainly Boskalis and Van Wijnen, have provided (counter) guarantees to financial institutions in respect of contracts, partnerships, joint arrangements and associates. The total estimated amount of these commitments and guarantees not recognized in the statement of financial position is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Commitments to provide debt or equity funding | 598.8 | 86.7 |
Guarantees and securities provided | 1,319.2 | 394.4 |
| \u00a0 | 1,918.0 | 481.1 |
The above commitments and guarantees relate for \u20ac\u00a01,086 million to commitments and guarantees provided by Boskalis.
The commitments and guarantees are included in the liquidity risk paragraph in note 38.
Other contingencies
Associates and joint ventures Vopak
The joint ventures and associates of Vopak are currently, and may from time to time become, involved in a number of legal proceedings, including inquiries from, or discussions with, governmental authorities (including tax authorities) that are incidental to their operations. For the contingent liabilities of the joint ventures and associates as at year-end related to legal cases, it is based on the current facts and circumstances not believed that they may have a material adverse effect on the financial position or profitability of Vopak. Due to inherent uncertainties, Vopak cannot make any accurate quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings referred to in this report, however costs in complex litigation may be substantial.
Environmental obligations Vopak
Vopak is exposed to risks regarding environmental obligations arising from past activities. For example, a number of sites has to be decontaminated before being handed back at the end of the contractual period. Under current legislation, environmental plans and any other measures to be adopted have to be agreed with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations arise, a provision is formed based on the most reliable estimate possible of future expenses. Vopak management is of the opinion that the provisions are adequate, based on information currently available. However, given the degree of difficulty in making estimates, this does not guarantee that no additional costs will arise going forward.
Legal proceedings and other contingent liabilities
As a result of its day-to-day activities, the Company is involved in a number of legal proceedings. Management\u00a0is of the opinion that for the legal cases and risks for which no provision has been recognized, it is not probable that the final outcome will result in a cash outflow, therefore no provisions have been recognized.
As part of divestments of terminals and assets, Vopak has provided certain customary representations and warranties in the relevant sales purchase agreements. These representations and warranties will generally terminate, depending on their specific features, a number of years after the date of the relevant transaction completion date. Based on the current facts and circumstances, Vopak management has determined that for the items for which no provision is currently recognized, the likelihood of a cash outflow relating to these items is considered to be remote.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
Capital commitments
On December 31, 2022, capital commitments in respect of property, plant and equipment amounted to \u20ac\u00a0265.8 million (2021: \u20ac\u00a0237.0 million) and mainly relate to terminal construction activities at Vopak, vessel-related construction activities at Boskalis and a new build vessel ordered at Anthony Veder.
Financial commitments
At year end, Safilo had contracts with licensors for the production and sale of branded sunglasses and frames. These contracts include guarantees for a minimum amount of production as well as commitments for advertising. These licensing commitments can be summarized as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
No later than 1 year | 89.0 | 68.7 |
Later than 1 year and no later than 5 years | 204.2 | 250.4 |
Later than 5 years | 12.9 | 17.6 |
| \u00a0 | 306.1 | 336.7 |
Commitments and guarantees
The Company and its subsidiaries and controlled minority interests entered into various commitments to provide debt and equity financing. These commitments mainly relate to Boskalis, Vopak, the Real estate segment and acquisitions of HAL. In addition, certain subsidiaries, mainly Boskalis and Van Wijnen, have provided (counter) guarantees to financial institutions in respect of contracts, partnerships, joint arrangements and associates. The total estimated amount of these commitments and guarantees not recognized in the statement of financial position is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Commitments to provide debt or equity funding | 598.8 | 86.7 |
Guarantees and securities provided | 1,319.2 | 394.4 |
| \u00a0 | 1,918.0 | 481.1 |
The above commitments and guarantees relate for \u20ac\u00a01,086 million to commitments and guarantees provided by Boskalis.
The commitments and guarantees are included in the liquidity risk paragraph in note 38.
Other contingencies
Associates and joint ventures Vopak
The joint ventures and associates of Vopak are currently, and may from time to time become, involved in a number of legal proceedings, including inquiries from, or discussions with, governmental authorities (including tax authorities) that are incidental to their operations. For the contingent liabilities of the joint ventures and associates as at year-end related to legal cases, it is based on the current facts and circumstances not believed that they may have a material adverse effect on the financial position or profitability of Vopak. Due to inherent uncertainties, Vopak cannot make any accurate quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings referred to in this report, however costs in complex litigation may be substantial.
Environmental obligations Vopak
Vopak is exposed to risks regarding environmental obligations arising from past activities. For example, a number of sites has to be decontaminated before being handed back at the end of the contractual period. Under current legislation, environmental plans and any other measures to be adopted have to be agreed with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations arise, a provision is formed based on the most reliable estimate possible of future expenses. Vopak management is of the opinion that the provisions are adequate, based on information currently available. However, given the degree of difficulty in making estimates, this does not guarantee that no additional costs will arise going forward.
Legal proceedings and other contingent liabilities
As a result of its day-to-day activities, the Company is involved in a number of legal proceedings. Management\u00a0is of the opinion that for the legal cases and risks for which no provision has been recognized, it is not probable that the final outcome will result in a cash outflow, therefore no provisions have been recognized.
As part of divestments of terminals and assets, Vopak has provided certain customary representations and warranties in the relevant sales purchase agreements. These representations and warranties will generally terminate, depending on their specific features, a number of years after the date of the relevant transaction completion date. Based on the current facts and circumstances, Vopak management has determined that for the items for which no provision is currently recognized, the likelihood of a cash outflow relating to these items is considered to be remote.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
Capital commitments
On December 31, 2022, capital commitments in respect of property, plant and equipment amounted to \u20ac\u00a0265.8 million (2021: \u20ac\u00a0237.0 million) and mainly relate to terminal construction activities at Vopak, vessel-related construction activities at Boskalis and a new build vessel ordered at Anthony Veder.
Financial commitments
At year end, Safilo had contracts with licensors for the production and sale of branded sunglasses and frames. These contracts include guarantees for a minimum amount of production as well as commitments for advertising. These licensing commitments can be summarized as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
No later than 1 year | 89.0 | 68.7 |
Later than 1 year and no later than 5 years | 204.2 | 250.4 |
Later than 5 years | 12.9 | 17.6 |
| \u00a0 | 306.1 | 336.7 |
Commitments and guarantees
The Company and its subsidiaries and controlled minority interests entered into various commitments to provide debt and equity financing. These commitments mainly relate to Boskalis, Vopak, the Real estate segment and acquisitions of HAL. In addition, certain subsidiaries, mainly Boskalis and Van Wijnen, have provided (counter) guarantees to financial institutions in respect of contracts, partnerships, joint arrangements and associates. The total estimated amount of these commitments and guarantees not recognized in the statement of financial position is as follows:
| \u00a0 | Dec. 31, 2022 | Dec. 31, 2021 |
|---|---|---|
Commitments to provide debt or equity funding | 598.8 | 86.7 |
Guarantees and securities provided | 1,319.2 | 394.4 |
| \u00a0 | 1,918.0 | 481.1 |
The above commitments and guarantees relate for \u20ac\u00a01,086 million to commitments and guarantees provided by Boskalis.
The commitments and guarantees are included in the liquidity risk paragraph in note 38.
Other contingencies
Associates and joint ventures Vopak
The joint ventures and associates of Vopak are currently, and may from time to time become, involved in a number of legal proceedings, including inquiries from, or discussions with, governmental authorities (including tax authorities) that are incidental to their operations. For the contingent liabilities of the joint ventures and associates as at year-end related to legal cases, it is based on the current facts and circumstances not believed that they may have a material adverse effect on the financial position or profitability of Vopak. Due to inherent uncertainties, Vopak cannot make any accurate quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings referred to in this report, however costs in complex litigation may be substantial.
Environmental obligations Vopak
Vopak is exposed to risks regarding environmental obligations arising from past activities. For example, a number of sites has to be decontaminated before being handed back at the end of the contractual period. Under current legislation, environmental plans and any other measures to be adopted have to be agreed with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations arise, a provision is formed based on the most reliable estimate possible of future expenses. Vopak management is of the opinion that the provisions are adequate, based on information currently available. However, given the degree of difficulty in making estimates, this does not guarantee that no additional costs will arise going forward.
Legal proceedings and other contingent liabilities
As a result of its day-to-day activities, the Company is involved in a number of legal proceedings. Management\u00a0is of the opinion that for the legal cases and risks for which no provision has been recognized, it is not probable that the final outcome will result in a cash outflow, therefore no provisions have been recognized.
As part of divestments of terminals and assets, Vopak has provided certain customary representations and warranties in the relevant sales purchase agreements. These representations and warranties will generally terminate, depending on their specific features, a number of years after the date of the relevant transaction completion date. Based on the current facts and circumstances, Vopak management has determined that for the items for which no provision is currently recognized, the likelihood of a cash outflow relating to these items is considered to be remote.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance that they will result in an obligation in the future.
Non-controlling\u00a0interests\u00a0with\u00a0respect\u00a0to\u00a0Vopak and\u00a0Safilo are significant to the Company. The non-controlling interests in Vopak and Safilo can\u00a0be detailed\u00a0as\u00a0follows:
| \u00a0 | Vopak | Vopak | Safilo | Safilo | Total | Total |
|---|---|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Profit / (loss) allocated to the non-controlling interest during the year | (57.3) | 140.1 | 23.3 | 12.7 | (34.0) | 152.8 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Accumulated non-controlling interest at December 31 | 1,703.3 | 1,805.1 | 247.0 | 217.6 | 1,950.3 | 2,022.7 |
Set\u00a0out\u00a0below\u00a0is\u00a0the\u00a0summarized financial\u00a0information\u00a0for\u00a0Vopak and Safilo. This is the financial information\u00a0as\u00a0reported\u00a0by\u00a0these companies, including purchase price accounting adjustments made by\u00a0the\u00a0Company.
| \u00a0 | Vopak | Safilo | ||
|---|---|---|---|---|
| \u00a0 | 2022 | 2021 | 2022 | 2021 |
Summarized balance sheet | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
As of December 31 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 520.6 | 567.7 | 598.0 | 564.2 |
Liabilities | (1,162.2) | (960.2) | (312.2) | (310.6) |
| \u00a0 | (641.6) | (392.5) | 285.8 | 253.6 |
Non-current | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Assets | 6,546.7 | 6,587.1 | 388.4 | 406.6 |
Liabilities | (2,691.9) | (2,780.9) | (219.0) | (273.7) |
| \u00a0 | 3,854.8 | 3,806.2 | 169.4 | 132.9 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Net assets | 3,213.2 | 3,413.7 | 455.2 | 386.5 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Summarized income statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
For the year | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenue | 1,430.9 | 1,269.0 | 1,075.5 | 969.6 |
Profit / (loss) before tax | (38.2) | 303.2 | 57.5 | 28.5 |
Income tax expense | (100.8) | (60.0) | (9.3) | (12.4) |
Profit / (loss) after income tax | (139.0) | 243.2 | 48.2 | 16.1 |
Other comprehensive income | 132.6 | 168.3 | - | 31.2 |
Total comprehensive income (CI) | (6.4) | 411.5 | 48.2 | 47.3 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
CI allocated to non-controlling interest | 37.8 | 37.0 | 1.9 | 3.8 |
Dividend paid to non-controlling interest | 33.1 | 25.0 | 0.9 | 1.1 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Summarized cash flow statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
For the year | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash from operating activities | 872.1 | 741.1 | 17.8 | 25.2 |
Interest paid net | (96.9) | (70.7) | (6.2) | (6.9) |
Income tax (paid) / received | (55.9) | (65.0) | (2.4) | (1.1) |
Net cash from operating activities | 719.3 | 605.4 | 9.2 | 17.2 |
Net cash from investing activities | (489.4) | (588.4) | (15.6) | (9.8) |
Net cash from financing activities | (249.1) | (15.0) | (16.8) | (0.8) |
Increase/(decrease) in cash and cash equivalents | (19.2) | 2.0 | (23.2) | 6.6 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents at beginning of year | 73.4 | 68.3 | 99.0 | 88.9 |
Cash included in assets held for sale beginning of year | (21.8) | - | - | - |
Effect of exchange rate changes and reclassifications | 1.4 | 3.1 | 1.9 | 3.4 |
Increase/(decrease) in cash and cash equivalents | (19.2) | 2.0 | (23.2) | 6.6 |
Cash and cash equivalents at end of year | 33.8 | 73.4 | 77.7 | 98.9 |
Name | Country of incorporation | Nature of business | Interest in common shares | Interest in preferred shares | Non-controlling interest |
|---|---|---|---|---|---|
Subsidiaries | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
HAL Holding N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Real Estate Inc. | U.S.A. | Real estate | 100.0% | 0.0% | 0.0% |
HAL Investments B.V. | The Netherlands | Holding company | 100.0% | 0.0% | 0.0% |
Rotter y Krauss | Chile | Optical retail | 100.0% | 100.0% | 0.0% |
Koninklijke Boskalis N.V. | The Netherlands | Dredging and offshore | 98.9% | 0.0% | 1.1% |
FD Mediagroep B.V. | The Netherlands | Media | 97.8% | 100.0% | 2.2% |
Broadview Holding B.V. | The Netherlands | Industrial | 97.4% | 0.0% | 2.6% |
Koninklijke Ahrend B.V. | The Netherlands | Office furniture | 96.0% | 100.0% | 4.0% |
280ppm B.V. | The Netherlands | GHG reduction investments | 95.0% | 100.0% | 5.0% |
Infomedics Holding B.V. | The Netherlands | Financial services | 94.5% | 0.0% | 5.5% |
Timber and Building Supplies Holland N.V. | The Netherlands | Building materials | 94.3% | 0.0% | 5.7% |
AN Direct B.V. | The Netherlands | Hearing aids | 90.0% | 0.0% | 10.0% |
SB Real Estate | The Netherlands | Real estate | 90.0% | 0.0% | 10.0% |
Van Wijnen Holding B.V. | The Netherlands | Construction | 88.0% | 100.0% | 12.0% |
Atlas Professionals B.V. | The Netherlands | Staffing | 86.9% | 0.0% | 13.1% |
HR Top Holding B.V. | The Netherlands | HR services | 86.7% | 100.0% | 13.3% |
GreenV B.V. | The Netherlands | Greenhouse projects | 71.3% | 0.0% | 28.7% |
Pro Gamers Group | Germany | Computer gaming equipment | 64.3% | 79.4% | 35.7% |
Anthony Veder Group N.V. | Cura\u00e7ao | Shipping | 62.9% | 0.0% | 37.1% |
Auxilium GmbH | Germany | Orthopedic devices | 53.8% | 100.0% | 46.2% |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Controlled minority interests | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Safilo Group S.p.A. | Italy | Optical products | 49.84% | 0.00% | 50.16% |
Koninklijke Vopak N.V. | The Netherlands | Tank terminals | 48.15% | 0.00% | 51.85% |
On March 14, 2023, HAL completed the acquisition of 100% of the shares in IQIP Holding B.V. (\u2018IQIP\u2019). IQIP is a supplier of foundation and installation equipment to the offshore wind, coastal & civil and oil & gas markets. The company is active worldwide and both sells and rents out equipment. Revenue over the financial year ending December 31, 2022, amounted to \u20ac\u00a0102 million.
IQIP is headquartered in Sliedrecht and has approximately 300 employees.
Name | Country of incorporation | Nature of business | Interest in common shares | Interest in preferred shares | Non-controlling interest |
|---|---|---|---|---|---|
Subsidiaries | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
HAL Holding N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Real Estate Inc. | U.S.A. | Real estate | 100.0% | 0.0% | 0.0% |
HAL Investments B.V. | The Netherlands | Holding company | 100.0% | 0.0% | 0.0% |
Rotter y Krauss | Chile | Optical retail | 100.0% | 100.0% | 0.0% |
Koninklijke Boskalis N.V. | The Netherlands | Dredging and offshore | 98.9% | 0.0% | 1.1% |
FD Mediagroep B.V. | The Netherlands | Media | 97.8% | 100.0% | 2.2% |
Broadview Holding B.V. | The Netherlands | Industrial | 97.4% | 0.0% | 2.6% |
Koninklijke Ahrend B.V. | The Netherlands | Office furniture | 96.0% | 100.0% | 4.0% |
280ppm B.V. | The Netherlands | GHG reduction investments | 95.0% | 100.0% | 5.0% |
Infomedics Holding B.V. | The Netherlands | Financial services | 94.5% | 0.0% | 5.5% |
Timber and Building Supplies Holland N.V. | The Netherlands | Building materials | 94.3% | 0.0% | 5.7% |
AN Direct B.V. | The Netherlands | Hearing aids | 90.0% | 0.0% | 10.0% |
SB Real Estate | The Netherlands | Real estate | 90.0% | 0.0% | 10.0% |
Van Wijnen Holding B.V. | The Netherlands | Construction | 88.0% | 100.0% | 12.0% |
Atlas Professionals B.V. | The Netherlands | Staffing | 86.9% | 0.0% | 13.1% |
HR Top Holding B.V. | The Netherlands | HR services | 86.7% | 100.0% | 13.3% |
GreenV B.V. | The Netherlands | Greenhouse projects | 71.3% | 0.0% | 28.7% |
Pro Gamers Group | Germany | Computer gaming equipment | 64.3% | 79.4% | 35.7% |
Anthony Veder Group N.V. | Cura\u00e7ao | Shipping | 62.9% | 0.0% | 37.1% |
Auxilium GmbH | Germany | Orthopedic devices | 53.8% | 100.0% | 46.2% |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Controlled minority interests | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Safilo Group S.p.A. | Italy | Optical products | 49.84% | 0.00% | 50.16% |
Koninklijke Vopak N.V. | The Netherlands | Tank terminals | 48.15% | 0.00% | 51.85% |
All the above entities are included in the consolidation. The proportion of the effective voting rights in the respective entity are virtually equal to the proportion of the ordinary shares held.
Non-controlled interests | \u00a0 |
|---|---|
Publicly traded | \u00a0 |
SBM Offshore N.V. | 22.88% |
| \u00a0 | \u00a0 |
Other | \u00a0 |
Coolblue B.V. | 49.00% |
Prodrive Technologies Group B.V. | 31.45% |
DMF Investment Management B.V. | 26.30% |
Name | Country of incorporation | Nature of business | Interest in common shares | Interest in preferred shares | Non-controlling interest |
|---|---|---|---|---|---|
Subsidiaries | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
HAL Holding N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL International Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Investments N.V. | Cura\u00e7ao | Holding company | 100.0% | 0.0% | 0.0% |
HAL Real Estate Inc. | U.S.A. | Real estate | 100.0% | 0.0% | 0.0% |
HAL Investments B.V. | The Netherlands | Holding company | 100.0% | 0.0% | 0.0% |
Rotter y Krauss | Chile | Optical retail | 100.0% | 100.0% | 0.0% |
Koninklijke Boskalis N.V. | The Netherlands | Dredging and offshore | 98.9% | 0.0% | 1.1% |
FD Mediagroep B.V. | The Netherlands | Media | 97.8% | 100.0% | 2.2% |
Broadview Holding B.V. | The Netherlands | Industrial | 97.4% | 0.0% | 2.6% |
Koninklijke Ahrend B.V. | The Netherlands | Office furniture | 96.0% | 100.0% | 4.0% |
280ppm B.V. | The Netherlands | GHG reduction investments | 95.0% | 100.0% | 5.0% |
Infomedics Holding B.V. | The Netherlands | Financial services | 94.5% | 0.0% | 5.5% |
Timber and Building Supplies Holland N.V. | The Netherlands | Building materials | 94.3% | 0.0% | 5.7% |
AN Direct B.V. | The Netherlands | Hearing aids | 90.0% | 0.0% | 10.0% |
SB Real Estate | The Netherlands | Real estate | 90.0% | 0.0% | 10.0% |
Van Wijnen Holding B.V. | The Netherlands | Construction | 88.0% | 100.0% | 12.0% |
Atlas Professionals B.V. | The Netherlands | Staffing | 86.9% | 0.0% | 13.1% |
HR Top Holding B.V. | The Netherlands | HR services | 86.7% | 100.0% | 13.3% |
GreenV B.V. | The Netherlands | Greenhouse projects | 71.3% | 0.0% | 28.7% |
Pro Gamers Group | Germany | Computer gaming equipment | 64.3% | 79.4% | 35.7% |
Anthony Veder Group N.V. | Cura\u00e7ao | Shipping | 62.9% | 0.0% | 37.1% |
Auxilium GmbH | Germany | Orthopedic devices | 53.8% | 100.0% | 46.2% |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Controlled minority interests | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Safilo Group S.p.A. | Italy | Optical products | 49.84% | 0.00% | 50.16% |
Koninklijke Vopak N.V. | The Netherlands | Tank terminals | 48.15% | 0.00% | 51.85% |
All the above entities are included in the consolidation. The proportion of the effective voting rights in the respective entity are virtually equal to the proportion of the ordinary shares held.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:5493000O3IE3DNOY3R07", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-565": { "value": "Unconsolidated Statement of Financial Position HAL Trust (in millions of euro)
As of December 31 | 2022 | 2021 |
|---|---|---|
Assets | \u00a0 | \u00a0 |
Shareholding in HAL Holding N.V. | 69.3 | 69.3 |
| \u00a0 | \u00a0 | \u00a0 |
Trust Property | 69.3 | 69.3 |
Unconsolidated Statement of Comprehensive Income HAL Trust (in millions of euro)
For the year ended December 31 | 2022 | 2021 |
|---|---|---|
Dividend received from HAL Holding N.V. | 494.4 | 401.3 |
| \u00a0 | \u00a0 | \u00a0 |
Net Income | 494.4 | 401.3 |
Unconsolidated Statement of Changes in Trust Property (in millions of euro)
| \u00a0 | \u00a0 |
|---|---|
Balance on January 1, 2022 | 69.3 |
Dividend received from HAL Holding N.V. (in cash and in shares) | 494.4 |
Distributed to Unit Holders HAL Trust (in cash and in shares) | (494.4) |
Balance on December 31, 2022 | 69.3 |
Unconsolidated Statement of Cash Flows HAL Trust (in millions of euro)
For the year ended December 31 | 2022 | 2021 |
|---|---|---|
Dividend received from HAL Holding N.V. | (247.2) | (200.5) |
Distributed to Unit Holders HAL Trust | 247.2 | 200.5 |
Net change | - | - |
Notes to the unconsolidated financial statements\u00a0(in millions of euro)
The shares in HAL Holding N.V. are accounted for at historical cost. As of December 31, 2022, HAL Trust owned 88,598,887 shares of HAL Holding N.V. (2021: 86,729,713)
Company Statement of Financial Position HAL Holding N.V. (in millions of euro)
As of December 31 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
Non-current assets | \u00a0 | \u00a0 |
Financial assets | 10,403.3 | 8,017.4 |
| \u00a0 | \u00a0 | \u00a0 |
Current assets | \u00a0 | \u00a0 |
Other current assets | 0.4 | 0.9 |
Marketable securities and bank deposits | 3,194.7 | 4,431.5 |
| \u00a0 | \u00a0 | \u00a0 |
Total assets | 13,598.4 | 12,449.8 |
| \u00a0 | \u00a0 | \u00a0 |
| \u00a0 | \u00a0 | \u00a0 |
Equity | 13,010.1 | 12,434.7 |
| \u00a0 | \u00a0 | \u00a0 |
Current liabilities | \u00a0 | \u00a0 |
Current debt | 576.0 | - |
Accrued expenses | 12.3 | 15.1 |
| \u00a0 | \u00a0 | \u00a0 |
Total equity and liabilities | 13,598.4 | 12,449.8 |
Company Statement of Income HAL Holding N.V. (in millions of euro)
For the year ended December 31 | 2022 | 2021 |
|---|---|---|
| \u00a0 | \u00a0 | \u00a0 |
Income from financial assets | 772.0 | 4,302.6 |
General and administrative expenses | (14.5) | (14.9) |
| \u00a0 | 757.5 | 4,287.7 |
| \u00a0 | \u00a0 | \u00a0 |
Financial income/(expense) | (110.7) | (17.5) |
| \u00a0 | \u00a0 | \u00a0 |
Net income | 646.8 | 4,270.2 |
Notes to the company financial statements HAL Holding N.V. (in millions of euro)
The company financial statements of HAL Holding N.V. have been prepared in accordance with book 2 of the Civil Code applicable for Cura\u00e7ao, applying accounting principles generally accepted in the Netherlands as allowed by article 2:120 of the Civil Code applicable for Cura\u00e7ao. For details concerning the accounting principles in respect of the statement of financial position and statement of income, reference is made to the consolidated financial statements of HAL Trust (which are identical to the consolidated financial statements of HAL Holding N.V.) except for investments in subsidiaries which are carried at net asset values.
Financial assets
| \u00a0 | \u00a0 |
|---|---|
Balance on January 1, 2022 | 8,017.4 |
Income | 772.0 |
Increase/(decrease) in loans, net | 1,392.0 |
Exchange differences, valuation differences and equity adjustments | 221.9 |
Balance on December 31, 2022 | 10,403.3 |
Financial assets include receivables on group companies for an amount of \u20ac\u00a01,500.4 million (2021: \u20ac\u00a01.0 million).
Equity
The movement for 2022 of Shareholders\u2019 equity is included on pages 31 and 70.
On December 31, 2022 and 2021, 88,598,887 and 86,729,713 Shares respectively were outstanding, with a nominal value of \u20ac\u00a00.02 each, and all were held by HAL Trust.
The Company may purchase HAL Trust Shares, when deemed appropriate, up to a maximum of 10% per year of the number of Shares outstanding at the beginning of the year.
A 2021 dividend of \u20ac\u00a0494.2 million (excluding dividend on treasury shares) or \u20ac\u00a05.70 per Share was distributed on June 17, 2022 (2021: \u20ac\u00a0200.5 million or \u20ac\u00a04.70 per Share), of which \u20ac\u00a0247.1 million in cash and \u20ac\u00a0247.1 million in stock. The conversion ratio of 1:46.4 resulted in 1,869,174 new Shares being issued.
The Company owned 6,337 HAL Trust Shares as of December 31, 2022. These shares may be used in the context of a share participation plan for management (not being members of the Executive Board).
Supervisory Directors
The 2022 fixed remuneration for the Supervisory Directors of HAL Holding N.V. was \u20ac\u00a00.4 million in total (2021: \u20ac\u00a00.4 million).