4.3.13Intangible Assets
2017
|
Development costs |
Goodwill |
Software |
Patents |
Total |
|
|---|---|---|---|---|---|
|
Cost |
23 |
25 |
11 |
19 |
77 |
|
Accumulated amortization and impairment |
(5) |
- |
(7) |
(19) |
(31) |
|
Book value at 1 January |
18 |
25 |
4 |
- |
46 |
|
Additions |
0 |
- |
1 |
- |
1 |
|
Amortization |
(4) |
- |
(2) |
- |
(5) |
|
(Impairment)/impairment reversal |
- |
- |
- |
- |
- |
|
Foreign currency variations |
- |
- |
0 |
- |
0 |
|
Other movements |
- |
- |
0 |
- |
0 |
|
Total movements |
(3) |
- |
(1) |
- |
(4) |
|
Cost |
23 |
25 |
12 |
19 |
79 |
|
Accumulated amortization and impairment |
(9) |
- |
(8) |
(19) |
(36) |
|
Book value at 31 December |
14 |
25 |
3 |
- |
42 |
2016
|
Development costs |
Goodwill |
Software |
Patents |
Total |
|
|---|---|---|---|---|---|
|
Cost |
19 |
25 |
9 |
19 |
71 |
|
Accumulated amortization and impairment |
(4) |
- |
(3) |
(19) |
(26) |
|
Book value at 1 January |
15 |
25 |
5 |
1 |
45 |
|
Additions |
5 |
- |
0 |
- |
5 |
|
Amortization |
(1) |
- |
(2) |
(1) |
(3) |
|
(Impairment)/impairment reversal |
- |
- |
- |
- |
- |
|
Foreign currency variations |
(1) |
- |
0 |
- |
(1) |
|
Other movements |
- |
- |
0 |
- |
0 |
|
Total movements |
3 |
- |
(1) |
(1) |
1 |
|
Cost |
23 |
25 |
11 |
19 |
77 |
|
Accumulated amortization and impairment |
(5) |
- |
(7) |
(19) |
(31) |
|
Book value at 31 December |
18 |
25 |
4 |
- |
46 |
Amortization of development costs is included in ’Research and development expenses’ in the income statement in 2017 for US$ 4 million (2016: US$ 1 million).
Goodwill relates to the acquisition of the Houston based subsidiaries (i.e. the Houston Regional Center). The recoverable amount is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management which cover a six-year period, in line with the Company’s internal forecasting horizon. Cash flows beyond the six-year period are extrapolated using an estimated growth rate of 2%. Management determined budgeted gross margin based on past performance and its expectations of market development and award perspective on brownfield, semi-TLP and semi-sub projects supported by external sources of information. Budgeted gross margin is based on a gradual recovery of the market for brownfield, semi-TLP and semi-sub projects over the next five years. The discount rate used is pre-tax and reflects specific risks (8.3%). The most significant assumption included in the financial budget used for the determination of the recoverable amount of the goodwill is the award of a semi-sub EPC contract in the next three years period (i.e. before 31 December 2020). The use of more pessimistic market assumptions, with no award of semi-sub EPC contract within the next 5 years, would lead to a full impairment of the goodwill as of December 31, 2017.