Note 5 - Vessels, Equipment, Project Cost and Intangible Assets

 

     

CONSOLIDATED

Vessels under construction

Vessels and equipment

Drydocking

(Amounts in USD 1,000)

Land and buildings

Vessels under construction

Vessels and equipment

Drydocking

Capitalised project cost

-

-

-

Purchase cost on January 1, 2014

4,853

127,711

1,725,682

38,445

24,764

-

-

-

Capital expenditure

156

290,367

206,281

22,284

6,567

-

-

-

Movements between groups

-

-4,073

24,918

-

-

-

-

-

Vessels delivered in 2014

-

-263,723

263,723

-

-

-

-

-

The year’s disposal at cost

-

-

-79,952

-4,894

-13,733

-

-

-

Effect of exchange rate differences

-881

-5,268

-56,558

-981

-

-

-

-

Purchase cost on December 31, 2014

4,128

145,015

2,084,094

54,855

17,597

                 

-

-

-

Accumulated depreciation on January 1, 2014

-412

-

-299,405

-28,831

-13,736

-

-

-

The year’s depreciation

-110

-

-79,604

-9,359

-6,629

-

-

-

Impairment

 

-14,500

-14,500

   

-

-

-

The year’s disposal of accumulated depreciation

-

-

19,666

4,894

13,733

-

-

-

Effect of exchange rate differences

90

-

7,462

727

-

-

-

-

Accumulated depreciation on December 31, 2014

-433

-14,500

-366,382

-32,569

-6,632

                 

-

-

-

Net book value on December 31, 2014

3,695

130,515

1,717,712

22,285

10,965

 

       

   

-

-

-

Purchase cost on January 1, 2015

4,128

145,015

2,084,094

54,855

17,597

-

-

-

Correction opening balance January 1, 2015

   

3,656

2,669

1,821

-

-

-

Capital expenditure

63

122,614

8,282

19,495

461

-

-

-

Movements between groups

-

-

1,024

-

-1,024

-

-

-

Vessels delivered in 2015

-

-62,970

62,970

-

-

-

-

-

The year’s disposal at cost

-3,805

-

-151,452

-4,032

-6,179

-

-

-

Effect of exchange rate differences

-75

-12,095

-78,085

-1,001

-

-

-

-

Purchase cost on December 31, 2015

310

192,563

1,930,488

71,986

12,676

                 

-

-

-

Accumulated depreciation on January 1, 2015

-433

-

-351,882

-32,569

-6,632

-

-

-

Accumulated impairment on January 1, 2015

 

-14,500

-14,500

   

-

-

-

Correction opening balance January 1, 2015

   

-1,501

 

-687

-

-

-

The year’s depreciation

-2

-

-84,954

-16,318

-4,813

-

-

-

Impairment

 

-

-159,465

   

-

-

-

Movements between groups impairment

 

7,000

-7,000

-

-

-

-

-

The year’s disposal of accumulated depreciation

410

-

43,186

3,722

4,836

-

-

-

Effect of exchange rate differences

5

-

9,611

603

-

-

-

-

Accumulated depreciation on December 31, 2015

-20

-7,500

-566,506

-44,563

-7,296

                 

-

-

-

Net book value on December 31, 2015

291

185,064

1,363,982

27,422

5,381

The balance of capitalized project costs relate to specific contracts. The costs are amortized over the term of the specific charter contracts.

The vessels are divided into the following components and economical lives:

Component

Percentage of total

Economic life

Hull

27.00%

30 years

Cargo equipment

17.00%

30 years

Marine equipment

10.00%

15 years

Crew equipment

9.00%

15 years

Engine

18.00%

30 years

Engine system

6.00%

30 years

Combined sewerage system

13.00%

30 years

Docking

 

2.5 years

Equipment

 

3 years

Intangible assets

Goodwill

Research and

development

Trademarks

and licences

Total

Balance on January 1, 2014

19,628

3,278

9,782

32,688

Investments

-

19

-

19

Effect of exchange rate differences

-2,310

-594

-98

-3,002

Purchase cost on December 31, 2014

17,318

2,704

9,684

29,705

       

Accumulated depreciation on January 1, 2014

-

-1,773

-1,177

-2,951

The year’s ordinary depreciation

-

-1,074

-90

-1,163

Effect of exchange rate differences

-

260

87

346

Accumulated depreciation on December 31, 2014

-

-2,588

-1,180

-3,768

         

Net book value on December 31, 2014

17,318

116

8,503

25,937

Intangible assets (Amounts in USD 1,000)

Goodwill

Research and development

Trademarks and licences

Total

Balance on January 1, 2015

17,318

2,704

9,684

29,705

Movement between groups from Vessel and equipment

-

9,240

-9,240

-

Investments

-

561

7

568

Effect of exchange rate differences

-1,763

-480

-69

-2,312

Purchase cost on December 31, 2015

15,555

12,025

380

27,961

       

Accumulated depreciation on January 1, 2015

-

-2,588

-1,180

-3,768

Movement between groups from Vessel and equipment

-

-777

841

64

The year’s ordinary depreciation

 

-932

-9

-941

Impairment of intangibles

 

-6,705

 

-6,705

Effect of exchange rate differences

-

239

 

239

Accumulated depreciation on December 31, 2015

-

-10,764

-347

-11,112

         

Net book value on December 31, 2015

15,555

1,261

33

16,849

Trademarks and licences refer to Siem WIS AS patented technology for the drilling industry. The figures include assets under development and developed assets, and the depreciation refers to developed assets that are not yet commercialized. Impairment of intangibles relates to Siem WIS AS and was recognized at USD 6,705 in 2015.

Impairment
In light of the turmoil in the oil service industry impairment tests have been performed for all vessels and equipment and intangible assets and the company has identified possible impairment for such assets. Each vessel constitutes a cash generating unit and is tested separately for impairment except for AHTS vessels which operates in a pool and is considered as one cash generating unit.

Valuation has been received from accredited brokers for all vessels. Due to a limited number of sale and purchase transactions in the current market, there is a large uncertainty related to the received broker estimates. Value-in-use calculations have therefore been performed for all vessels to compare with broker’s values.

Value-in-use calculations have been based on conservative terminal amounts. The discount rate used in the value-in-use calculation is a real average cost of capital after tax ranging from 7.59%-9.62%. Impairment for certain Brazilian flagged vessels of USD 29,000 made at year end 2014 has been reallocated at year end 2015 to reflect updated value-in-use calculations made as per end of 4th quarter 2015. Such reallocations have a zero effect on the total impairment recorded in 2015.

If the pre-tax discount rate applied to the cash flow projections of this CGU had been 1% higher than management’s estimates (8.59% - 10.62% instead of 7.59% - 9.62%), the group would have had to recognzse an impairment against vessels of USD 167,9 million.