HAL Trust

Annual Report 2019

The history of HAL dates back to April 18, 1873, when the Nederlandsch-Amerikaansche Stoomvaart-Maatschappij (N.A.S.M.) was founded in Rotterdam, the Netherlands.

The Company continued its activities under various names and is now operating as HAL Holding N.V., a Curaçao company. All the shares of HAL Holding N.V. are held by HAL Trust and form the Trust's entire assets. HAL Trust was formed on October 19, 1977, by a Trust Deed, which was last amended on May 18, 2011. The shares of the Trust are listed and traded on Euronext in Amsterdam.

HAL Holding N.V.
Johan van Walbeeckplein 11A
Willemstad
Curaçao
Telephone: (599) 9 4615 002
Telefax: (599) 9 4615 003

Branch office:
HAL Holding N.V.
5, Avenue des Citronniers
MC 98000 Monaco
Telephone: (377) 92 16 75 79
Telefax: (377) 93 25 54 34
www.halholding.com

Contents

4 Corporate Administration
5 Highlights and Financial Calendar
6 Report of the Trust Committee
7 Report of the Supervisory Board of HAL Holding N.V.
9 Report of the Executive Board of HAL Holding N.V.
21 Financial Statements HAL Trust
Consolidated Statement of Financial Position, 24
Consolidated Statement of Income, 25
Consolidated Statement of Comprehensive Income, 26
Consolidated Statement of Changes in Equity, 27
Consolidated Statement of Cash Flows, 28
Basis of preparation, 29
Notes to the Consolidated Financial Statements, 35
List of Principal subsidiaries and minority interests, 120
Information relating to estimated value of the subsidiaries and minority interests of HAL Holding N.V., 121
Supplemental information, 123
Financial Statements HAL Trust, 155
Distribution of Dividends, 156
Independent Auditor's Report, 157
169 Five-Year Summary Consolidated Statement of Financial Position
170 Five-Year Summary Consolidated Statement of Income
171 Financial Statements HAL Holding N.V.
173 Distribution of Profits
174 HAL Trust Organization
175 Description Corporate Governance HAL Holding N.V.
179 Information in respect of members of the Supervisory Board

Corporate Administration

HAL Holding N.V.

Supervisory Board:
M. van der Vorm, Chairman
L.J. Hijmans van den Bergh, vice Chairman
M.P.M. de Raad
C.O. van der Vorm
G.J. Wijers

Executive Board:
M.F. Groot, Chairman
A.A. van 't Hof, CFO
J.N. van Wiechen

Highlights and

Financial Calendar

In euro	2019*	2018*
Income (in millions)
Revenues (excluding GrandVision N.V.)	2,965.4	2,401.8
Income from marketable securities and deposits	5.5	(7.7)
Share of results of associates and joint ventures (excluding GrandVision N.V.)	235.3	(54.4)
Income from other financial assets	11.5	6.7
Income from real estate activities	(2.5)	10.2
Net profit from discontinued operations (GrandVision N.V.)	460.8	226.0
Net income attributable to owners of parent	665.8	154.7
Financial position
Total assets (in millions)	14,130.8	11,384.0
Equity attributable to owners of parent (in millions)	7,960.3	7,471.2
Equity attributable to owners of parent (as a percentage of total assets)	56.3	65.6
Number of Shares outstanding at December 31(in thousands)	83,397**	81,693**
Average number of Shares outstanding (in thousands)	82,574**	80,885**
Per Share
Net income (incl. discontinued operations)	8.06	1.87
Shareholders’ equity	95.45	91.45
Net asset value	164.20***	137.57***
Closing price shares HAL Trust at December 31	144.00	133.20
Volume-weighted average December share price HAL Trust	144.43	132.75
Dividend	5.80***	5.30
Exchange rates - December 31
U.S. dollar per euro	1.12	1.15

These figures relate, where applicable, to the pro forma financial statements as included in the supplemental information on pages 123 through 154
** Net of treasury shares
*** Based on the market value of the quoted companies and the liquid portfolio and on the book value of the unquoted companies
***Proposed (€ 2.90 in cash and € 2.90 in Shares)

Financial calendar

Interim statement May 19, 2020

Publication of 2020 half-year results August 27, 2020

Interim statement November 24, 2020

Publication of preliminary net asset value January 28, 2021

Publication of 2020 annual results March 30, 2021

Shareholders' meeting HAL Trust and interim statement May 19, 2021

Report of the Trust Committee

HAL Trust

HAL Trust was formed in 1977 and holds all the outstanding shares of HAL Holding N.V.

For further details of the organization see page 174.

In accordance with the instructions issued on May 16, 2019, the Trust distributed a dividend of € 5.30 per Share on June 19, 2019, of which € 2.65 per Share was payable in shares HAL Trust and € 2.65 per Share in cash.

Accordingly, a cash dividend was paid of € 216.5 million and 1,685,836 HAL Trust shares were issued as stock dividend.

On December 31, 2019, 83,448,898 HAL Trust shares were in issue (2018: 81,763,062).

On December 31, 2019, HAL Holding N.V. owned 51,658 HAL Trust shares (2018: 70,309).

The Trust Committee
HAL Trust Committee Ltd.

March 26, 2020

Report of the Supervisory Board of HAL Holding N.V.

The Supervisory Board (the 'Board') supervises the Executive Board and provides advice to the general meeting of shareholders. In performing its task, the Board is guided by the interest of HAL Holding N.V. and its business.

On May 24, 2019, the general meeting of shareholders reappointed Mr. L.J. Hijmans van den Bergh as a member of the Board. At the end of 2019 the Board consisted of five members. Their names, nationality and other relevant information are mentioned on page 179.

The Board met during ten meetings, five of which were regularly scheduled meetings. The other five meetings primarily related to the sale of the ownership interest in GrandVision N.V. The meetings were attended by all Board members.

The Executive Board provided the Board with both written and verbal information. Based on this information, the state of affairs of the Company was discussed and evaluated. Among others, the following specific subjects were addressed: the budget, the development of the results, the investment, liquid and real estate portfolios, the dividend, the quarterly, semi-annual and annual reports, the report of the financial expert (see below), the functioning and remuneration of the Executive Board, (potential) acquisitions, the sale of the ownership interest in GrandVision, the risks associated with the Company, insider trading regulations, the governance of the Company and the design and implementation of the systems of internal control for financial reporting purposes including the reporting by the Executive Board on fraud cases and irregularities.

The Company does not have an internal audit function. The Board requested Deloitte Risk Advisory B.V. to examine the controls over financial reporting risks (covering the processes at HAL Holding N.V., HAL Investments B.V. and HAL Real Estate Inc.) and to report on deficiencies. The findings were set out in a detailed report to the Board, and the Executive Board was requested to appropriately follow up on these matters. For further information relating to the systems of internal control for financial reporting purposes, we refer to the relevant paragraph in the report of the Executive Board on page 9.

As explained in the paragraph Administrative organization, risk management systems and financial reporting in the report of the Executive Board on page 18, the application of IFRS 10 requires the Company to consolidate the financial statements of Koninklijke Vopak N.V. ('Vopak') and Safilo Group S.p.A. ('Safilo') in its financial statements, although HAL's ownership in these companies is below 50%. In order to allow the Company to comply with IFRS, it has entered into Memoranda of Understanding with Vopak and Safilo with respect to confidentiality, the process of exchanging financial information and attendance rights to the Audit Committee meetings of Vopak and the Control, Risk and Sustainability Committee meetings of Safilo of an independent financial expert on behalf of the Company. This financial expert (Mr. J.A.M. Stael, former partner of PricewaterhouseCoopers Accountants N.V.) reports to the Executive Board and the Supervisory Board, whether there are any matters relating to Vopak and Safilo that should be brought to the attention of the Company prior to the signing of the financial statements of the Company by the Executive Board and the Supervisory Board. Moreover, the assessment that the Company's financial statements do not contain material errors attributable to the financial statements of Vopak and/or Safilo is based on the external audit.

In the publicly traded companies Koninklijke Boskalis Westminster N.V. ('Boskalis'), Vopak and Safilo, the Company plays its role as a large minority shareholder. This is complemented by board representation. Mr. M.F. Groot, Chairman of the Executive Board is a member of the Supervisory Board of Vopak, and a non-executive member of the Board of Safilo. Mr. J.N. van Wiechen, member of the Executive Board, is a member of the Supervisory Board of Boskalis. In their respective functions they may, from time to time, be in the possession of confidential information about these publicly traded companies that they do not share with the other members of the Executive Board and the Supervisory Board of the Company. The

Executive Board and the Supervisory Board of the Company recognize the importance of confidentiality of the discussions at the level of the boards of the above quoted companies as this contributes to a frank exchange of ideas and fruitful discussions. This modus operandi is based on sound business principles and allows these investee companies to operate more independently from the Company.

The Board has determined the variable compensation of the Executive Board. Further information with respect to the compensation of the Executive Board is included on page 114. The remuneration per Supervisory Board member for 2019, as determined by the General Meeting of Shareholders in 2011, amounted to € 80,000.

The Board had discussions with the external auditor during three meetings. Subjects discussed included the audit plan and audit findings, the financial statements, the report on the first half of 2019, impairment testing, new accounting standards and the systems of administrative and internal controls for financial reporting purposes as well as the independence of the auditor. The financial expert was also present during these meetings.

The Board also met in the absence of the Executive Board to discuss, among other matters, the functioning and composition of the Board as well as the functioning of the Executive Board. All Board members were present during the meeting of Trust Shareholders of HAL Trust on May 16, 2019.

The Board did not form any committees. Between Board meetings, the Chairman of the Board maintained more intensive contacts with the Executive Board. In between the meetings of the Board, individual members provided their views on specific matters relevant to the Company.

The financial statements for 2019 were prepared by the Executive Board and discussed by the Board during a meeting on March 26, 2020, in which the external auditor and the financial expert participated. After reviewing the unqualified audit opinions on the financial statements of HAL Trust and HAL Holding N.V., the results of the external audit as summarized in a report to the Board and the Executive Board and the report of the financial expert, all members of the Board agreed to sign the financial statements of the Company.

The Board recommends that the Shareholders of HAL Trust instruct the Trustee to vote at the Annual Meeting of HAL Holding N.V. for the approval of the financial statements for 2019 as per the documents submitted and the proposed distribution of profits.

It should be noted that neither the Dutch Corporate Governance Code is applicable to HAL Holding N.V., because HAL Holding N.V. is not a Dutch company, nor are other Corporate Governance Codes applicable to HAL Holding N.V. Pages 175 through 178 of this report provide a description of HAL Holding N.V.'s corporate governance structure.

In accordance with the rotation schedule, Mr. M. van der Vorm will resign this year. He is available for re-election. We propose to the Shareholders of HAL Trust to instruct the Trustee to vote at the Annual Meeting of HAL Holding N.V. for the re-election of Mr. M. van der Vorm.

We also propose to the Shareholders to instruct the Trustee to vote at the Annual Meeting of HAL Holding N.V. to elect Mrs. M. Harris to the Supervisory Board. Information on Mrs. Harris is included on page 179.

On behalf of the Supervisory Board,
M. van der Vorm, Chairman

March 26, 2020

Report of the Executive Board of HAL Holding N.V.

Introduction

Net income of HAL Holding N.V. for 2019 amounted to € 666 million (€ 8.06 per Share) compared with € 155 million (€ 1.88 per Share) for 2018. Due to the announced sale on July 31, 2019, of the ownership interest in GrandVision, this subsidiary has been classified as held for sale under IFRS. Accordingly, amortization, impairment and depreciation of non-current assets ceased effective that date, which had a positive effect on net income of € 193 million. In addition, extraordinary gains at Vopak had a positive effect on net income of € 103 million, whereas in 2018 extraordinary losses at Boskalis had a negative effect on net income of € 192 million.

The net asset value based on the market value of the quoted companies and the liquid portfolio and on the book value of the unquoted companies, increased by € 2,670 million in 2019. This increase is primarily due to a higher stock market value of GrandVision (effect € 1.7 billion) and Vopak (effect € 0.6 billion).

After taking into account the cash portion of the 2018 dividend (€ 217 million) and the sale of treasury shares (€ 3 million), the net asset value on December 31, 2019, amounted to € 13,694 million (€ 164.20 per Share) compared to € 11,238 million (€ 137.57 per Share) on December 31, 2018.

The net asset value does not include the positive difference between estimated value and book value of the unquoted companies as of December 31, 2019. This difference is calculated annually and, based on the principles and assumptions set out on pages 121 and 122 of this report, amounted to € 346 million (€ 4.15 per Share) on December 31, 2019, compared with € 297 million (€ 3.64 per Share) on December 31, 2018.

Dividend

The dividend policy is, barring unforeseen circumstances and provided sufficient liquid assets, to base the dividend on 4% of the volume-weighted average December share price of HAL Trust in the year prior to the year of the dividend payment. Accordingly, the proposed dividend per Share over 2019 amounts to € 5.80 (2018: € 5.30) of which 50% to be paid in cash and 50% in shares.

Prospects

The spread of COVID-19 (Corona virus) has a significant impact on the operations of the investee companies and their profitability will be negatively impacted. It is currently uncertain what the magnitude of the impact will be. This will depend, among others, on how long the restrictive measures taken by governments will last. The subsidiaries have taken measures to preserve the operations of their businesses and the health and safety of their employees and customers. Measures are being taken to reduce operating costs and non-business critical capital expenditures as well as optimize working capital. The subsidiaries are also preparing for possibilities of tax payment deferrals as well as for other government relief measures such as short-term unemployment schemes. Due to the uncertainties with respect to the impact of COVID-19 and the fact that a significant part of the Company's net income is determined by the results of the quoted associates and potential capital gains and losses, we do not express an expectation as to the net income for 2020. During the period from December 31, 2019, through March 20, 2020, the stock market value of the ownership interests in quoted companies and the liquid portfolio was negatively impacted by changes in stock market prices for approximately € 1,750 million (€ 20.98 per Share).

Strategy

The Company's strategy is focused on acquiring and holding significant shareholdings in companies, with the objective of increasing long-term shareholders' value.

When selecting investment candidates the Company emphasizes, in addition to investment and return criteria, the potential of playing an active role as a shareholder and/or board member. Given the emphasis on the longer term, the Company does not have a predetermined investment horizon.

HAL also owns real estate. The real estate activities are concentrated in the greater Seattle metropolitan area with an emphasis on the development and rental of multi-family properties and office buildings. Next to these Seattle activities, two retail centers were acquired in the Netherlands in 2019 with the intention to upgrade the retail space and add residential units.

The liquid portfolio is primarily invested in short-term cash deposits and liquid equities. This provides a high degree of flexibility for potential acquisitions.

Risks

There are a number of risks associated with the strategy and with its implementation. Financial risks are further described in the section supplemental information of the financial statements on pages 150 through 153. Besides risks which are specific to individual companies (these risks are not managed by HAL Holding N.V., see page 18), important risk factors are summarized below. The risks described below also exclude the risks of Koninklijke Vopak N.V. ('Vopak', 48.15%) and Safilo Group S.p.A. ('Safilo', 49.8%). Although HAL's ownership in these companies is below 50%, these companies are included in the consolidated financial statements of the Company as, in accordance with the provisions of IFRS 10, the Company is deemed to have control over these entities. Reference is also made to the paragraph Administrative organization, risk management systems and financial reporting on page 18, for the organizational and control aspects of the consolidation of Vopak and Safilo.

Concentration risk

Concentration risk exists with respect to the optical retail activities as well as the quoted associates, as each represent a significant part of the net asset value of HAL.

Optical retail activities

Revenues of the optical retail and unquoted companies for 2019 amounted to € 7,004 million of which the optical retail activities represented 58%. At the end of 2019 the stock market value of HAL's ownership interest in its optical retail subsidiary GrandVision N.V. was € 5.4 billion, representing 39% of the net asset value of HAL.

A 10% change in the share price of GrandVision N.V. has an effect on HAL's net asset value of 3.9%. Accordingly, there is a significant concentration risk with respect to the optical retail industry. A decrease in revenues of the optical retail activities, for example due to an economic recession, may have a significant impact on the net asset value and profitability of HAL. A 10% decrease in these revenues could, everything else being equal, negatively affect the profit before tax by more than € 150 million. After completion of the sale of GrandVision (we refer to the paragraph divestitures) the concentration risk with respect to the optical retail activities will cease to exist.

Quoted minority interests

At the end of 2019 the stock market value of HAL's ownership interests in quoted minority interests amounted to € 5.0 billion (2018: € 4.1 billion). This included Vopak (€ 3.0 billion, 2018: € 2.4 billion), Koninklijke Boskalis Westminster N.V. (€ 1.3 billion, 2018: € 1.2 billion), SBM Offshore N.V. (€ 0.5 billion, 2018: € 0.4 billion), and Safilo (€ 0.2 billion, 2018: € 0.1 billion). Changes in stock prices of these companies may have a significant effect on the net asset value of HAL.

Market value risk

In addition to the interests in quoted companies as described above, at the end of 2019 HAL owned equities which are part of the liquid portfolio, for an amount of € 152 million (2018: € 219 million). The value of these assets can be subject to significant fluctuations as a result of the volatility of the stock markets. In 2019, share price developments of the quoted companies (including GrandVision) and the equities in the liquid portfolio, including dividends received, had a positive effect of € 2.6 billion on the net asset value. The change in market value (based on stock exchange prices) of the quoted companies where HAL's ownership interest exceeds 20%, does not have an impact on the valuation in the financial

statements as these assets are either consolidated or accounted for using the equity method in the (pro forma) financial statements.

Interest rate risk

Investments in fixed income instruments are exposed to fluctuations in interest rates. In view of the short duration of the Company's liquid assets, the interest rate risk is limited. In addition, the risk of an increase in interest rates exists with respect to the Company's debt position. At the end of 2019, this debt was exclusively at the level of the subsidiaries. Of the € 807 million interest bearing debt outstanding at the end of 2019, which excludes the debt of GrandVision as it is held for sale, (2018: € 1,531 million including the debt of GrandVision), 42% (2018: 75%) was borrowed at fixed rates for an average period of 4.5 years (2018: 3.2 years).

Currency risk

The most important currency risk relates to currency translation risk as a result of the translation of (net) balance sheet positions from a foreign currency to the euro. At the end of 2019 the unhedged exposure to currency translation risk, excluding GrandVision, was € 813 million (2018: € 419 million). The largest currency exposure related to the U.S. dollar and amounted to € 542 million (2018: € 381 million). The potential impact is detailed in the section supplemental information of the financial statements on page 153. Currency risk also exists with respect to the translation of the results of foreign currency operations. Changes in exchange rates compared with 2018 had a positive effect on revenues of € 16 million. The positive effect on operating income was € 2 million.

Credit risk

HAL is subject to credit risk with respect to financial instruments and liquid assets. This is the risk that a counter party is unable to comply with its contractual obligations. The Company generally only enters into transactions with counter parties that have a strong credit rating (S&P long-term credit rating varying from A to AA-). At the end of 2019 the liquid assets (excluding equities and

excluding the liquid assets of GrandVision) amounted to € 1,470 million (2018: € 2,077 million, including the liquid assets of GrandVision) of which € 1,224 million (2018: € 1,736 million) was part of the 'corporate' liquid portfolio. At the end of 2019, the corporate liquid portfolio mainly consisted of short term deposits held at banks with an average short-term S&P credit rating of A-1.

Liquidity risk

Liquidity risk relates to situations where a company is unable to comply with its financial obligations. The financial liabilities mainly relate to the consolidated subsidiaries. The liquidity risk of the consolidated subsidiaries is detailed in the section supplemental information on pages 151 through 153 of the financial statements. HAL Holding N.V had, at the end of 2019, in addition to its corporate liquid portfolio of € 1.4 billion, committed revolving bank facilities of € 175 million with an average of 1.3 years remaining until maturity.

Acquisition risk

In the process of acquisitions, the Company makes hypotheses, assumptions and judgments about possible future events. Actual developments may turn out to be significantly different. In addition, errors of judgment in due diligence and contract negotiations, as well as non-compliance with laws and regulations in the context of acquisitions, could result in (opportunity) losses and/or reputational damage for the Company.

Financial reporting risk

Although HAL's ownership interest in Vopak and Safilo Group is below 50%, IFRS requires (since January 1, 2014) these associates to be consolidated in the consolidated financial statements as HAL, in accordance with the provisions of IFRS 10 (Consolidated Financial Statements), is deemed to have control over these two entities. HAL has agreed with Vopak and Safilo on certain procedures for the exchange of information which allow HAL to comply with its consolidation requirement. If however, for whatever reason, either Vopak or Safilo will not, or is not able to, provide HAL

with this information, HAL may not be able to comply with its obligation to prepare consolidated financial statements on a timely basis.

Other

In addition to the above-mentioned risk factors, it should be noted that the profitability and the net asset value of the Company are susceptible to economic downturns. Demand for the products and services of the subsidiaries and minority-owned companies and/or their profitability may decline as a direct result of an economic recession, inflation, changes in the prices of raw materials, the inability to transform business models to a digital environment, consumer confidence, interest rates or governmental (including fiscal) policies, legislation as well as geopolitical developments. In addition, it should be taken into account that the operations and profitability of the investee companies will be negatively affected by the spread of COVID-19 (Corona virus).

Acquisitions unquoted companies

On June 3, 2019, Broadview Holding B.V. completed the acquisition of the Formica Group ('Formica') from Fletcher Building Ltd. for USS 840 million (€ 725 million), on a debt and cash free basis. Formica was founded in 1913 and is linked to the invention of the original High Pressure Laminate (HPL). The company has grown to become a leading provider of branded, designed surfacing solutions with a global presence and production locations in America, Asia and Europe. Formica employs around 3,400 FTE and reported 2019 sales of € 632 million.

In July, 2019, Broadview acquired full ownership of Aritas, a Turkish manufacturer of cryogenic equipment. The 2019 sales of Aritas amounted to TRY 86 million (€ 13 million).

During 2019, the ownership interest in Timber and Building Supplies Holland N.V. was increased from 78% to 89%, in Coolblue from 30% to 49%, in Atlas Professionals B.V. from 70% to 80% and in AN Direct from 85% to 90%.

Increased ownership in quoted minority interests

On January 2, 2019, Safilo Group S.p.A. completed a € 150 million rights issue, which was announced on September 21, 2018. HAL had committed, subject to certain terms and conditions, to fully underwrite the rights issue. As a result of the completion of the underwriting on January 2, 2019, and the subsequent sale of 2.5 million shares HAL's ownership interest increased to 49.8%. HAL's net investment in Safilo increased by € 14 million in 2019.

The ownership interest in the outstanding share capital of Koninklijke Boskalis Westminster N.V. increased from 40.4% at the end of 2018 to 43.5% on December 31, 2019 due to the purchase of shares for € 85 million.

The ownership interest in the outstanding share capital of SBM Offshore N.V. increased from 16% at the end of 2018 to 16.8% on December 31, 2019. On February 28, 2020 the ownership interest was increased to 20.35%.

Divestitures

On January 17, 2019, Broadview completed the sale of IEV Group, the holding company of Intersafe and Elacin which supplies and manufactures personal protective equipment. The company was acquired by HAL in 2001. Sales for 2018 amounted to € 123 million. The transaction resulted in an after tax capital gain of € 40 million.

On July 31, 2019, HAL announced, subject to certain terms and conditions, the sale of its 76.72% ownership interest in GrandVision to EssilorLuxottica at a price of € 28.00 per share, to be increased to € 28.42 if closing does not occur prior to July 30, 2020. The transaction results in a valuation of HAL's ownership interest in GrandVision of € 5.5 billion. As of December 31, 2019, the book value of HAL's ownership interest in GrandVision amounted to € 1,225 million. It is expected that closing will occur approximately 12 to 24 months after July 31, 2019. Completion will be subject to, among other matters, approval from various anti-trust authorities and performance of the parties' obligations under the transaction agreements.

Subsidiaries

Optical retail

GrandVision N.V. (76.7%), is a leading global optical retailer based at Amsterdam Airport Schiphol. The shares of the company are listed on Euronext in Amsterdam. During 2019 GrandVision acquired Opticas2000 (a Spanish chain), McOptic (a Swiss chain) and Charlie Temple (a Dutch online optical company). At the end of 2019, the stock market value of HAL's 76.7% ownership interest was € 5,353 million (2018: € 3,734 million). At the end of 2019 GrandVision was active in 44 countries and had 7,406 optical stores (2018: 7,095) including franchise stores. The company average number of full-time equivalent employees (FTE's) was 34,143 (2018: 32,400). Revenues amounted to € 4,039 million (2018: € 3,721 million), an 8.5% increase. Excluding the effect of acquisitions and changes in currency exchange rates, revenues increased by 5.1% (2018: 3.9%). The 2019 same store sales (defined as the sales at constant currency exchange rates of those stores, excluding franchise stores, which were part of the store network both on January 1, 2018, and on December 31, 2019), increased by 4.1% (2018: 3.4%). The 2019 operating income (in this report defined as earnings before interest, exceptional and non-recurring items, taxes and amortization of intangible assets, but including amortization of software), amounted to € 475 million (2018: € 426 million). The 2019 operating income excluding the effects of IFRS 16, Leases, amounted to € 443 million.

HAL has had an ownership interest in GrandVision since 1996.

Unquoted companies

Broadview Holding B.V. (97.4%) is located in 's-Hertogenbosch (the Netherlands) and employed 6,072 FTE's at the end of 2019 (2018: 2,859). Its main subsidiaries are Trespa International B.V., Arpa Industriale S.p.A., Westag & Getalit AG and Formica (acquired in June 2019, see above). Trespa is located in Weert (the Netherlands) and produces composite panels for façade cladding as well as laboratory furniture. Arpa is located in Bra (Italy) and uses a similar technology to manufacture panels for a variety of interior surfaces such as kitchens and retail furniture. Westag is based in Rheda-Wiedenbrück (Germany) and produces doors and frames, kitchen worktops and windowsills as well as solid surface material and coated plywood panels.

Broadview is also active in the distribution of liquefied natural gas (LNG) and related activities through its subsidiaries and associates in Norway, the Netherlands, Turkey (Aritas, acquired in 2019) and Spain. Broadview sold the IEV group in January 2019.

Revenues for 2019 increased by 76% to € 971 million (2018: € 552 million). Excluding the effect of acquisitions in 2019 and 2018, revenues increased by 3.0%. Operating income amounted to € 81 million (2018: € 54 million). Acquisitions and divestitures had a positive effect on operating income of € 23 million.

HAL has had an ownership interest in Broadview since 1996.

Timber and Building Supplies Holland N.V. (89.3%) located in Zaandam (the Netherlands), is one of the country's leading suppliers of timber products and building materials used for new construction, renovations and maintenance. The company has 101 outlets and had 1,497 FTE's at the end of 2019 (2018: 1,508). Revenues for 2019 increased by 1.4% to € 730 million (2018: € 720 million). Operating income amounted to € 57 million (2018: € 49 million).

HAL has had an ownership interest in Timber and Building Supplies Holland since 1999.

Koninklijke Ahrend B.V. (96%) is based in St. Oedenrode (the Netherlands) and employed 1,632 FTE's at the end of 2019 (2018: 1,605). The company delivers furniture and fit out services for office, education, healthcare and retail environments through a portfolio of four leading furniture brands: Ahrend, Gispen, Techo and Presikhaaf. Revenues for 2019 increased by 10.2% to

€ 347 million (2018: € 315 million). Operating income amounted to € 12 million (2018: € 7 million).

HAL has had an ownership interest in Ahrend since 2001.

Orthopedie Investments Europe B.V. (100%) is located in Rotterdam (the Netherlands). Its subsidiaries (Livit B.V., 89% owned and Auxilium GmbH, 54% owned) manufacture and sell orthopedic and other medical aids. Livit operates a network of 34 specialized care centers and a large number of fitting locations throughout the Netherlands. Auxilium GmbH, based in Essen (Germany), is the holding company of eight German companies. At the end of 2019, the company employed 2,325 FTE's (2018: 2,215). Revenues for 2019 increased by 14.3% to € 256 million (2018: € 224 million). Excluding the effects of acquisitions in 2018 (mainly in Germany), revenues increased by 8.7%. Operating income amounted to € 12 million (2018: € 6 million).

HAL has had an ownership interest in Orthopedie Investments Europe since 2007.

Atlas Professionals B.V. (80.1%), located in Hoofddorp (the Netherlands), is a temporary staffing agency supplying technical personnel to the international oil & gas, marine and offshore wind industries. The company employed 302 FTE's at the end of 2019 (2018: 276). Revenues for 2019 increased by 9.8% to € 235 million (2018: € 214 million). Excluding the acquisition of the technical recruitment company Brander in the United Kingdom in January 2019, and at constant exchange rates, revenues increased by 1.3%. Operating income for 2019 amounted to € 6 million (2018: € 9 million).

HAL has had an ownership interest in Atlas since 2011.

Anthony Veder Group N.V. (62.9%) is a Rotterdam (the Netherlands) based shipping company. At the end of 2019 the company had 631 FTE's (2018: 691) and operated 36 gas tankers (2018: 31), of which 26 (2018: 26) were (partially) owned. Revenues for 2019 (including recharged bunker and port costs) amounted to $ 198 million (2018: $ 197 million). Operating income amounted to $ 23 million (2018: $ 22 million).

HAL has had an ownership interest in Anthony Veder since 1991.

FD Mediagroep B.V. (100%) is located in Amsterdam (the Netherlands). The company employed 386 FTE's at the end of 2019 (2018: 348). The major brands of FD Mediagroep include the Dutch financial newspaper "Het Financieele Dagblad", the radio station "BNR Nieuwsradio" and the information and data services provider Company.info. Revenues for 2019 amounted to € 89 million (2018: € 78 million), an increase of 14%. The increase excluding the effect of acquisitions was 9.4%. Operating income amounted to € 8 million (2018: € 7 million).

HAL has had an ownership interest in FD Mediagroep since 1997.

Infomedics Holding B.V. (81.0%), provides business process outsourcing and factoring services for the Dutch health care sector and had 238 FTE's at the end of 2019 (2018: 109). Revenues for 2019 amounted to € 62 million (2018: € 28 million). The increase in revenues is primarily due to the acquisition of Famed in November 2018. Operating income for 2019 amounted to € 26 million (2018: € 13 million).

HAL has had a direct ownership interest in Infomedics since 2016. Since 2012 HAL held a minority stake through InVesting B.V. (sold in 2016).

Floramedia Group B.V. (96%) is based in Westzaan (the Netherlands) and employed 209 FTE's at the end of 2019 (2018: 209). Floramedia provides horticultural communication products and services to growers, garden centers and retailers. The company uses a horticultural database which contains more than 220,000 pictures, videos, texts and other plant-related content. Revenues for 2019 amounted to € 37 million (2018: € 37 million). Operating income increased.

HAL has had an ownership interest in Floramedia since 1999.

Sports Timing Holding B.V. (95.5%), located in Haarlem (the Netherlands), operates under the MYLAPS brand and is active in the development and production of identification and timing equipment for sports events. The company employed 139 FTE's at the end of 2019 (2018: 130). Revenues for 2019 amounted to € 28 million (2018: € 27 million). Operating income was at the same level as the year before.

HAL has had an ownership interest in Sports Timing Holding since 1998.

Flight Simulation Company B.V. (97%) is based at Amsterdam Airport Schiphol (the Netherlands) and provides training for pilots using flight simulators. At the end of 2019 the company operated 13 flight simulators of which 12 owned and employed 52 FTE's (2018: 55).

Revenues for 2019 amounted to € 22 million (2018: € 23 million). Operating income decreased.

HAL has had an ownership interest in Flight Simulation Company since 2006.

AN Direct B.V. (90%) is the holding company of MD Hearing which sells hearing aids via its web site and call centers in the United States. The company employed 39 FTE's at the end of 2019 (2018: 55). Revenues for 2019 amounted to € 21 million (2018: € 21 million). The operating income decreased.

HAL has had an ownership interest in AN Direct since 2017.

Unquoted minority interests

HAL has ownership interests in the following unquoted associates:

Coolblue B.V. (49%), based in Rotterdam, is one of the leading online retailers in the Benelux and employed 3,077 FTE's at the end of 2019 (2018: 2,448). The company reported 2019 revenues of € 1,482 million (2018: € 1,354 million). Coolblue further expanded its activities with solar panels, installation services, white goods as a service and new stores. Earnings before interest, depreciation and amortization (EBITDA) amounted to € 48 million (2018: € 27 million). IFRS 16 had a positive effect on EBITDA of € 14 million.

HAL acquired an ownership interest in Coolblue in 2016.

DMF Investment Management B.V. (25%), based in The Hague, operates under the trade name Dutch Mortgage Funding Company (DMFCO). The company is active in the origination and management of Dutch mortgages under the label Munt Hypotheken. The mortgages are funded by pension funds and international investors with commitments of over € 15 billion. The company reported 2019 revenues of € 36 million (2018: € 34 million) and employed 41 FTE's at the end of 2019 (2018: 32).

HAL acquired an ownership interest in DMFCO in 2017.

Quoted minority interests

HAL has ownership interests in the following quoted associates:

Koninklijke Vopak N.V. (48.15%) is the world's leading independent tank storage company. Vopak operates 66 terminals in 23 countries with a combined storage capacity of 34.0 million cubic meter. At the end of 2019, the company employed 3,722 FTE's. The shares of the company are listed on Euronext in Amsterdam. The market value at the end of 2019 amounted to approximately € 6.2 billion. Revenues for 2019 amounted to € 1,253 million (2018: € 1,255 million). Net income amounted to € 571 million (2018: € 255 million). The 2019 net income included exceptional gains of € 213 million.

HAL has had an ownership interest in Vopak since 1999.

For additional information on Vopak, please refer to the company's annual report and its website www.vopak.com.

Safilo Group S.p.A. (49.8%) is a Padua (Italy) based manufacturer and distributor of optical

frames and sunglasses. The shares of the company are listed on the Milan stock exchange. The market value at the end of 2019 amounted to approximately € 0.3 billion. At the end of 2019 the company had 5,754 employees.

Revenues for 2019 amounted to € 965 million (2018: € 963 million). The net loss amounted to € 328.3 million (2018: net loss of € 32.4 million). In 2019 Safilo recorded goodwill impairment charges of € 227 million.

HAL has had an ownership interest in Safilo since 2005.

For additional information on Safilo, please refer to the company's annual report and its website www.safilo.com.

Koninklijke Boskalis Westminster N.V. (43.5%) is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors. 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 700 vessels and floating equipment and 9,600 employees, including associates.

The shares of the company are listed on Euronext in Amsterdam. The market value at the end of 2019 amounted to approximately € 3.1 billion.

Revenues for 2019 amounted to € 2,645 million (2018: € 2,570 million). Net income for 2019 amounted to € 74.9 million (2018: a loss of € 435.9 million). At the end of 2019 the order book of the company amounted to € 4.7 billion compared to € 4.3 billion at the end of 2018.

HAL has had an ownership interest in Boskalis since 1989.

For additional information on Boskalis please refer to the company's annual report and its website www.boskalis.com.

SBM Offshore N.V. (16.8%) provides floating production solutions to the offshore energy industry. The company's main activities are the design, supply, installation, operation and the life extension of floating production solutions for the offshore energy industry. The company has approximately 4,450 employees. Its shares are listed on Euronext in Amsterdam. The market value at the end of 2019 amounted to approximately € 3.3 billion.

Revenues for 2019 amounted to $ 2,171 million compared with $ 1,703 million for 2018. The net income for 2019 amounted to $ 235 million compared to $ 301 million for 2018. At the end of 2019 the order backlog of the company amounted to $ 20.7 billion compared to $ 14.8 billion at the end of 2018.

HAL has had an ownership interest in SBM Offshore since 2012.

For additional information on SBM Offshore please refer to the company's annual report and its website www.sbmoffshore.com.

Real estate

The real estate assets of HAL are located in the Seattle metropolitan area (United States of America) and the Netherlands.

HAL has a real estate operation in Seattle (8 employees) that manages a real estate portfolio. This portfolio includes a 57.5% ownership in a fully leased office property in Seattle (129,000 net rentable square feet, 12,000 m2) and ownership interests in six joint ventures for the development and rental of 1,767 apartments in the Seattle metropolitan area. Two projects (438 apartments) were completed at the end of 2019 and are 97% leased. A third project of 492 apartments is partially completed. A total of 165 units were delivered at the end of 2019 of which 72% were leased. The other projects will be completed during the period 2020-2022. The total estimated cost of the six apartment projects is $ 555 million (€ 494 million) and

the estimated HAL equity commitment is $ 158 million (€ 141 million) of which the remaining commitment at the end of 2019 is $ 51 million (€ 45 million).

In addition, in June 2018, HAL entered into a joint venture agreement and purchased 3.2 acres (13,000 m2) of environmentally contaminated land in Seattle in order to remediate the site and then develop 552 apartments. HAL's equity commitment (excluding the construction phase) is $ 6 million (€ 5 million).

At the end of 2019, the book value of the US real estate portfolio amounted to $ 108 million (€ 96 million) against an estimated market value of $ 177 million (€ 157 million). For additional information on HAL's real estate portfolio in the United States please refer to www.halrealestate.com.

In the Netherlands, HAL has a 90% interest in a company that acquired in August 2019 the retail centers De Aarhof (9,723 m2) in Alphen aan de Rijn and City Passage (7,763 m2) in Veldhoven. The intention is to redevelop these properties in order to add residential units and upgrade the retail space. The book value of these assets at the end of 2019 amounted to € 34 million.

Liquid portfolio

The corporate liquid portfolio decreased in 2019 by € 579 million to € 1,376 million. This decrease is primarily due to the Formica acquisition, payment of the 2018 cash dividend and the increase of the ownership interest in Boskalis, partially offset by dividends received and repayments of shareholder loans. On December 31, 2019, the liquid portfolio consisted for 89% (2018: 89%) of fixed income instruments and cash balances amounting to € 1,224 million (2018: € 1,736 million), and for 11% (2018: 11%) of equities, for an amount of € 152 million (2018: € 219 million). The fixed income instruments and cash balances provided a return of negative 0.1% (2018: negative 0.3%). This portfolio consisted for 94% of assets with a duration of less than two weeks. The equity portfolio provided a return of 1.0% (2018: negative 5.9%).

Upon completion of the sale of HAL's ownership interest in GrandVision N.V. the corporate liquid portfolio will substantially increase. In order to maintain flexibility for future investments, these proceeds will primarily be invested in short term investment grade fixed income instruments, bank deposits and highly liquid equity securities including equity index funds.

Results

This paragraph refers to the segmentation in the pro forma financial statements on page 129 where Vopak and Safilo are accounted for on an unconsolidated basis using the equity method.

Optical retail

Revenues for 2019 amounted to € 4,039 million (2018: € 3,721 million), an 8.5% increase. Excluding the effect of acquisitions and changes in currency exchange rates, revenues increased by 5.1% (2018: 3.9%). The 2019 same store sales increased by 4.1% (2018: 3.4%).

The 2019 operating income, before the effect of IFRS 5 (see below) amounted to € 475 million (2018: € 426 million). The 2019 operating income excluding the effect of IFRS 16, Leases, amounted to € 443 million. As a result of the announced sale on July 31, 2019, of HAL's ownership interest in GrandVision, this subsidiary is recorded in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Accordingly, amortization, impairment and depreciation of non-current assets ceased as of July 31, 2019. This had a positive effect on operating income of € 222 million and on profit before tax of € 266 million consisting of non-recognized amortization and depreciation of € 240 million and non-recognized impairments of € 26 million. The positive effect on HAL's net income (taking into account the share of the non-controlling interest) was € 193 million.

Unquoted companies

Revenues from the unquoted subsidiaries for 2019 amounted to € 2,965 million (2018: € 2,402 million), representing an increase of € 563 million (23.4%). Excluding the effect of acquisitions, divestitures and currency exchange differences, revenues from the unquoted subsidiaries increased by € 82 million (3.4%).

The operating income of the unquoted companies for 2019 amounted to € 233 million (2018: € 177 million). Acquisitions, divestitures and changes in currency exchange rates had a positive effect on operating income of € 40 million. The effect of IFRS 16, Leases, on operating income was not significant.

Quoted minority interests

Net income from quoted minority interests increased by € 290 million to € 235 million. This increase is primarily due to higher earnings from Vopak and Boskalis. Extraordinary gains at Vopak had a positive effect on net income of € 103 million whereas in 2018 extraordinary losses at Boskalis had a negative effect on net income of € 192 million.

Administrative organization, risk management systems and financial reporting

The administrative procedures, the risk management and internal control systems associated with the Company's strategy and its implementation, the financial reporting and compliance are all designed to provide a reasonable degree of assurance that significant risk factors are identified, their development is monitored and, where appropriate, action is taken on a timely basis. (Refer to the paragraph Risks on page 10.) The Supervisory Board is regularly informed about these matters.

The companies in which HAL has interests differ in industry, size, culture, geographical diversity and stage of development. Each company is subject to specific risks relating to strategy, operations, finance and (fiscal) legislation. HAL has therefore chosen not to institute a centralized management approach and not to develop a central risk management system. Each investee company has its own financial structure and is responsible for evaluating and managing its own risks as well as formulating and executing its own strategy with respect to issues such as sustainable development, compliance with law and regulations, safety, health and environment as well as cyber security (including regulations with respect to data protection). The companies generally have a supervisory board of which certain members are affiliated with HAL. However, the majority of the members is not affiliated with HAL. This corporate governance structure allows the operating companies to fully concentrate on developments which are relevant to them and to assess which risks to accept and which risks to avoid. Accordingly, in addition to risks associated with HAL's strategy and its implementation as described above, there are specific risk factors associated with each individual investee company. It is the responsibility of each investee company to evaluate these risks. These risks are therefore not managed by HAL.

HAL has a management reporting system to monitor its performance, as well as that of the companies where its ownership exceeds 50%, on a monthly basis. This system comprises a set of tools including portfolio analysis, budgeting and the reporting of actual as well as projected results, balance sheet and cash flow information and operational performance indices. In addition, management of the majority-owned companies provide internal letters of representation with respect to the half-year and year-end financial statements. They also report on fraud and irregularities on a semi-annual basis.

HAL's objective is, in the context of the inherent limitations of the decentralized management approach described above, that its internal and external financial reporting is complete, accurate, valid and timely. Financial reporting risk can be defined as any event that impedes HAL to achieve its financial reporting objectives. Although HAL is aware that no risk management and internal control system can provide absolute assurance that its objectives will be achieved or that errors, losses, fraud or

the violation of laws and regulations, human errors and mistakes will be prevented, the Company aims to further improve its risk management and internal control systems. In this context the risk management and internal control systems with respect to financial reporting were again reviewed during 2019. For the most important financial processes (financial reporting and consolidation, information technology, treasury, taxation and entity level controls), risks were identified as well as the control measures designed to mitigate these risks. These controls were also tested in order to conclude on their operating effectiveness during the year. The risk management review did not cover the key financial processes of HAL's investee companies for the reasons described above. The risk management and internal control systems, were discussed with the Supervisory Board.

The Executive Board has adopted a code of conduct and whistleblower rules (lastly revised in 2018) for the employees of HAL Holding N.V., HAL Investments B.V. and HAL Real Estate Inc. The purpose of this code of conduct is to state HAL's policies on ethics, integrity, compliance with the law, employment and business conduct. With respect to compliance with laws, it is HAL's policy to comply with all applicable laws, including, but not limited to, those with respect to employment, anti-discrimination, health, antitrust, securities, fraud, corruption and bribery. No employee, including members of the Executive Board of HAL Holding N.V., has authority to violate any law or to direct another employee or any other person to violate any law on behalf of HAL. With respect to employment it is HAL's policy to maintain a working environment in which each individual is treated with respect and to ensure equal employment opportunity without discrimination or harassment on the basis of race, color, national origin, religion, sex, age or disability. In this context it should be noted that HAL holds personal information with respect to employment. This information is kept for employment-related purposes only. Personal information is released outside HAL only with the permission of the employee. Employees may access and review their own personal information. The code of conduct also covers

subjects such as conflicts of interest, use of e-mail, internet and social media, bribes, gifts, business courtesy, confidential information and securities transactions. The employees, including the members of the Executive Board, confirm on an annual basis that they have complied with the code of conduct. In addition, the understanding by the employees of the code of conduct is tested on an annual basis. The whistleblower rules offer the opportunity for employees to report suspected irregularities. During 2019 no such irregularities were reported.

With respect to taxation, HAL is committed to comply with all tax laws and regulations, including compliance with country by country tax reporting, in all jurisdictions where it is active. A tax strategy was adopted which provides a framework of how to operate the tax function and how risks related to taxation are managed. It also describes the various roles, responsibilities and procedures, including a quarterly reporting of the majority owned investee companies of their tax position and (potential) tax risks. These tax risks are managed by the respective investee companies and not by HAL. The tax risks of the controlled minority interests Vopak and Safilo as well as other minority interests are also not managed by HAL. In the Netherlands, HAL Investments B.V. concluded a compliance agreement with the tax authorities in the context of the "Horizontal Supervision" model. This model is based on mutual trust, understanding and transparency. The compliance agreement ensures that the tax authorities receive current and factual information about the Company's tax strategy and control framework including the tax aspects of business developments. On their part, the tax authorities are prepared to provide swift upfront assurance about certain tax matters.

Although HAL's ownership interest in Vopak and Safilo is below 50%, IFRS requires these associates to be consolidated in the consolidated financial statements as HAL is deemed to have control, as defined in IFRS 10, 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 associates, in the past neither operational nor strategic control was exercised. Moreover, Vopak and Safilo are, for example, not part of the above mentioned 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. HAL therefore continues to include the results of Vopak and Safilo in the segment Quoted minority interests. The Company has entered into Memoranda of Understanding with Vopak and Safilo with respect to confidentiality, the process of exchanging information and attendance rights to the audit committee meetings of Vopak and the Control, Risk and Sustainability Committee meetings of Safilo for an independent financial expert on behalf of HAL. This allows HAL to comply with IFRS and prepare consolidated financial statements which include the (audited) financial statements of Vopak and Safilo. However, HAL does not have access to the financial books and records, contracts and related information of Vopak and Safilo in order to independently verify that these financial statements are complete, valid and accurate.

Mr. M.F. Groot, chairman of the Executive Board of the Company, is a member of the Supervisory Board of Vopak and non-executive member of the Board of Safilo. Mr. J.N. van Wiechen, member of the Executive Board of the Company, is a member of the Supervisory Board of Koninklijke Boskalis Westminster N.V. The information obtained in these capacities cannot be used for the preparation of the consolidated financial statements of the Company in order to preserve confidentiality and to allow these quoted associates to operate independently from the Company. Accordingly, the risk management and internal control systems of HAL with respect to financial reporting risks are not designed and are not able to provide assurance that the information relating to quoted associates in the Company's consolidated financial statements does not contain material errors due to the inherent limitations described above. The assessment that the Company's consolidated financial statements do not contain material errors attributable to the financial statements of Vopak and/or Safilo, is based on the external audit of these companies and the involvement of the independent financial expert referred to above. Vopak and Safilo both have included a description of their risks and risk management system in their respective annual reports. These risks are neither monitored nor managed by HAL.

In view of the fact that consolidating Vopak and Safilo significantly affects the financial statements of the Company, supplemental financial information is provided where, consistent with the period before the effective date of IFRS 10, Vopak and Safilo are accounted for on an unconsolidated basis using the equity method.

Accordingly, based on the above and taking into account the inherent limitations referred to above, we are of the opinion that the risk management and internal control systems with respect to financial reporting of HAL Holding N.V. provide reasonable assurance that the financial reporting does not contain material inaccuracies and that these systems operated properly during 2019 and we declare that, to the best of our knowledge:

1°. the financial statements give a true and fair view of the assets, liabilities, financial position and profit for the year of the consolidated entities taken as a whole;

2°. the report of the Executive Board gives a true and fair view of the situation as of the statement of financial position date and the developments during the year of the entities included in the financial statements taken as a whole, and

3°. this report includes a description of the principal risks HAL Holding N.V. is facing.

Executive Board HAL Holding N.V.

M.F. Groot (Chairman)
A.A. van 't Hof
J.N. van Wiechen

March 26, 2020

Financial Statements
HAL Trust

Contents

24 Consolidated Statement of Financial Position
25 Consolidated Statement of Income
26 Consolidated Statement of Comprehensive Income
27 Consolidated Statement of Changes in Equity
28 Consolidated Statement of Cash Flows
29 Basis of preparation
Consolidation, 32
Foreign currencies, 33
Cash flow statement, 34
35 Notes to the Consolidated Financial Statements
1. Segmentation, 35
2. Exceptional items, 38
3. Discontinued operations and assets and liabilities held for sale, 40
4. Property, plant and equipment, 46
5. Investments properties, 48
6. Right-of-use assets and lease liabilities, 48
7. Intangible assets, 52
8. Acquisition, divestment and deconsolidation of subsidiaries, 54
9. Investments in associates and joint arrangements, 58
10. Derivatives and other financial assets, 63
11. Marketable securities and deposits, 65
12. Receivables, 65
13. Inventories, 66
14. Other current assets, 67
15. Cash and cash equivalents, 67
16. Share capital, 67
17. Other reserves, 68
18. Deferred taxes, 70
19. Pension benefits, 72
20. Provisions, 78
21. Debt and other financial liabilities, 80
22. Accrued expenses, 82
23. Revenues, 83
24. Income from marketable securities and deposits, 86
25. Share of results from associates and joint ventures, 87
26. Income from other financial assets, 87
27. Income from real estate activities, 87
28. Other income (net), 88

Employee expenses, 88
Other operating expenses, 89
Financial income and expense, 90
Income tax expense, 91
Earnings per Share, 92
Cash flows from operating activities, 93
Share-based compensation, 94
Impairment of non-financial, non-current assets, 96
Financial instruments, 101
Derivatives and hedge accounting, 105
Financial risk management, 106
Capital risk management, 114
Related-party transactions, 114
Capital and financial commitments, contingent liabilities, 115
Non-controlling interests, 116
Summarized financial information on joint ventures, 118
Events after the reporting period, 119

120 List of Principal subsidiaries and minority interests
121 Information relating to estimated value of the subsidiaries and minority interests of HAL Holding N.V.
123 Supplemental information
155 Financial Statements HAL Trust
156 Distribution of Dividends
157 Independent Auditor's Report

Consolidated Statement of Financial Position

HAL Trust

As of December 31

In millions of euro	Notes	2019	2018
Non-current assets
Property, plant and equipment	4	5,008.1	5,456.0
Right-of-use assets	6	892.8	-
Investment properties	5	34.0	-
Intangible assets	7	1,179.7	2,642.4
Investments in associates and joint arrangements	9	2,889.5	2,632.9
Derivatives and other financial assets	10	779.7	632.8
Pension benefits	19	40.5	68.8
Deferred tax assets	18	96.6	134.8
Total non-current assets		10,920.9	11,567.7
Current assets
Inventories	13	664.3	831.2
Receivables	12	857.7	895.9
Marketable securities and deposits	11	222.6	274.7
Derivatives and other financial assets	10	40.3	27.3
Other current assets	14	374.4	546.9
Cash and cash equivalents	15	1,558.6	2,276.5
Assets held for sale	3	5,118.6	55.7
Total current assets		8,836.5	4,908.2
Total assets		19,757.4	16,475.9
Equity
Equity attributable to owners of parent		8,012.3	7,512.2
Non-controlling interest	43	2,536.3	2,397.8
Total equity		10,548.6	9,910.0
Non-current liabilities
Deferred tax liabilities	18	386.5	439.4
Pension benefits	19	123.5	207.5
Derivatives	38	7.1	32.7
Provisions	20	105.2	83.4
Contract liabilities	23	13.0	8.2
Lease liabilities	6	849.5	-
Debt and other financial liabilities	21	2,130.5	2,681.0
Total non-current liabilities		3,615.3	3,452.2
Current liabilities
Provisions	20	49.9	68.7
Contract liabilities	23	70.1	172.0
Accrued expenses	22	492.5	746.0
Income tax payable		57.5	127.4
Accounts payable		771.9	861.0
Derivatives	38	39.7	22.4
Lease liabilities	6	106.3	-
Debt and other financial liabilities	21	726.0	1,079.3
Liabilities related to assets held for sale	3	3,279.6	36.9
Total current liabilities		5,593.5	3,113.7
Total equity and liabilities		19,757.4	16,475.9

Consolidated Statement of Income

HAL Trust

For the year ended December 31

In millions of euro	Notes	2019	2018
Revenues	23	5,159.9	4,632.5
Income from marketable securities and deposits	24	5.5	(7.7)
Share of results from associates and joint ventures	25	193.5	(41.8)
Income from other financial assets	26	20.3	14.9
Income from real estate activities	27	(2.5)	10.2
Other income (net)	28	268.5	2.7
Total income		5,645.2	4,610.8
Usage of raw materials, consumables and other inventory		1,619.7	1,428.1
Employee expenses	29	1,384.6	1,173.4
Depreciation and impairment of property, plant, equipment and investment properties	4, 5	431.7	379.3
Depreciation and impairment of right-of-use assets	6	110.7	-
Amortization and impairment of intangible assets	7	132.7	78.0
Other operating expenses	30	1,132.3	1,138.9
Total expenses		4,811.7	4,197.7
Operating profit		833.5	413.1
Financial expense	31	(178.1)	(231.8)
Other financial income	31	41.5	50.1
Profit before income tax		696.9	231.4
Income tax expense	32	(95.1)	(81.4)
Net profit from continuing operations		601.8	150.0
Net profit from discontinued operations	3	460.8	226.0
Net profit		1,062.6	376.0
Attributable to:
Owners of parent		665.5	155.3
Non-controlling interest		397.1	220.7
		1,062.6	376.0
Average number of Shares outstanding (in thousands)	33	82,574	80,885
Earnings per Share for profit attributable to owners of parent during the period (in euro)
- basic and diluted from continuing operations		4.06	(0.02)
- basic and diluted from discontinued operations		4.00	1.90
- basic and diluted		8.06	1.88
Dividend per Share(in euro)		5.80*	5.30

Proposed

The notes on pages 35 to 154 form an integral part of the consolidated financial statements.

Consolidated Statement of Comprehensive Income

For the year ended December 31

HAL Trust

In millions of euro	Notes	2019	2018
Net profit		1,062.6	376.0
Other comprehensive income (OCI)
Items that will not be reclassified to statement of income in subsequent periods
Change in fair value of financial assets through OCI		130.3	(14.5)
Income tax on change in fair value	32	-	(2.9)
Actuarial results on pension benefits obligations	19	(41.6)	13.0
Income tax on actuarial results	32	9.4	(3.4)
Associates and joint ventures - share of OCI, net of tax	9	(2.6)	(1.6)
		95.5	(9.4)
Items that may be reclassified to statement of income in subsequent periods
Change in fair value of financial assets through OCI		2.8	(7.1)
Income tax on change in fair value	32	2.4	0.3
Effective portion of hedging instruments		(15.1)	21.7
Income tax related to hedging instruments	32	3.5	(9.0)
Translation of foreign subsidiaries, net of hedges		63.6	54.9
Income tax on translation and related hedges	32	-	0.9
Other movements		1.1	(0.5)
Associates and joint ventures - share of OCI, net of tax	9	(17.7)	4.4
		40.6	65.6
Other comprehensive income for the year, net of tax*		136.1	56.2
Total comprehensive income for the year, net of tax		1,198.7	432.2
Total comprehensive income for the year, attributable to:
- Owners of parent		792.3	162.7
- Non-controlling interest		406.4	269.5
		1,198.7	432.2

Of which € 126.8 million attributable to owners of parent (2018: € 7.4 million).

The notes on pages 35 to 154 form an integral part of the consolidated financial statements.

Consolidated Statement of Changes in Equity

HAL Trust

In millions of euro	Attributable to owners of parent				Non-controlling interest	Total equity
	Share capital	Retained earnings	Other reserves	Total
Balance on January 1, 2018	1.6	7,460.7	139.0	7,601.3	2,155.1	9,756.4
Net profit for the year	-	155.3	-	155.3	220.7	376.0
Other comprehensive income for the year	-	(2.7)	10.1	7.4	48.8	56.2
Total comprehensive income for the year	-	152.6	10.1	162.7	269.5	432.2
Capital increase/(decrease)	-	13.1	-	13.1	61.0	74.1
Effect of acquisitions and disposals	-	(22.1)	-	(22.1)	55.5	33.4
Dividend paid to minority shareholders	-	-	-	-	(144.6)	(144.6)
Share-based compensation	-	2.9	-	2.9	0.9	3.8
Treasury shares	-	2.4	-	2.4	-	2.4
Dividend paid	-	(248.1)	-	(248.1)	-	(248.1)
Reclassification*	-	108.3	(108.3)	-	-	-
Other movements	-	-	-	-	0.4	0.4
Transactions with the owners of parent recognized directly in equity	-	(143.5)	(108.3)	(251.8)	(26.8)	(278.6)
Balance on December 31, 2018	1.6	7,469.8	40.8	7,512.2	2,397.8	9,910.0
Changes in accounting policy (IFRS 16)	-	(95.0)	-	(95.0)	(71.4)	(166.4)
Balance on January 1, 2019	1.6	7,374.8	40.8	7,417.2	2,326.4	9,743.6
Net profit for the year	-	665.5	-	665.5	397.1	1,062.6
Other comprehensive income for the year	-	(22.5)	149.3	126.8	9.3	136.1
Total comprehensive income for the year	-	643.0	149.3	792.3	406.4	1,198.7
Capital increase/(decrease)	-	-	-	-	(6.3)	(6.3)
Effect of acquisitions and disposals	-	9.6	-	9.6	(43.4)	(33.8)
Dividend paid to minority shareholders	-	-	-	-	(149.8)	(149.8)
Share-based compensation	-	7.6	-	7.6	3.4	11.0
Treasury shares	-	2.6	-	2.6	-	2.6
Dividend paid	0.1	(216.5)	-	(216.4)	-	(216.4)
Reclassification	-	16.3	(16.3)	-	-	-
Other movements	-	(0.6)	-	(0.6)	(0.4)	(1.0)
Transactions with the owners of parent recognized directly in equity	0.1	(181.0)	(16.3)	(197.2)	(196.5)	(393.7)
Balance on December 31, 2019	1.7	7,836.8	173.8	8,012.3	2,536.3	10,548.6

Reclassifications mainly related to realized results on the disposal of the shareholding in Chart Industries Inc.

The notes on pages 35 to 154 form an integral part of the consolidated financial statements.

Consolidated Statement of Cash Flows

For the year ended December 31

HAL Trust

In millions of euro	Notes	2019	2018
Cash flows from operating activities
Profit before taxes from continuing operations		696.9	231.4
Profit before taxes from discontinued operations		540.0	307.6
Dividend from associates and joint ventures	34	142.6	86.2
Changes in working capital	34	37.6	5.9
Adjustments for non-cash items		810.4	916.2
Cash generated from operating activities	34	2,227.5	1,547.3
Other financial income received		14.6	9.4
Finance cost paid, including effect of hedging		(121.1)	(135.2)
Income taxes paid		(238.8)	(214.8)
Net cash from operating activities		1,882.2	1,206.7
Cash flows from investing activities
Acquisition of associates, joint arrangements and subsidiaries, net of cash acquired	8	(1,126.1)	(399.7)
Proceeds from divestiture of associates, joint arrangements and subsidiaries		626.1	27.9
Proceeds from sale of/(acquisition of) other intangibles		(105.3)	(83.6)
Purchase of property, plant, equipment and investment properties	4	(952.8)	(854.0)
Proceeds from sale of property, plant, equipment and investment properties		27.0	49.7
Proceeds from/(acquisition of) other financial assets	10	(60.9)	150.5
Acquisition of marketable securities and deposits		(58.8)	(79.2)
Proceeds from marketable securities and deposits		116.4	358.5
Settlement of derivatives (net investments hedges)		(10.3)	(13.6)
Net cash from/(used in) investing activities		(1,544.7)	(843.5)
Cash flows from financing activities
Proceeds from debt and other financial liabilities		1,140.0	721.3
Repayment of debt and other financial liabilities		(1,258.6)	(553.4)
Payments on lease liabilities		(537.0)	-
Net proceeds from/(repayments of) short-term financing		157.2	(138.1)
Capital increase non-controlling interests		-	67.3
Other non-controlling interest transactions (including dividend paid)		(183.0)	(142.6)
Movement in treasury shares		2.6	2.4
Dividend paid		(216.4)	(248.1)
Net cash from/(used in) financing activities		(895.2)	(291.2)
Increase/(decrease) in cash and cash equivalents		(557.7)	72.0
Cash and cash equivalents at beginning of year		2,276.5	2,205.0
Effect of exchange rate changes and reclassifications		2.7	(0.5)
Cash and cash equivalents retranslated at beginning of year		2,279.2	2,204.5
Net increase/(decrease) in cash and cash equivalents		(557.7)	72.0
Cash and cash equivalents at end of period	15	1,721.5	2,276.5
Cash and cash equivalents included in assets held for sale		162.9	-
Cash as included on the consolidated statement of financial position		1,558.6	2,276.5

The notes on pages 35 to 154 form an integral part of the consolidated financial statements.

Basis of preparation

The consolidated financial statements presented are those of HAL Trust (the 'Trust'), a Bermuda trust formed in 1977, and its subsidiaries (the 'Group') 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's only asset was all outstanding shares of HAL Holding N.V. (the 'Company'), a Curaçao 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 on March 26, 2020, 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, mainly related to GrandVision (see below). These reclassifications had no effect on net income, shareholders' equity or earnings per Share.

On July 30, 2019, HAL signed an agreement to sell, subject to certain terms and conditions, its 76.72% ownership interest in the issued share capital of GrandVision to EssilorLuxottica. As of this date the assets and liabilities of GrandVision are classified as held for sale and recognition of depreciation, amortization and impairment of non-current assets of GrandVision has been discontinued. The net results related to GrandVision in both the current and prior period 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.

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 statement presentation and that require complex estimates or significant judgment are described in the following notes:

Deemed control over quoted minority interests – consolidation section;
Classifications of non-current assets as held for sale – note 3;
Useful life and residual value of property, plant and equipment – note 4;
Determination of lease terms and discount rates applied to lease contracts – note 6;
Valuation of intangible assets in acquisitions – note 8;
Allowance for inventory obsolescence – note 13;
Recognition of carry-forward losses and tax provisions – notes 18 and 32;
Assumptions pension benefits – note 19;
Estimated impairment of non-current assets – note 36.

Recent accounting developments

The significant 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, 2018, except as described below.

New and amended standards and interpretations adopted by the Company

The Company adopted IFRS 16, Leases, on the effective date January 1, 2019, using the modified retrospective transition approach. Under this approach comparative information was not restated and the cumulative effect of initially applying IFRS 16 was recorded as an adjustment to the opening balance of equity on January 1, 2019. The application of IFRS 16 had no cash impact on the Company. On transition to IFRS 16 the Company applied the following practical expedients, as allowed under the standard:

IFRS 16 was only applied to contracts that were previously identified as leases under IAS 17 and IFRIC 4;
Hindsight was applied to determine the lease term when the lease contract contained options to extend or terminate;
A single discount rate was applied to a portfolio of leases with reasonably similar characteristics;
Where applicable, provisions for onerous lease contracts recognized in the consolidated statement of financial position as of December 31, 2018, were included in the measurement of the right-of-use assets for these lease contracts on January 1, 2019.

The impact of transition at January 1, 2019, and the impact from adopting IFRS 16 on 2019 income were in line with the expectations reported in the 2018 annual report. The impact of implementation of IFRS 16 on the results from operations in 2019 was as follows:

Impact analysis - consolidated statement of income

Decrease results from associates	(4.9)
Decrease operating expenses	118.5
Increase depreciation expenses	(99.4)
Increase operating profit	14.2
Increase interest expenses	(26.5)
Decrease profit before income tax from continuing operations	(12.3)
Increase profit before income tax from discontinued operations	2.4
Total decrease profit before income tax	(9.9)

The impact of implementation of IFRS 16 on the consolidated statement of financial position on January 1, 2019 was as follows:

Impact analysis - consolidated statement of financial position

Right of Use assets	2,364
Lease liabilities	(2,332)
Other intangibles - key money*	(213)
Property, plant and equipment*	(50)
Deferred tax, net asset	49
Other balance sheet accounts*	16
Total equity impact, decrease	166

Reclassification

The application of IFRS 16 resulted in changes in presentation as follows: In the consolidated financial statements separate lines were added to reflect the right-of-use assets, the current and non-current lease liabilities, depreciation of right-of-use assets and interest expense related to lease liabilities (in note 31). Rental income related to operating subleases was recognized within revenues. In the consolidated statement of cash flows the repayments of principle and interest related to lease liabilities were included in a separate line item within cash flows from financing activities. Repayments of principle and interest received related to subleases were included within cash flows from financing activities.

The table below provides a reconciliation between the operating lease commitments disclosed in the 2018 annual report (note 39) and the opening position for lease liabilities presented in the 2019 consolidated statement of financial position.

Lease commitments reconciliation
Undiscounted operating lease commitments at December 31, 2018	2,750
Effect of discounting	(452)
Reclassification from financial lease liabilities	67
Lease extension options not considered under IAS 17	26
Exempted short-term and low-value lease contracts	(22)
Other effects	29
Lease liability recognized as at January 1, 2019	2,398

The main contributors to the consolidated lease liability as at January 1, 2019, were GrandVision (€ 1,364 million) and Vopak (€ 678 million). The weighted-average incremental borrowing rate applied to these portfolios was 2.3% and 3.6%, respectively. The lease liabilities of GrandVision were subsequently classified as liabilities related to assets held for sale.

Vopak measured the right-of-use assets for its largest land lease contracts at its carrying amount as if IFRS 16 had been applied since the commencement of the lease contracts. GrandVision applied a similar methodology to its property leases, making up the majority of its lease portfolio. The right-of-use assets of GrandVision were subsequently classified as assets held for sale.

IFRIC 23 was issued in 2017 and is effective for accounting periods beginning on or after January 1, 2019. The interpretation sets out how to determine the accounting tax positions when there is uncertainty over income tax treatments under IAS 12 Income Taxes. IFRIC 23 did not have a significant impact on the consolidated financial statements of the Company.

No other new or amended standards and interpretations had significant impact on the Company's consolidated financial statements.

New standards, amendments and interpretations issued but not yet effective

Amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures, were issued in 2019. The amendments clarify the impact of interest rate benchmark reform on hedge accounting and related disclosures. These amendments are effective for accounting periods beginning on or after January 1, 2020, and will not be early adopted by the Company. The application of these amendments is not expected to have a significant effect on the financial position and financial results of the Company.

In 2018, amendments to IFRS 3, Business Combinations, were issued. The amendments clarify whether an acquired set of activities and assets is a business or not, which is a key consideration in determining whether a transaction is accounted for as a business combination or as an asset acquisition. These amendments apply to transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020, and will

not be early adopted by the Company. The impact of application of these amendments is expected to be limited and is dependent on the characteristics of future transactions.

The amendments to IAS 1, Presentation of Financial Statements, and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to align the definition of materiality throughout IFRS standards, were issued in 2018 and are effective for accounting periods beginning on or after January 1, 2020. The application of these amendments is not expected to have a significant effect on the financial position and financial results of the Company. The Company will not early adopt these amendments.

There are no other new standards, amendments to existing standards or new IFRIC interpretations that are not yet effective that are expected to have a material impact on the Company.

Supplemental information

As a result of the 2014 implementation of IFRS 10, Consolidated Financial Statements, HAL Trust consolidates the financial information of Koninklijke Vopak N.V. ('Vopak') and Safilo Group S.p.A. ('Safilo'). Supplemental information has been included on pages 123 through 154 whereby Vopak and Safilo are accounted for on an unconsolidated basis using the equity method as applied in the years until 2014. The inclusion of this information is considered appropriate and useful as the control model of the Company with respect to Vopak and Safilo is materially different than the model with respect to the other consolidated entities, where the Company's ownership interest exceeds 50%, and the effect of the inclusion of Vopak and Safilo in the consolidation has a significant effect on the financial statements. This information also preserves comparability with consolidated financial statements prior to 2014.

Consolidation

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 over entities where the Company's 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's 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 – 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 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 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’s ownership interest does not exceed 50%.

Although the Company’s 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’s 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’s principal subsidiaries and minority-owned entities is set out on page 120.

Foreign currencies

Functional and presentation currency

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in euro, which is the Company’s 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’s subsidiaries

The results and financial position of all the Company’s subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) 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;

(ii) 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;
(iii) 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.

Cash flow statement

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 included in the consolidated statement of cash flows and are further detailed in note 3.

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.

Notes to the Consolidated Financial Statements

(All amounts in millions of euro, unless otherwise stated)

1. Segmentation

The Company's reportable segments are defined as follows:

Optical retail (discontinued operation)
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.

Optical retail relates to GrandVision, the Company's majority-owned retail company that derives its revenues from the sale of optical retail products to consumers. The segment optical retail is presented as disposal group held for sale and discontinued operation in these financial statements, refer to note 3 for details.

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 building materials, office furniture, staffing, shipping, orthopedic devices, media and other activities.

The quoted minority interests segment comprises both the Company's consolidated and unconsolidated minority interests in publicly traded entities.

The real estate segment relates to the development and rental of retail centers, multi-family properties and office buildings.

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) can be detailed as follows:

	2019	2018
Optical retail	697.5	426.2
Unquoted	232.5	176.5
Quoted minority interests	741.6	354.7
Real estate	(3.5)	9.4
Liquid portfolio	2.3	(7.7)
Total operating income	1,670.4	959.1
Reconciling items:
- Discontinued operations (optical retail)	(697.5)	(426.2)
- Amortization and impairment of intangibles	(132.7)	(78.0)
- Other	(6.7)	(41.8)
Operating result as per the consolidated statement of income	833.5	413.1
Financial expense, net	(136.6)	(181.7)
Profit before tax as per the consolidated statement of income	696.9	231.4

The "other" reconciling items represent mostly corporate overhead and exceptional and non-recurring items (excluding those of Vopak, Safilo and Boskalis).

The segment quoted minority interests includes the operating income (after exceptional items) of Vopak and Safilo, the Company's share in the net income of Boskalis and the dividend income from SBM Offshore.

The composition of depreciation and impairment expense on property, plant and equipment, right-of-use assets and investment properties by segment is as follows:

	2019	2018
Unquoted	166.4	88.6
Quoted minority interests	374.0	290.2
Real estate	0.5	0.3
Reconciling items	1.5	0.2
Total continuing operations	542.4	379.3
Discontinued operations (optical retail)	275.1	124.2
	817.5	503.5

The reconciling items represent the corporate depreciation expense.

The composition of revenues by segment is as follows:

	2019	2018
Unquoted	2,965.4	2,401.8
Quoted minority interests	2,194.5	2,230.7
Total continuing operations	5,159.9	4,632.5
Discontinued operations (optical retail)	4,039.3	3,721.0
	9,199.2	8,353.5

The composition of assets by segment is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Optical retail (2019: assets held for sale)	4,959.2	3,166.9
Unquoted	4,138.5	2,956.2
Quoted minority interests	9,066.0	8,191.7
Real estate	132.0	101.2
Liquid portfolio	1,376.0	1,955.4
Reconciling items	85.7	104.5
	19,757.4	16,475.9

The reconciling items represent corporate assets, including deferred tax, loans and pension benefit assets.

The composition of investments in associates and joint arrangements by segment is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Optical retail (2019: assets held for sale)	-	1.1
Unquoted	318.6	330.7
Quoted minority interests	2,474.9	2,201.3
Real estate	96.0	99.8
	2,889.5	2,632.9

The composition of capital expenditures by segment is as follows:

	2019	2018
Unquoted	281.9	240.7
Quoted minority interests	687.5	570.2
Real estate	34.5	-
Reconciling items	-	0.4
Total continuing operations	1,003.9	811.3
Discontinued operations (optical retail)	297.5	214.7
	1,301.4	1,026.0

Capital expenditures consist of additions to property, plant and equipment, investment properties and intangible assets.

The composition of liabilities by segment is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Optical retail (2019: liabilities related to assets held for sale)	3,276.1	1,758.8
Unquoted	2,221.2	1,538.0
Quoted minority interests	3,675.6	3,246.4
Real estate	1.6	-
Liquid portfolio	0.4	0.6
Reconciling items	33.9	22.1
	9,208.8	6,565.9

The reconciling items represent corporate liabilities, including earn-out liabilities and deferred tax.

The composition of revenues by geographical area is as follows:

	2019	2018
Europe	3,493.5	3,346.6
USA & Canada	804.6	733.4
Asia	572.5	428.9
Other	289.3	123.6
Total continuing operations	5,159.9	4,632.5
Discontinued operations (optical retail)	4,039.3	3,721.0
	9,199.2	8,353.5

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:

	Dec. 31, 2019	Dec. 31, 2018
Europe	5,668.1	7,387.2
USA & Canada	998.1	821.5
Asia	2,152.0	1,539.2
Other	1,185.9	983.4
	10,004.1	10,731.3

2. Exceptional items

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:

	Notes	2019	2018
Gains on assets held for sale Vopak	3, 28	243.1	-
Impairment related to Safilo Group S.p.A.	36	(60.9)	-
Restructuring*		(33.7)	(8.4)
Gain on sale of Intersafe	3, 28	40.3	-
Impairment Vopak	36	(17.2)	-
Loss on disposal of Solstice by Safilo		(13.6)	-
Impairment of goodwill on continuing operations	36	(12.0)	-
Other impairments, net of reversal, on continuing operations	36	(6.2)	(8.1)
Acquisition-related expenses Broadview Holding B.V.		(5.3)	(8.2)
Impairment at Royal Boskalis Westminster N.V.		-	(191.7)
Settlement Dutch defined benefit plan Vopak		-	19.1
Exceptional items joint ventures Vopak		(14.7)	-
Other		(30.4)	(10.5)
Effect on operating profit		89.4	(207.8)
Recycling of unrealized currency translation losses (deconsolidation Vopak Venezuela)	8	-	(50.2)
Other		1.8	(0.4)
Effect on profit before income tax		91.2	(258.4)
Impairment deferred taxes related to Safilo Group S.p.A.	32	(26.1)	-
Release of deferred taxes due to change in the tax rate		-	20.8
Income tax		32.3	4.5
Effect on net profit from continuing operations		97.4	(233.1)
Exceptional items related to discontinued operations	3	(76.6)	(57.5)
Effect on net profit		20.8	(290.6)

Restructuring expenses mainly relate to Safilo

The exceptional items are disclosed separately in the notes when relevant in order to increase transparency. In addition to the above, the 2019 results were positively impacted due to the application of IFRS 5 with respect to the intended sale of the ownership interest in GrandVision N.V. In accordance with this standard, recognition of amortization, depreciation and impairments of non-current assets of this subsidiary was discontinued from the date of classification as held for sale (July 31, 2019). The effect on net profit was € 265.5 million (HAL's share € 193 million). Reference is made to note 3 for further details on the intended transaction.

The low tax rate in 2019 is mainly due to the fact that the capital gains on divestitures were not taxable, due to the application of the participation exemption in the Netherlands. The low tax effect of the 2018 exceptional items was due to non-deductible impairment charges and the recycling of the unrealized currency translation results with respect to Vopak Venezuela, as well as the fact that HAL's share in the extraordinary charges of Boskalis is after tax.

3. Discontinued operations and assets and liabilities 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. Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is updated 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's 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.

Critical accounting estimates and judgments

At the end of the reporting period, management has to assess if the value of the assets will be recovered principally through a divestment transaction rather than through continued use and what the likelihood is that an asset will be divested within a year. This assessment is based on the facts and circumstances at that date. These facts and circumstances may change and could result in a situation where assets are divested that were not classified as held for sale at year-end. When classifying non-current assets as held for sale, management makes estimates of their fair value (sales price and expected costs of disposal). Depending on the nature of the non-current assets, the estimated fair value may be associated with uncertainty and possibly adjusted subsequently. Measurement of the fair value of non-current assets is generally categorized as level 3 in the fair value hierarchy as measurement is not based on observable market data.

On July 30, 2019, an agreement was signed, subject to certain terms and conditions, to sell the 76.72% ownership interest in the issued share capital of GrandVision N.V. to EssilorLuxottica. As of that date, the assets and liabilities of GrandVision are classified as held for sale and recognition of depreciation, amortization and impairment of non-current assets of GrandVision in the books of the Company has been discontinued. The effect of this classification is set out in this note. The net results related to GrandVision in both the current and prior period are presented in the statement of income as profit from discontinued operations as GrandVision represents a separate major line of business (it represents the entire segment optical retail). Detailed financial information relating to GrandVision is set out below.

In addition to GrandVision, at the reporting date the Company held € 10.0 million in property, plant and equipment classified as held for sale. Also, Vopak classified its Algeciras terminal as held for sale (assets € 143.9 million, liabilities € 18.0 million), which was divested in January 2020 and Safilo classified two buildings as held for sale (€ 5.5 million).

The composition of total assets held for sale and related liabilities is as follows.

	Dec. 31, 2019	Dec. 31, 2018
Property, plant and equipment	722.7	5.1
Right-of-use assets	1,614.8	-
Intangible assets	1,792.4	3.0
Investments in associates and joint ventures	1.0	-
Other non-current assets	146.1	-
Current assets	841.6	47.6
Total assets held for sale	5,118.6	55.7
Non-current liabilities	1,675.0	0.2
Current liabilities	1,604.6	36.7
Total liabilities related to assets held for sale	3,279.6	36.9
Total net assets held for sale	1,839.0	18.8

The assets and related liabilities held for sale at December 31, 2018, mainly related to Intersafe which was sold in 2019, for details reference is made to note 8.

Details of the announced sale of GrandVision N.V.

On July 30, 2019, HAL agreed to sell, subject to certain terms and conditions, its 76.72% ownership interest in the issued share capital of GrandVision N.V. to EssilorLuxottica at a price of € 28.00 per share. This price is to be increased by 1.5% to € 28.42 if closing does not occur before July 30, 2020. In addition, HAL will receive dividend until closing whereby GrandVision intends to continue its existing dividend policy. The agreement provides for customary adjustments of the purchase price in case of leakage. Leakage includes dividend payments in excess of the lower of € 0.35 per share for 2019 and € 0.37 per share for 2020 or 40% of the net results of GrandVision for each of these respective years. Completion of the sale will be subject to, among other matters, approval from various anti-trust authorities and other third parties, completion of employee consultation procedures and performance of the parties' obligations under the transaction agreements. It is expected that closing will occur approximately 12 to 24 months after July 31, 2019, due to the large number of required merger control filings with relevant authorities. HAL has irrevocably committed to sell its shareholding in GrandVision to EssilorLuxottica. On termination of the block-trade agreement by HAL due to either i) a breach by EssilorLuxottica of its representations and warranties, ii) a material breach by EssilorLuxottica of its obligations under the block-trade agreement which is not or cannot be cured by July 31, 2021, or iii) required anti-trust approvals not having been obtained by July 31, 2021, (other than as a result of breach of obligations by HAL under the block-trade agreement or by GrandVision under the support agreement), EssilorLuxottica will pay a € 400 million termination compensation to HAL. In the event HAL receives the termination compensation, HAL has agreed with GrandVision to make a share premium contribution to GrandVision for the same amount taking into account income tax, if any.

The transaction price results in a valuation of HAL's 76.72% ownership interest in the issued share capital of GrandVision of € 5.5 billion. As of December 31, 2019, the book value of HAL's ownership interest in GrandVision amounted to approximately € 1.225 million.

The 2019 results of GrandVision included, net of tax, € (95.3) million in exceptional items, of which € (76.6) million was recognized in these financial statements due to application of IFRS 5. The full exceptional items of GrandVision related mainly to an impairment of goodwill on the activities of GrandVision in the United States (€ 50.7 million) and impairments of software (€ 21.2 million).

Goodwill impairment

During the reporting period there were triggering events for impairment for GrandVision’s activities in the United States, following the delayed profitability of the business. The company performed a goodwill impairment test on this cash-generating unit and as a result an impairment of € 50.7 million was recognized, also in these consolidated financial statements as the impairment was recognized before July 30, 2019. The recoverable amount was determined using the fair value less cost of disposal method. The impairment test was performed using cash flow projections for a period of eight years, based on the approved five year financial plan. Planned expansion of the store base was only included in the first four years, using a 2% revenue growth beyond year five and, for calculation of the terminal value, into perpetuity. The average revenue growth rate in the eight-year period was 10.9%. The projected cash flows and terminal value were discounted taking into account an 8.47% post-tax discount rate that excludes cost of leasing and reflects the country-specific risks relating to the optical retail industry. The discounted cash flows include the net repayment of lease liabilities and receivables to incorporate cash outflows in respect to occupancy costs. The carrying amount of the cash-generating unit includes lease liabilities under the assumption that the lease liabilities would be transferred to the buyer, should the business be sold. For the discounted cash flow method, the most sensitive key assumptions relate to revenue growth and the discount rate. For the discounted cash flow method used for the cash-generating unit GrandVision United States, a 1% decrease in revenue growth of existing stores in the next five years and a 1% increase in the discount rate would result in an additional impairment of € 27.6 million (USD 30.9 million) and € 18.3 million (USD 20.5 million), respectively. A 1% increase in revenue growth of existing stores in the next five years and a 1% decrease in the discount rate would result in a decrease in impairment of € 28.5 million (USD 32.0 million) and € 25.6 million (USD 28.7 million), respectively.

Software impairment

In 2019, GrandVision recognized software impairments for an amount of € 21.2 million following changes in the strategy related to the implementation of global e-commerce platforms and ERP system. These impairments were not recognized in these consolidated financial statements, in accordance with IFRS 5, as they occurred after the classification of GrandVision as held for sale.

For informational purposes, the pro forma consolidated income statement of the Company, would GrandVision not have been classified as a discontinued operation, is presented on the following page.

In millions of euro	2019	Presentation*	Result impact**	2019 (adjusted)	2018 (adjusted)***
Revenues	5,159.9	4,039.3	-	9,199.2	8,353.5
Income from marketable securities and deposits	5.5	-	-	5.5	(7.7)
Share of results from associates and joint ventures	193.5	(0.7)	-	192.8	(42.5)
Income from other financial assets	20.3	-	-	20.3	14.9
Income from real estate activities	(2.5)	-	-	(2.5)	10.2
Other income	268.5	-	-	268.5	2.7
Total income	5,645.2	4,038.6	-	9,683.8	8,331.1
Usage of raw materials, consumables and other inventory	(1,619.7)	(1,029.7)	-	(2,649.4)	(2,357.7)
Employee expenses	(1,384.6)	(1,398.4)	-	(2,783.0)	(2,447.7)
Depreciation and impairment of property, plant, equipment and investment properties	(431.7)	(73.5)	(54.9)	(560.1)	(503.5)
Depreciation and impairment of right-of-use assets	(110.7)	(201.6)	(158.9)	(471.2)	-
Amortization and impairment of intangible assets	(132.7)	(91.6)	(51.7)	(276.0)	(191.0)
Other operating expenses	(1,132.3)	(654.4)	-	(1,786.7)	(2,092.1)
Total expenses	(4,811.7)	(3,449.2)	(265.5)	(8,526.4)	(7,592.0)
Operating profit	833.5	589.4	(265.5)	1,157.4	739.1
Financial expense	(178.1)	(53.1)	-	(231.2)	(252.0)
Other financial income	41.5	3.7	-	45.2	51.9
Profit before income tax	696.9	540.0	(265.5)	971.4	539.0
Income tax expense	(95.1)	(79.2)	-	(174.3)	(163.0)
Net profit from continuing operations	601.8	460.8	(265.5)	797.1	376.0
Net profit from discontinued operations	460.8	(460.8)	-	-	-
Total net profit	1,062.6	0.0	(265.5)	797.1	376.0
Net profit attributable to owners of parent	665.5	-	(193.0)	472.5	155.3
Net profit attributable to non-controlling interest	397.1	-	(72.5)	324.6	220.7
Total net profit	1,062.6	-	(265.5)	797.1	376.0
Comprehensive income attributable to owners of parent	792.3	-	(193.0)	599.3	162.7
Comprehensive income attributable to non-controlling interest	406.4	-	(72.5)	333.9	269.5
Total comprehensive income	1,198.7	-	(265.5)	933.2	432.2

Reversal of the net presentation of the results of GrandVision N.V. (as required by IFRS 5)
** Reversal of the discontinuance of recognition of depreciation, amortization and impairments on non-current assets of GrandVision N.V. (as required by IFRS 5)
***Presentation in line with the 2018 HAL annual report

Details of the financial performance of GrandVision, standalone, for the years presented are provided below. These are the financial statements as reported by these companies including purchase price accounting adjustments made by the Company, intercompany eliminations and corporate goodwill.

	2019	IFRS 5 impact*	2019 (adjusted)	2018
Revenues	4,039.3	-	4,039.3	3,721.0
Depreciation, amortization and impairment	(366.7)	(265.5)	(632.2)	(225.9)
Other expenses	(3,132.6)	-	(3,132.6)	(3,176.2)
Profit before income tax	540.0	(265.5)	274.5	318.9
Income tax expense	(79.2)	-	(79.2)	(81.6)
Impairment of corporate goodwill	-	-	-	(11.3)
Profit after income tax from discontinued operation	460.8	(265.5)	195.3	226.0
Other comprehensive income	(7.9)	-	(7.9)	(7.9)
Total comprehensive income (CI)	452.9	(265.5)	187.4	218.1
Net profit attributable to owners of parent	330.0	(193.0)	137.0	157.3
Net profit attributable to non-controlling interest	130.8	(72.5)	58.3	68.7
CI attributable to owners of parent	323.9	(193.0)	130.9	155.4
CI attributable to non-controlling interest	129.0	(72.5)	56.5	62.7

From July 30, 2019, onwards no amortization, depreciation or impairment was recognized on the non-current assets of GrandVision

The cash flows presented in the consolidated statement of cash flows include the full-year cash flows of GrandVision. The cash flows from GrandVision can be specified as follows:

	2019	2018
Cash inflow from operating activities	858.4	438.3
Net cash outflow from investing activities	(361.9)	(239.5)
Net cash outflow from financing activities	(464.5)	(214.9)
Exchange gains/ (losses) on cash and cash equivalents	(7.4)	(10.3)
Net increase/ (decrease) in cash generated by the discontinued operation	24.6	(26.4)
Dividend paid by GrandVision to GrandVision’s non-controlling interest	16.7	16.0

The following assets and liabilities were classified as a disposal group, held for sale, in relation to GrandVision N.V. as at December 31, 2019.

	Dec. 31, 2019	Dec. 31, 2018*
Non-current assets
Property, plant and equipment	587.6	516.8
Right of use assets	1,601.8	-
Investments in associates and joint arrangements	1.0	1.1
Intangible assets	1,786.5	1,789.2
Deferred tax assets	62.1	46.7
Other non-current assets	83.5	49.1
Total non-current assets	4,122.5	2,402.9
Current assets
Inventories	338.5	313.2
Receivables	149.2	140.3
Other financial assets	1.6	3.5
Other current assets	184.8	168.7
Cash and cash equivalents	162.9	138.3
Total current assets	837.0	764.0
Total assets	4,959.5	3,166.9
Non-current liabilities
Deferred tax liabilities	43.2	71.5
Pension benefits	136.1	96.2
Provisions	18.2	17.0
Contract liabilities	8.6	7.8
Non-current lease liabilities	1,037.3	-
Long-term debt and other financial liabilities	407.5	369.2
Other non-current liabilities	8.0	2.6
Total non-current liabilities	1,658.9	564.3
Current liabilities
Provisions	24.0	16.8
Contract liabilities	90.0	77.7
Accrued expenses	345.1	330.1
Income tax payable	40.0	39.7
Accounts payable	205.0	178.3
Current lease liabilities	373.3	-
Short term debt and other financial liabilities	519.2	534.9
Other current liabilities	6.1	4.1
Total current liabilities	1,602.7	1,181.6
Total liabilities	3,261.6	1,745.9
Net assets held for sale for GrandVision at December 31, 2019	1,697.9	1,421.0

Comparative figures reflect balances in relation to GrandVision N.V. that were not classified as held for sale at December 31, 2018, including corporate goodwill and after intercompany elimination

4. Property, plant and equipment

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’s 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 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 as follows: buildings 10-50 years, vessels 25-30 years, tank storage terminals 10-40 years and equipment and other 2-15 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 Vopak 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, determined by the board of Vopak based on its estimations and assumptions, have a major impact on the measurement of property, plant and equipment.

Movements for 2019 and 2018 are as follows:

	Land and buildings	Vessels	Tank storage terminals	Equipment and other	Total
Cost value	1,375.7	606.1	5,293.9	2,335.1	9,610.8
Cost value - under construction	87.2	-	250.7	28.1	366.0
Accumulated depreciation and impairments	(642.8)	(152.4)	(2,412.4)	(1,738.5)	(4,946.1)
Balance on January 1, 2018	820.1	453.7	3,132.2	624.7	5,030.7
Investments	134.4	73.8	436.5	209.3	854.0
Consolidation and purchase price adjustments	31.2	-	(0.1)	63.7	94.8
Disposals	(7.3)	-	(1.5)	(8.2)	(17.0)
Depreciation and impairments continuing operations	(25.1)	(36.8)	(229.0)	(88.2)	(379.1)
Depreciation and impairments discontinued operations	(52.2)	-	-	(72.0)	(124.2)
Reclassification	(76.1)	-	96.3	(23.6)	(3.4)
Exchange differences	1.4	15.3	(14.5)	(2.0)	0.2
Balance on December 31, 2018	826.4	506.0	3,419.9	703.7	5,456.0
Cost value	1,467.5	694.4	5,578.0	2,631.9	10,371.8
Cost value - under construction	89.3	-	501.0	21.5	611.8
Accumulated depreciation and impairments	(730.4)	(188.4)	(2,659.1)	(1,949.7)	(5,527.6)
Balance on December 31, 2018	826.4	506.0	3,419.9	703.7	5,456.0
Initial application IFRS 16	-	-	-	(49.7)	(49.7)
Balance on January 1, 2019	826.4	506.0	3,419.9	654.0	5,406.3
Investments	115.9	48.8	563.3	190.3	918.3
Consolidation and purchase price adjustments	101.4	-	4.4	174.1	279.9
Disposals	(9.2)	(12.0)	-	(9.8)	(31.0)
Depreciation and impairments continuing operations	(53.3)	(42.1)	(232.3)	(103.5)	(431.2)
Depreciation and impairments discontinued operations	(30.9)	-	-	(42.6)	(73.5)
Reclassification	(8.7)	-	(0.5)	(14.3)	(23.5)
Reclassification to held for sale*	(311.4)	(7.5)	(454.0)	(323.5)	(1,096.4)
Exchange differences	2.3	6.2	40.4	10.3	59.2
Balance on December 31, 2019	632.5	499.4	3,341.2	535.0	5,008.1
Cost value	1,000.8	714.3	5,404.3	1,846.5	8,965.9
Cost value - under construction	61.2	-	598.7	72.2	732.1
Accumulated depreciation and impairments	(429.5)	(214.9)	(2,661.8)	(1,383.7)	(4,689.9)
Balance on December 31, 2019	632.5	499.4	3,341.2	535.0	5,008.1

Reclassifications to hold for sale mainly relate to GrandVision N.V. and certain Vopak terminals

Note 21 details information on pledges.

5. Investments properties

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's 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 years). Useful lives and residual values are reviewed annually and, if required, amended. Land is not depreciated.

Movements for 2019 and 2018 are as follows:

	2019	2018
Cost value	-	7.8
Accumulated depreciation	-	(0.9)
Book value on January 1	-	6.9
Investments	34.5	-
Disposals	-	(6.9)
Depreciation and impairments	(0.5)	(0.2)
Exchange differences	-	0.2
Book value on December 31	34.0	-
Cost value	34.5	-
Accumulated depreciation	(0.5)	-
Book value on December 31	34.0	-

In August, 2019, HAL acquired the retail centers De Aarhof (9,723 m2) in Alphen aan de Rijn and City Passage (7,763 m2) in Veldhoven. The intention is to redevelop these properties in order to add residential units and upgrade the retail space. These properties are included in the real estate segment. At year-end 2019, the carrying value of the investment properties was a reasonable approximation of their fair value.

6. Right-of-use assets and lease liabilities

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 to house its retail stores, offices and logistical activities. 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 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 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 and key money paid, 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's 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.

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.

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.

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 for 2019 are as follows:

	Land and buildings	Vessels	Terminal-related assets	Equipment and other	Total
Cost value	2,227.1	8.9	24.1	128.2	2,388.3
Accumulated depreciation and impairments	-	-	-	(24.6)	(24.6)
Balance on January 1, 2019	2,227.1	8.9	24.1	103.6	2,363.7
New lease contracts	153.8	78.1	-	22.9	254.8
Consolidation	35.4	-	-	15.3	50.7
Depreciation and impairments continuing operations	(72.4)	(10.1)	(0.7)	(27.5)	(110.7)
Depreciation and impairments discontinued operations	(198.6)	-	-	(3.0)	(201.6)
Reclassification	(0.6)	-	-	(0.3)	(0.9)
Reclassification to held for sale*	(1,706.3)	-	(17.3)	(10.9)	(1,734.5)
Reassessment and remeasurement	251.6	(2.0)	(0.2)	(1.2)	248.2
Exchange differences	22.4	(0.8)	0.1	1.4	23.1
Balance on December 31, 2019	712.4	74.1	6.0	100.3	892.8
Cost value	779.6	82.8	6.5	150.5	1,019.4
Accumulated depreciation and impairments	(67.2)	(8.7)	(0.5)	(50.2)	(126.6)
Balance on December 31, 2019	712.4	74.1	6.0	100.3	892.8

Reclassifications to hold for sale mainly relate to GrandVision N.V.

The balance on January 1, 2019 represents initial recognition of right-of-use following adoption of IFRS 16, including amounts reclassified from other current and non-current assets and liabilities and related to key money and rental incentives.

The consolidated lease liability as at December 31, 2019, relates mainly to Vopak (€ 564.9 million). The weighted-average incremental borrowing rate applied to this portfolio was 3.3%.

In 2019, variable payments of € 102.0 million related to on-balance lease contracts were included in operating expenses, of which € 99.1 million related to discontinued operations. 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 2019 other operating expenses for € 15.6 million, respectively € 7.6 million. This included amounts related to discontinued operations for € 2.3 million, respectively € 2.5 million. The total cash outflow for leases in 2019 amounted to € 662.2 million, of which € 504.2 million related to discontinued operations.

Movements in the lease liabilities for 2019 are as follows:

	Total
Balance on January 1, 2019	2,398.3
New lease contracts	262.2
Consolidation	40.9
Accrued interest continuing operations	29.9
Accrued interest discontinued operations	30.3
Payments	(537.0)
Reclassification to held for sale*	(1,553.3)
Reassessment and remeasurement	257.3
Exchange differences and other	27.2
Balance on December 31, 2019	955.8
Current lease liabilities	106.3
Non-current lease liabilities	849.5
Balance on December 31, 2019	955.8

Reclassifications to held for sale mainly relate to GrandVision N.V.

The balances of right-of-use assets and lease liabilities on January 1, 2019, were recognized as a result of the implementation of IFRS 16.

7. Intangible assets

Intangible assets include goodwill, trademarks, key money, customer relationships, software and other.

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’s 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, as described in note 36. 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.

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 15 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 on a straight-line basis over an estimated useful life of maximum 15 years.

Software

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. Direct costs (such as software development employee costs and an appropriate portion of relevant overheads) are included in the initial measurement. Costs associated with developing and maintaining computer software that do not meet these criteria are recognized as an expense as incurred. 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 maximum 5 years.

Movements for goodwill and other intangibles are as follows:

	Goodwill	Software	Trade-marks	Customer relationships	Other	Total
Cost value	2,253.4	503.4	503.4	367.2	395.1	4,022.5
Accumulated amortization and impairments	(718.6)	(302.5)	(249.4)	(94.6)	(88.7)	(1,453.8)
Balance on January 1, 2018	1,534.8	200.9	254.0	272.6	306.4	2,568.7
Investments	86.0	73.1	-	0.7	12.2	172.0
Consolidation	-	3.5	6.3	67.1	14.0	90.9
Purchase price accounting adjustments	2.3	-	-	-	-	2.3
Disposals	(0.2)	(0.2)	-	-	(1.1)	(1.5)
Amortization and impairments continuing operations	-	(32.3)	(22.5)	(17.4)	(5.8)	(78.0)
Amortization and impairments discontinued operations	(30.7)	(32.5)	(21.1)	(18.6)	(10.1)	(113.0)
Reclassification	(3.7)	8.1	0.2	(3.1)	(4.1)	(2.6)
Exchange differences and other	0.2	0.3	0.7	2.1	0.3	3.6
Balance on December 31, 2018	1,588.7	220.9	217.6	303.4	311.8	2,642.4
Cost value	2,338.0	572.9	509.7	437.2	419.8	4,277.6
Accumulated amortization and impairments	(749.3)	(352.0)	(292.1)	(133.8)	(108.0)	(1,635.2)
Balance on December 31, 2018	1,588.7	220.9	217.6	303.4	311.8	2,642.4
Initial application IFRS 16	32.6	-	-	-	(212.9)	(180.3)
Balance on January 1, 2019	1,621.3	220.9	217.6	303.4	98.9	2,462.1
Investments	242.5	103.0	0.2	1.6	1.3	348.6
Consolidation	-	12.3	125.7	136.4	84.2	358.6
Disposals	-	(0.7)	-	-	(0.1)	(0.8)
Amortization and impairments continuing operations	(12.0)	(34.3)	(30.5)	(49.9)	(6.0)	(132.7)
Amortization and impairments discontinued operations	(50.7)	(19.9)	(6.2)	(10.6)	(4.1)	(91.5)
Reclassification	1.2	16.1	-	1.1	(8.8)	9.6
Reclassification to held for sale*	(1,320.0)	(144.9)	(121.5)	(138.0)	(73.1)	(1,797.5)
Exchange differences and other	12.5	1.2	2.0	6.7	0.9	23.3
Balance on December 31, 2019	494.8	153.7	187.3	250.7	93.2	1,179.7
Cost value	786.7	381.9	325.2	331.2	203.4	2,028.4
Accumulated amortization and impairments	(291.9)	(228.2)	(137.9)	(80.5)	(110.2)	(848.7)
Balance on December 31, 2019	494.8	153.7	187.3	250.7	93.2	1,179.7

Reclassifications to hold for sale mainly relate to GrandVision N.V.

The reclassification in the category other on the line initial application IFRS 16 mainly relates to key money which has been reclassified to right-of use-assets. The addition to goodwill of € 32.6 million on the line initial application of IFRS 16 relates to Fonds de Commerce in France (optical retail) which was reclassified from key money (included in other intangible assets) since it could not be included in cost of right-of-use assets.

The other category consists of:

	Dec. 31, 2019	Dec. 31, 2018
Key money	-	213.1
Other	93.2	98.7
	93.2	311.8

Information on impairment testing is included in note 36.

8. Acquisition, divestment and deconsolidation of subsidiaries

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's proportionate share of the acquiree's identifiable net assets.

If the business combination is achieved in stages, the Company's 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 ('badwill'), 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 are recognized either in the consolidated statement of income or as a change to other comprehensive 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

Formica Group

On June 3, 2019, Broadview Holding B.V. (97.4% HAL) completed the acquisition of the Formica Group ('Formica') from Fletcher Building Ltd. for USD 840 million (€ 725 million), on a debt and cash free basis. Formica was founded in 1913 and is linked to the invention of the original High Pressure Laminate (HPL). The company has grown to become a leading provider of branded, designed surfacing solutions with a global presence and production locations in America, Asia and Europe. Formica employs around 3,400 FTE and reported 2018 sales of € 604 million. Based on the purchase price allocation an amount of € 140.4 million was identified as goodwill and represents the future synergies, the workforce and expected growth and profitability of the business.

GrandVision - Óptica2000

On February 20, 2019, GrandVision N.V. (76.7% HAL) acquired 100% of the shares of Óptica2000 for an amount of € 89.6 million. The acquisition comprises Óptica2000's network of 108 optical stores across Spain and Portugal, with the majority of these establishments in El Corte Ingles department stores. Based on the initial purchase price allocation an amount of € 32.6 million was identified as provisional goodwill. The goodwill mainly comprises expected expansion in the Spanish market and synergies following integration of the acquired business into the existing organization, which cannot be recognized as separately identifiable assets. Based on the purchase price allocation an amount of € 29.6 million was identified as goodwill and represents the workforce and expected growth and profitability of the business.

Details on the acquisitions performed during the year are as follows:

	Formica	Óptica2000	Other	Total
Cash paid	725.3	89.6	95.6	910.5
Future consideration	-	-	14.3	14.3
Fair value of previously held equity interests	-	-	7.8	7.8
Fair value of net assets acquired	(586.9)	(60.0)	(52.5)	(699.4)
Non-controlling interest recognized	2.0	-	-	2.0
Goodwill	140.4	29.6	72.5	242.5
Badwill (in consolidated statement of income)	-	-	(7.3)	(7.3)

Goodwill is not expected to be deductible for tax purposes. The Company recognized badwill on the acquisition of a manufacturer of cryogenic equipment in Turkey due to low profitability of this entity compared to its asset base.

Details of the net assets acquired are set out below:

	Formica	Óptica2000	Other	Total
Property, plant and equipment	255.5	4.0	20.4	279.9
Right-of-use assets	27.4	3.3	20.0	50.7
Intangible assets	265.7	58.3	34.6	358.6
Other financial assets	2.7	-	-	2.7
Deferred tax assets	10.3	1.3	12.1	23.7
Other non-current assets	1.4	0.1	1.2	2.7
Cash	21.9	6.3	14.6	42.8
Non-current debt	-	-	(0.8)	(0.8)
Non-current provisions	(22.6)	-	(11.8)	(34.4)
Deferred tax liabilities	(84.7)	(15.3)	(12.9)	(112.9)
Lease liabilities	(23.9)	(3.3)	(13.7)	(40.9)
Other non-current liabilities	-	-	(11.4)	(11.4)
Current debt	-	-	(4.2)	(4.2)
Accounts receivable	71.0	8.0	6.5	85.5
Inventories	144.7	6.0	12.2	162.9
Other current assets	9.2	0.8	5.1	15.1
Income tax payable	(2.4)	-	(0.6)	(3.0)
Accounts payable	(39.1)	(2.7)	(5.4)	(47.2)
Accrued expenses	(39.4)	(5.5)	(5.8)	(50.7)
Other current liabilities	-	(1.3)	(7.6)	(8.9)
Current provisions	(10.8)	-	-	(10.8)
Net working capital	133.2	5.3	4.4	142.9
Fair value of net assets acquired	586.9	60.0	52.5	699.4

The above acquisitions generated the following results in 2019, respectively would have generated the following results, should they have been consolidated for the full year:

	Formica	Óptica2000	Other	Total
Contribution to 2019 revenues	370.5	-	22.6	393.1
Contribution to 2019 operating income	25.3	-	1.7	27.0
Contribution to 2019 net income from continuing operations	(9.2)	-	1.2	(8.0)
Contribution to 2019 net income from discontinued operations	-	3.8	2.3	6.1
2019 full-year revenues	631.8	-	28.9	660.7
2019 full-year operating income	43.9	-	2.4	46.3
2019 full-year net income from continuing operations	(8.1)	-	1.4	(6.7)
2019 full-year net income from discontinued operations	-	4.6	7.0	11.6

Acquisition costs charged to the other operating expenses, related to continuing operations, in the consolidated statement of income amounted to € (10.2) million. Within profit from discontinued operation, gross acquisition costs of € 2.4 million are included.

The reconciliation to the cash flow statement also includes net cash paid by GrandVision for acquisitions performed after July 30, 2019, as the cash flow statement is drawn up including the full-year cash flows of GrandVision:

	Total
Cash paid for the above acquisitions	910.5
Cash acquired in the above acquisitions	(42.8)
Cash outflow due to acquisition of subsidiaries, net of cash acquired	867.7
Acquisition of associates and joint arrangements	258.4
Cash outflow due to acquisition of associates, joint arrangements and subsidiaries, net of cash acquired	1,126.1

Divestments and deconsolidation

Vopak - divestment Amsterdam and Hamburg terminals

On September 30, 2019, Vopak completed the earlier announced divestment of its terminals in Amsterdam and Hamburg. The total recognized capital gain of € 193.8 million. In December, 2019, an additional capital gain of € 8.0 million was recognized in relation to the divestment of the terminals in Amsterdam and Hamburg, which is contingent on the successful completion of the divestment of Vopak Terminal Algeciras. The divestment of all three terminals was negotiated as a package deal. At year-end 2019, management of Vopak determined that it was virtually certain that Vopak Terminal Algeciras would be divested, and that the contingent consideration would be received. The total cash consideration received for Vopak's investment in the equity of the Amsterdam and Hamburg terminals amounted to € 378.2 million. In addition, intercompany loans were repaid by these entities for the amount of € 178.6 million. Cash and cash equivalents held by the terminals upon divestment amounted to € 35.5 million.

Safilo - divestment Solstice

On July 1, 2019, Safilo completed the earlier announced divestment of its retail operations in the United States of America for a cash consideration of € 8 million (USD 9 million) on a cash and debt-free basis, combined with a multi-year supply agreement for Safilo products. At the moment of classification as held for sale, an impairment was recorded on Solstice of € 17.0 million, of which € 3.7 million related to impairment of deferred tax assets.

Divestment Intersafe

On January 17, 2019, Broadview completed the sale of IEV Group. IEV is the holding company of Intersafe and Elacin and supplies and manufactures personal protective equipment with key positions in the Benelux and France. The company was acquired by HAL in 2001. The transaction resulted in an after-tax capital gain of € 40 million. IEV Group was classified as held for sale at December 31, 2018.

	Vopak - Amsterdam and Hamburg	Intersafe	Other	Total
Cash received from divestment of subsidiaries	556.8	56.8	10.1	623.7
Cash sold in these divestments	(35.5)	(1.4)	(0.8)	(37.7)
Cash inflow resulting from divestment of subsidiaries, net of cash sold	521.3	55.4	9.3	586.0
Disposal of associates and joint arrangements*	-	-	40.2	40.2
Cash inflow due to divestment of associates, joint arrangements and subsidiaries, net of cash sold	521.3	55.4	49.5	626.2

Classified as held for sale at the moment of disposal

2018

Vopak - deconsolidation of Vopak Venezuela

At the end of September 2018, Vopak deconsolidated its wholly-owned terminal in Venezuela (Americas division), reflecting the conclusion that the Group no longer has control from an accounting perspective. It was observed that the economic, legal, social and political environment in which the terminal operated was continuously deteriorating. Strict currency controls continued to be applicable and inflation exceeded one million percent in 2018. This triggered the reassessment of the accounting treatment of this terminal as of the end of the third quarter of 2018. This event led to recycling of historical unrealized currency translation losses from equity to the income statement in 2018. In total the reported net income was reduced by € 51.1 million as an exceptional item. After deconsolidation, the participation in the terminal is accounted for as an investment measured at fair value through other comprehensive income. Vopak continues to monitor the situation and will periodically assess whether facts and circumstances have changed and whether control has been regained over the entity in Venezuela.

9. Investments in associates and joint arrangements

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. All 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. The carrying value is subsequently adjusted to recognize the Company's 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's 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's 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.

The movements of investments accounted for using the equity method are set out below.

	Associates	Joint ventures	Total
Share of net assets	1,468.5	735.7	2,204.2
Goodwill	253.0	64.4	317.4
Balance on January 1, 2018	1,721.5	800.1	2,521.6
Investments	203.4	25.1	228.5
Consolidation	7.1	-	7.1
Disposals	(3.3)	-	(3.3)
Share of results - real estate	-	(0.5)	(0.5)
Share of results - discontinued operations	-	(0.7)	(0.7)
Share of results - other	(139.4)	97.6	(41.8)
Share of other comprehensive income	(0.3)	3.1	2.8
Dividends	(4.7)	(76.7)	(81.4)
Redemption of share capital	(23.9)	-	(23.9)
Reclassification	(8.8)	10.4	1.6
Exchange differences and other	4.3	18.6	22.9
Balance on December 31, 2018	1,755.9	877.0	2,632.9
Share of net assets	1,485.7	810.9	2,296.6
Goodwill	270.2	66.1	336.3
Balance on December 31, 2018	1,755.9	877.0	2,632.9
Initial application IFRS 16	(11.1)	(21.1)	(32.2)
Balance on January 1, 2019	1,744.8	855.9	2,600.7
Investments	217.2	41.2	258.4
Disposals	(11.1)	(0.5)	(11.6)
Share of results - real estate	-	(4.6)	(4.6)
Share of results - discontinued operations	-	(0.7)	(0.7)
Share of results - other	102.0	91.5	193.5
Share of other comprehensive income	(22.3)	2.0	(20.3)
Dividends	(39.5)	(103.1)	(142.6)
Reclassification to held for sale	(1.1)	(8.7)	(9.8)
Exchange differences and other	9.4	17.1	26.5
Balance on December 31, 2019	1,999.4	890.1	2,889.5
Share of net assets	1,701.7	824.0	2,525.7
Goodwill	297.7	66.1	363.8
Balance on December 31, 2019	1,999.4	890.1	2,889.5

Joint ventures mainly relate to Vopak and the real estate segment. In the 2019 share of results from associates a total one-off gain was recognized at the associate Vopak Terminal Haiteng for the amount of € 7.8 million. This total amount is mainly related to the final customer settlements. In the fourth quarter of 2019, an exceptional loss of € 14.7 million was recognized by Vopak as part of the result of joint ventures due to the recognition of a tax provision that was recognized in one of its joint ventures. In relation to the provision, management of Vopak has assessed that based on the current facts and circumstances it is no longer more likely than not that the court case will be won.

The amounts recognized in the statement of financial position comprise:

	Dec. 31, 2019	Dec. 31, 2018
Publicly traded	1,202.1	1,119.6
Other	1,687.4	1,513.3
	2,889.5	2,632.9

Investments

Vopak - acquisition Colombia associate

On September 11, 2019, Vopak acquired a 49% shareholding in Sociedad Portuaria el Cayao (SPEC) in Cartagena, Colombia. SPEC is the only LNG import facility in Colombia, with a capacity of 170,000 cbm, and has been in operation since 2016. The total consideration paid, including transaction costs, amounted to € 85.2 million. There was no material goodwill recorded as part of the carrying amount of the associate.

Vopak - increase shareholding Pakistan associate

On January 23, 2019, Vopak acquired an additional share of 15% in the associate Engro Elengy Terminal (LNG division), bringing the total share in this associate to 44%. The total consideration paid for the entire 44% (29% in December 2018 and 15% in January 2019), including transaction costs, amounted to € 49.4 million. Total goodwill recorded by Vopak as part of the carrying amount of the associate amounted to € 4.5 million.

Increases in shareholding Boskalis and Coolblue

The ownership interest in Koninklijke Boskalis Westminster N.V. increased from 40.41% at the end of 2018 to 43.51% at the end of 2019 due to stock dividend and the purchase of shares for € 85 million. The Company identified € 7.6 million goodwill as part of the purchase price allocation. The ownership interest in Coolblue increased from 30.1% to 49.0% as a result of the repurchase of shares by this associate.

Real estate

The gross investment in joint ventures belonging to the real estate segment increased by € 23 million during 2019. At year-end 2019 the book value of the real estate joint ventures was € 96 million. The real estate joint ventures in the United States include a 57.5% ownership in a fully leased office property in Seattle (129,000 net rentable square feet, 12,000 m²) and ownership interests in six joint ventures for the development and rental of 1,767 apartments in the Seattle metropolitan area. Two projects (438 apartments) were completed at the end of 2019 and are 97% leased. A third project of 492 apartments is partially completed. A total of 165 units were delivered at the end of 2019 of which 72% were leased. The other projects will be completed during the period 2020-2022.

The total estimated cost of the six apartment projects is USD 555 million (€ 494 million) and the estimated equity commitment of the Company is USD 158 million (€ 141 million). The remaining commitment at the end of 2019 is USD 51 million (€ 45 million).

In addition, in June 2018, the Company entered into a joint venture agreement and purchased 3.2 acres (13,000 m2) of environmentally contaminated land in Seattle in order to remediate the site and then develop 552 apartments. The Company's equity commitment (excluding the construction phase) is USD 6 million (€ 5 million).

Disposals

Vopak - divestment Yangpu China terminal joint venture

In December, 2019, Vopak divested its 49% equity share in Vopak SDIC Yangpu Terminal in Hainan, China. The transaction resulted in a capital gain of € 25.3 million, including transaction expenses, of which an amount of € 5.2 million is related to the realization of accumulated currency translation differences that were previously recognized in equity and of which an amount of € 1.8 million is related to the release of a provision with a corresponding gain in the net finance costs. Total cash consideration received from this divestment amounted to € 18.3 million. A contingent consideration for (a maximum of) approximately € 30 million related to this divestment has not yet been recognized at year-end 2019, as the recognition criteria were not yet met. This upward potential may or may not materialize going forward.

Vopak - divestment Estonia terminal joint venture

On April 3, 2019, Vopak completed the divestment of its 50% share in the Estonian terminal Vopak E.O.S. resulting in an after-tax capital gain of € 16.4 million, including transaction expenses, which was fully recognized in EBITDA in the second quarter of 2019. The total cash consideration received from this divestment amounted to € 10.2 million.

Principal associate

The principal (non-consolidated) associate of the Company is Koninklijke Boskalis Westminster N.V. ('Boskalis') in which the Company has a 43.51% (2018: 40.41%) ownership interest. Boskalis is incorporated in the Netherlands and is listed on Euronext Amsterdam. The company is a leading global service provider operating in the dredging, maritime infrastructure and maritime services sectors.

The difference between the market value of Boskalis and the book value is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Market value	1,343.1	1,188.7
Book value	(1,202.1)	(1,119.6)
	141.0	69.1

Set out on the next page is summarized financial information for Boskalis. This summary is based on publicly available information.

	Dec. 31, 2019	Dec. 31, 2018
Current
Cash and cash equivalents	399.6	336.2
Other current assets	1,112.2	1,269.5
Total current assets	1,511.8	1,605.7
Financial liabilities (excluding trade payables)	110.0	40.0
Other current liabilities (including trade payables)	1,523.9	1,440.1
Total current liabilities	1,633.9	1,480.1
Non-current
Assets	3,085.0	2,934.1
Financial liabilities	384.8	440.2
Other liabilities	83.3	71.9
Total non-current liabilities	468.1	512.1
Non-controlling interest	3.4	3.3
Net assets	2,491.4	2,544.3
	2019	2018
Revenue	2,644.6	2,569.5
Depreciation and amortization	(265.1)	(234.6)
Financial income	1.0	0.4
Financial expense	(16.7)	(13.7)
Profit before tax	95.0	(413.8)
Profit after tax for owners of parent	74.9	(435.9)
Other comprehensive income for owners of parent	(14.0)	11.6
Total comprehensive income for owners of parent	60.9	(424.3)

The Boskalis 2018 financial result was substantially impacted by extraordinary charges of in total € 518.7 million post-tax (HAL share € 191.7 million).

Reconciliation of the summarized financial information for Boskalis:

	2019	2018
Net assets January 1	2,544.3	3,021.5
Profit for the period	74.9	(435.9)
Other comprehensive income	(14.0)	11.6
Transactions with owners	(113.8)	(52.9)
Net assets December 31	2,491.4	2,544.3
Interest in Boskalis (43.51%, 2018: 40.41%)	1,084.0	1,028.2
Elimination part of gain relating to the sale of Dockwise Ltd. (2013)	(11.3)	(11.3)
Intangible assets recognized in purchase price allocation	5.0	5.9
Goodwill	124.4	96.8
Book value	1,202.1	1,119.6

We refer to note 44 with respect to summarized financial information on joint ventures.

10. Derivatives and other financial assets

For the accounting policies for derivative financial instruments, reference is made to note 38. At initial recognition, the Company classifies its non-derivative financial assets as “measured at amortized cost” or as “measured at fair value” (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 37). Interest income on financial assets measured at amortized cost is recognized using the effective interest method.

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 37.

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 37), are recognized in the consolidated statement of income.

Equity instruments

Management has made the irrevocable election 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 instrument is sold, 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:

	Dec. 31, 2019	Dec. 31, 2018
Derivatives
Asset positions	48.7	56.7
Other financial assets
Investments in quoted securities	553.0	425.1
Investments in unquoted securities	30.1	11.2
Loans to associates and joint ventures	75.7	2.1
Other loans	55.4	81.0
Other	57.1	84.0
	820.0	660.1

The increase of loans to associates and joint ventures mainly relates to financing provided by Vopak. The category "other" includes long-term deposits and receivables. For additional information on derivatives reference is made to note 38. The derivatives and other financial assets can be further specified as follows:

	Dec. 31, 2019	Dec. 31, 2018
Current
Derivatives	29.2	27.3
Other financial assets	11.1	-
Non-current
Derivatives	19.5	29.4
Other financial assets	760.2	603.4
	820.0	660.1

Investments in quoted securities include:

	Dec. 31, 2019	Dec. 31, 2018
Equity interest in SBM Offshore N.V. (16.80%, 2018: 15.99%)	553.0	425.1
	553.0	425.1

Amounts included in the cash flow statement comprise:

	Dec. 31, 2019	Dec. 31, 2018
Sale/(purchase) of shares in Chart Industries Inc.	-	137.8
Loans provided to associates and joint ventures	(43.5)	-
Repayment of loans by associates and joint ventures	(9.1)	-
Other	(8.3)	12.7
Changes in other financial assets in cash flow statement	(60.9)	150.5

11. Marketable securities and deposits

The accounting policies applied to marketable securities and deposits are the same as those applied to other financial assets (note 10). Marketable securities are measured at fair value through profit or loss except for fixed income securities which are measured at fair value through other comprehensive income.

Marketable securities consist of equity securities amounting to € 151.6 million (2018: € 218.9 million) and fixed income securities amounting to € 71.0 million (2018: € 55.8 million).

12. Receivables

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 37) with application of the simplified approach. The amount of the provision is the difference between the assets' 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.

	Dec. 31, 2019	Dec. 31, 2018
Trade receivables	921.7	967.7
Allowance for doubtful accounts	(64.0)	(71.8)
	857.7	895.9

The ageing analysis of the trade receivables that are past due, net of provision for impairment, is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Up to 3 months	154.6	162.0
Between 3 and 6 months	11.3	18.5
Between 6 and 9 months	9.3	11.0
Over 9 months	48.0	52.0
	223.2	243.5

Movements on the provision for impairment of trade receivables are as follows:

	2019	2018
Allowance on January 1	(71.8)	(40.8)
Addition to allowance	(21.2)	(47.6)
Utilized during the year	18.6	17.8
Released	1.8	2.3
Net addition related to discontinued operations	(5.6)	(5.0)
Reclassification to held for sale	15.9	-
Other movements	(1.7)	1.5
Allowance on December 31	(64.0)	(71.8)

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 21.

13. Inventories

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.

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.

	Dec. 31, 2019	Dec. 31, 2018
Raw materials	209.3	138.7
Work in progress	60.3	36.0
Finished goods	510.2	776.5
Stock in transit	11.8	7.9
Provision for obsolete inventory	(127.3)	(127.9)
	664.3	831.2

The cost of inventory recognized as an expense amounts to € 1,439.4 million (2018: € 1,325.7 million, excluding € 862.2 million related to discontinued operations). The total write-down of inventories recognized as an expense amounts to € 43.8 million (2018: € 25.4 million, excluding € 36.7 million related to discontinued operations).

Information on pledges is included in note 21.

14. Other current assets

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:

	Dec. 31, 2019	Dec. 31, 2018
Prepaid vendors	61.3	97.3
VAT	44.6	39.4
Supplier bonus receivable	35.0	51.6
Consumer insurance receivable	-	47.7
Income tax receivable	35.8	72.6
Other receivables	197.7	238.3
	374.4	546.9

15. Cash and cash equivalents

Cash and cash equivalents comprise unrestricted bank balances and liquid investments with a maturity of three months or less.

	Dec. 31, 2019	Dec. 31, 2018
Cash	896.3	1,457.4
Cash equivalents	662.3	819.1
Cash and cash equivalents as presented in the consolidated statement of financial position	1,558.6	2,276.5
Cash and cash equivalents classified as held for sale	162.9	-
Cash and cash equivalents as presented in the consolidated statement of cash flows	1,721.5	2,276.5

Cash equivalents include time deposits with a maturity of less than three months.

16. Share capital

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, 2019, consists of 83,448,898 shares of which 51,658 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, 2018	80,124.6	84.3
Sale and transfer of treasury shares	-	(22.5)
Purchase of treasury shares, including stock dividend	-	8.5
Dividend paid in stock	1,638.5
Balance on December 31, 2018	81,763.1	70.3
Balance on January 1, 2019	81,763.1	70.3
Sale and transfer of treasury shares	-	(20.1)
Purchase of treasury shares, including stock dividend	-	1.5
Dividend paid in stock	1,685.8
Balance on December 31, 2019	83,448.9	51.7
	December 31, 2019
---	---
Authorized shares	85,000.0
Outstanding shares	83,397.2
Par value (HAL Holding N.V.) (in euro)	0.02
Share capital (in millions of euro)	1.7

The treasury shares above are HAL Trust Shares held by HAL Holding N.V. and are not expected to be cancelled. Each share has one voting right.

A 2018-related dividend of € 433.0 million (excluding dividend on treasury shares) or € 5.30 per Share was paid on June 19, 2019 (2018: € 496.2 million or € 6.20 per Share), of which € 216.5 million in cash and € 216.5 million in Shares. Shareholders received one new Share for 48.5 existing Shares held. The calculation of the 2018 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 22, 2019, through June 11, 2019. Accordingly, 1,685,836 Shares were issued on June 18, 2019.

17. Other reserves

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
Balance on January 1, 2018	185.7	(59.6)	12.9	139.0
Change in fair value of financial assets at fair value through other comprehensive income	(25.8)	-	-	(25.8)
Translation of foreign subsidiaries, including share of associates and joint arrangements	-	-	35.8	35.8
Effective portion of hedging instruments, including share of associates and joint arrangements	-	0.1	-	0.1
Reclassification*	(71.9)	(61.8)	25.4	(108.3)
Balance on December 31, 2018	88.0	(121.3)	74.1	40.8
Change in fair value of financial assets at fair value through other comprehensive income	130.8	-	-	130.8
Translation of foreign subsidiaries, including share of associates and joint arrangements	-	-	24.4	24.4
Effective portion of hedging instruments, including share of associates and joint arrangements	-	(5.9)	-	(5.9)
Reclassification	(0.3)	(5.9)	(10.1)	(16.3)
Balance on December 31, 2019	218.5	(133.1)	88.4	173.8

Reclassification mainly related to realized results on the disposal of the shareholding in Chart Industries Inc. and to currency components of cross-currency interest rate swaps.

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

< 1 year	(57.2)
1-5 years	(58.2)
> 5 years	(17.7)
	(133.1)

18. Deferred taxes

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:

	Carry-forward losses	PP&E	Leases	Intangibles	Inventories	Other	Offset	Total
Assets	58.0	27.6	-	11.6	46.8	124.0	(154.0)	114.0
Liabilities	-	(308.0)	-	(217.1)	(9.1)	(44.9)	154.0	(425.1)
Net book value on January 1, 2018	58.0	(280.4)	-	(205.5)	37.7	79.1	-	(311.1)
Credited/(charged) to net income - cont. operations	(8.1)	3.1	-	17.8	3.4	(16.0)	-	0.2
Credited/(charged) to net income - disc. operations	30.9	-	-	9.7	0.2	0.3	-	41.1
Credited/(charged) to OCI	-	-	-	-	-	(14.5)	-	(14.5)
Acquisitions and purchase price accounting adjustments	0.2	(5.7)	-	(21.2)	(0.8)	5.7	-	(21.8)
Other	-	-	-	-	-	3.0	-	3.0
Reclassifications	0.9	(0.4)	-	(1.4)	-	0.8	-	(0.1)
Exchange differences	(1.2)	(2.4)	-	(0.1)	0.5	1.8	-	(1.4)
Net book value on December 31, 2018	80.7	(285.8)	-	(200.7)	41.0	60.2	-	(304.6)
Assets	80.7	21.4	-	9.2	45.8	97.9	(120.2)	134.8
Liabilities	-	(307.2)	-	(209.9)	(4.8)	(37.7)	120.2	(439.4)
Net book value on January 1, 2019	80.7	(285.8)	-	(200.7)	41.0	60.2	-	(304.6)
Initial application of IFRS 16 (equity impact)	-	-	48.9	-	-	-	-	48.9
Credited/(charged) to net income - cont. operations	11.8	4.2	7.2	31.4	(21.4)	(20.0)	-	13.2
Credited/(charged) to net income - disc. operations	10.5	1.7	(2.0)	12.3	0.3	(1.6)	-	21.2
Credited/(charged) to OCI	-	1.2	-	-	-	8.6	-	9.8
Acquisitions and purchase price accounting adjustments	8.0	(18.9)	-	(81.4)	(0.7)	3.8	-	(89.2)
Divestitures	-	27.9	-	0.2	-	5.0	-	33.1
Other	-	-	-	0.1	-	1.7	-	1.8
Reclassifications to held for sale	(58.7)	1.8	(11.8)	100.6	(4.9)	(45.7)	-	(18.7)
Reclassifications	0.3	-	(19.0)	18.6	0.6	(0.5)	-	-
Exchange differences	0.9	(5.8)	(0.1)	(1.4)	0.3	0.7	-	(5.4)
Net book value on December 31, 2019	53.5	(273.7)	23.2	(120.3)	15.2	12.2	-	(289.9)
Assets	53.5	19.5	156.2	4.2	19.5	54.7	(211.0)	96.6
Liabilities	-	(293.2)	(133.0)	(124.5)	(4.3)	(42.5)	211.0	(386.5)
Net book value on December 31, 2019	53.5	(273.7)	23.2	(120.3)	15.2	12.2	-	(289.9)

Withholding tax and any other tax due for unremitted earnings of subsidiaries are not recognized as these earnings are assumed to be permanently invested.

The portion of the deferred tax liabilities, related to continuing operations, that is expected to be recovered within 12 months amounts to € 9.0 million (2018: € 10.1 million including discontinued operations), the portion of the deferred tax assets, related to continuing operations, that is expected to be recovered within 12 months amounts to € 22.9 million (2018: € 46.3 million including discontinued operations).

Unused tax losses for which deferred tax assets have not fully been recognized are as follows:

Expiration	2019	2018
2019	-	5.1
2020	18.2	2.8
2021	29.7	12.5
2022	38.6	22.4
2023	22.9	35.6
2024 and further years	128.0	108.9
No expiration date	593.4	338.0
Total continuing operations	830.8	525.3
Discontinued operations	334.1	301.5
	1,164.9	826.8

Deferred tax assets, related to continuing operations, 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 € 96.5 million (2018: € 89.5 million, excluding discontinued operations for € 45.3 million).

Deferred tax assets related to continuing operations of € 46.3 million (2018: € 46.7 million, excluding discontinued operations for € 11.3 million) relate to entities that suffered a loss in either the current or the preceding period. Their recognition is supported by projections of future taxable income. 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.

19. Pension benefits

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 equity in 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.

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:

	Dec. 31, 2019	Dec. 31, 2018
Pension benefit assets	40.5	68.8
Pension benefit liabilities	(123.5)	(207.5)
	(83.0)	(138.7)

The net pension benefit liability consists of:

	Dec. 31, 2019	Dec. 31, 2018
Present value of funded obligations	(448.8)	(280.7)
Fair value of plan assets	441.4	293.9
Surplus/(deficit) of funded obligations	(7.4)	13.2
Present value of unfunded obligations	(75.6)	(149.0)
Total defined benefit plans	(83.0)	(135.8)
Defined contribution plans	-	(2.9)
Net asset/(liability) in the statement of financial position	(83.0)	(138.7)

Pension benefit liabilities

The pension liabilities of € 123.5 million mainly relates to pension plans of Vopak (€ 41.3 million) outside the Netherlands and a pension plan of Westag (€ 31.7 million) in Germany. Also included are two Formica pension plans in the United Kingdom (UK) with a net liability of nil.

Westag plan

The pension plan of Westag is unfunded and payments are made from Westag's 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.

Formica plans

Based on earlier recovery plans, a contribution of € 2.5 million was made to the Formica plans in 2019. Future contributions are dependent on the financial position of the plans. At December 31, 2019, the assets of the plans (€ 177.7 million) exceeded the obligations of the plans (€ 165.0 million) by € 12.7 million. The surplus in both pension plans has not been recognized since it is not possible to recognize any economic benefit from 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 plan 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 € 40.5 million relates for € 40.4 million to a surplus of a pension fund in the Netherlands (the 'pension fund') 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 178% at year-end 2018. The funding level at December 31, 2019, was preliminary calculated at 177%. 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.

For one multi-employer plan in the Netherlands the share of premiums contributed by a consolidated subsidiary, as part of total premiums paid to the plan by all participating employers in the plan, is significant. During the fourth quarter of 2019 this plan communicated a funded level of $110\%$ (2018: $109\%$ ) compared to a required $118\%$ . The plan has submitted an updated recovery plan to the DNB in 2017 as it continued to hold insufficient buffers. The exposure for the Company's subsidiary is limited to potential increases in future pension premiums. In 2020 the plan will merge with another multi-employer plan, this is not expected to affect the contribution to the plan by the respective subsidiary in 2020 expected at approximately € 4 million.

The movement in the net provision for defined benefit plans is as follows:

	2019	2018
Balance on January 1	(135.8)	(158.1)
Pension charge defined benefit plans continuing operations	(9.8)	(24.3)
Pension charge defined benefit plans discontinued operations	(6.4)	(7.6)
Consolidation	(29.3)	(27.2)
Contributions	12.2	42.7
Remeasurement effects	(41.6)	13.0
Benefits paid for unfunded plans	6.0	4.4
Reclassification to held for sale*	136.1	-
Plan amendments, settlements and curtailments	(11.1)	22.9
Exchange differences and other	(3.3)	(1.6)
Balance on December 31	(83.0)	(135.8)

The reclassification to held for sale mainly relates to GrandVision N.V.

In 2019, the remeasurement effects of € (41.6) million are primarily the result of lower discount rates. In 2018, the remeasurement effects of € 13.0 million were primarily the result of higher discount rates. The 2019 plan amendments relate to the liquidation of a pension plan (€ 27.1 million) which did not have any participants and the settlement of a pension plan (€ 16.0 million) related to the sale of the German terminals of Vopak. The net assets of the liquidated fund of € 27.1 million were transferred to the Company and did not result in any gain or loss on settlement. The € 16.0 million gain on settlement was included in other income as it related to a sales transaction.

The amounts recognized in the consolidated statement of income are as follows:

	2019	2018
Current service costs	7.7	22.0
Interest expense/(income)	1.5	1.2
Plan amendments, settlements and curtailments	-	(22.9)
Administrative costs	0.6	1.1
Total defined benefit costs	9.8	1.4
Other costs	62.9	47.1
Pension charges related to continuing operations	72.7	48.5
Pension charges related to discontinued operations	28.1	27.8
	100.8	76.3

Other costs mainly include costs related to defined contribution plans and multi-employer plans classified as defined contribution plans, as referred to above.

The 2018 result on plan amendments of € 22.9 million related to the settlement of a defined benefit pension plan of Vopak in the Netherlands.

Movements in the defined benefit obligation, for both funded and unfunded plans, and plan assets, net of application of asset ceiling, are as follows:

	Plan assets		Obligation
	2019	2018	2019	2018
Balance on January 1	293.9	1,389.8	429.7	1,547.9
Consolidation	217.0	-	246.3	27.2
Service cost	-	-	7.8	22.0
Interest income	9.2	17.6	-	-
Interest expense	-	-	10.7	18.8
Pension charges related to discontinued operations	0.6	0.4	7.0	7.8
Employer contributions	12.2	42.7	-	-
Employee contributions	2.5	2.9	2.5	2.9
Return on plan assets (excluding amounts included in interest income)	32.4	(19.4)	-	-
Experience adjustments	-	-	1.7	(1.3)
Change in financial assumptions	-	-	71.8	(27.6)
Change in demographic assumptions	-	-	0.5	(3.5)
Plan amendments, settlements and curtailments	(27.1)	(1,113.0)	(16.0)	(1,135.9)
Benefits paid	(28.8)	(32.6)	(35.0)	(37.1)
Reclassification	-	-	0.3	-
Reclassification to held for sale*	(79.5)	(0.2)	(215.6)	(0.3)
Exchange differences and other	9.0	5.7	12.7	8.8
Balance on December 31	441.4	293.9	524.4	429.7

The reclassification to held for sale mainly relates to GrandVision N.V.

The 2019 impact from plan amendments on plan assets relates to the settlement of a pension plan that had no participants. The net assets of the fund were transferred to the Company and did not result in any gain or loss on settlement. The 2019 impact from plan amendments on the obligation related to the settlement of a defined benefit pension plan of Vopak in connection to the divestment of the German terminals. The 2018 impact from plan amendments mainly related to the settlement of the defined benefit pension plan of Vopak.

The 2018 employer's contribution for defined benefit plans for Vopak included the one-off payment of € 18.0 million related to the settlement of Vopak's defined benefit pension plan in the Netherlands. The Company expects to contribute € 9.0 million to defined benefit plans in 2020.

The expected maturity analysis of undiscounted pension benefits is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Less than 1 year	17.8	16.1
1-2 years	18.5	16.8
2-5 years	58.7	49.0
> 5 years	741.7	681.6
	836.7	763.5

The principal weighted-average assumptions used were:

	Dec. 31, 2019	Dec. 31, 2018
Discount rate/return on assets	2.00%	2.41%
Future inflation rate	2.32%	1.81%
Future salary increases	3.43%	2.64%
Life expectancy in years:
Age 65 for men	21.5	20.3
Age 65 for women	22.5	22.9
Age 65 in 20 years for men	22.9	22.2
Age 65 in 20 years for women	24.6	24.6

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, 2019:

	Level 1	Level 2	Level 3	Total	Total (%)
Equity instruments	138.4	44.5	-	182.9	40.3%
Debt instruments	93.7	140.6	0.1	234.4	51.6%
Cash and cash equivalents	22.2	-	-	22.2	4.9%
Other	14.5	-	0.1	14.6	3.2%
	268.8	185.1	0.2	454.1	100.0%

Plan assets included as of December 31, 2018:

	Level 1	Level 2	Level 3	Total	Total (%)
Equity instruments	111.4	0.1	-	111.5	37.9%
Debt instruments	25.4	61.3	0.2	86.9	29.6%
Cash and cash equivalents	47.3	-	-	47.3	16.1%
Other	0.5	47.5	0.2	48.2	16.4%
	184.6	108.9	0.4	293.9	100.0%

Other assets mainly represent assets at insurance companies with respect to vested benefits, real estate and derivatives.

The sensitivity of the defined benefit obligation to changes in the weighted-average principal assumptions is as follows:

	Impact on obligation
	Change	Increase	Decrease
Discount rate/return on assets	1.00%	(50.6)	67.1
Future inflation rate	1.00%	38.7	(30.3)
Future salary increases	0.25%	3.7	(3.4)
Life expectancy	1 year	14.8	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' bond holdings. The majority of the plans' obligations are to provide benefits for the lifetime of the members, therefore increases in life expectancy will result in an increase in the plans' liabilities.

20. Provisions

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. 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.

Provisions are presented in the statement of financial position as follows:

	Dec. 31, 2019	Dec. 31, 2018
Current	49.9	68.7
Non-current	105.2	83.4
	155.1	152.1

The breakdown and movement in provisions is as follows:

	Environmental	Employee related	Restructuring and legal	Claims, legal & regulatory	Other	Total
Balance on January 1, 2018	16.0	20.5	8.0	78.8	42.1	165.4
Addition to provision	8.0	23.6	3.4	7.3	6.8	49.1
Consolidation	-	-	0.3	-	1.3	1.6
Utilized during the year	(3.7)	(24.7)	(4.7)	(11.1)	(18.0)	(62.2)
Exchange differences	-	(0.4)	-	(1.0)	-	(1.4)
Released	(0.4)	(0.1)	(0.9)	-	(0.7)	(2.1)
Net addition related to discontinued operations	-	2.5	-	1.7	(1.5)	2.7
Reclassifications and other movements	0.3	(1.7)	(3.9)	3.4	0.9	(1.0)
Balance on December 31, 2018	20.2	19.7	2.2	79.1	30.9	152.1
Balance on January 1, 2019	20.2	19.7	2.2	79.1	30.9	152.1
Addition to provision	3.8	40.5	29.7	10.3	8.8	93.1
Consolidation	2.9	12.0	0.2	-	0.8	15.9
Utilized during the year	(4.0)	(41.7)	(7.6)	(4.4)	(10.0)	(67.7)
Exchange differences	0.2	(0.4)	-	-	0.2	-
Released	(0.2)	(1.3)	(0.3)	(7.9)	(2.0)	(11.7)
Net addition related to discontinued operations	-	7.5	-	1.6	5.6	14.7
Reclassification to held for sale	-	(14.1)	-	(19.7)	(8.4)	(42.2)
Reclassifications and other movements	0.2	1.2	(0.7)	(2.2)	2.4	0.9
Balance on December 31, 2019	23.1	23.4	23.5	56.8	28.3	155.1

Claims, legal & regulatory

This category includes a provision for potential fines in connection with an investigation in France by the French Competition Authority (FCA) and relates to GrandVision and Safilo. The part of the provision related to GrandVision has been classified as held for sale as of July 30, 2019. In June 2009, the FCA began investigations into certain optical suppliers and optical retailers active in the branded sunglasses and branded frames sector in France, including GrandVision and Safilo. The authorities are investigating whether these parties have entered into vertical restraints in relation to the distribution of branded sunglasses and branded frames. In May 2015, GrandVision and Safilo received a statement of objections ('notification de griefs') from the FCA, which contains the FCA's preliminary position on alleged anti-competitive practices and does not prejudice its final decision. If the FCA concludes that there was a violation, it will impose a fine, which may be contested in court. GrandVision and Safilo have examined the FCA's preliminary findings reported in the statement of objections and a provision has been recorded, determined by an assessment of the probability and amount of potential liability. A report dated July 21, 2016, was received from the FCA, reconfirming the accusation and confirming the assumptions of the probability and amount of the potential liability. On December 15, 2016, a hearing was held before the FCA during which all parties were given the opportunity to defend their case. On February 24, 2017, the FCA decided to refer the entire case back for further investigation to the FCA's investigation services, without imposing any sanction on any of the companies currently under investigation. The next step will be another audience before the FCA. On April 19, 2019. Safilo received a new statement of objections. In July 2019, Safilo filed a statement in which it contested all charges raised by the FCA. No developments have occurred since.

Restructuring

Provisions include a reorganization provision at Safilo of € 20.8 million relating to the reorganization of the Italian Safilo companies in accordance with its business plan 2020-2024.

Debt and other financial liabilities

Debt is initially recognized at fair value, less any directly related transaction costs. Certain debt is designated as being part of a fair value hedge relationship. In these cases, 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 37 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. 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:

	Dec. 31, 2019	Dec. 31, 2018
Debt	2,764.0	3,649.9
Other financial liabilities	92.5	110.4
	2,856.5	3,760.3

	Dec. 31, 2019	Dec. 31, 2018
Non-current debt and other financial liabilities
Mortgage loans	310.8	412.4
Private placements	1,628.2	1,445.5
Other loans	120.5	736.4
Total non-current debt	2,059.5	2,594.3
Non-current other financial liabilities	71.0	86.7
Total non-current debt and other financial liabilities	2,130.5	2,681.0
Current debt and other financial liabilities
Bank overdrafts	210.1	153.1
Bank loans	285.5	90.1
Current portion of long-term debt	188.6	256.0
Commercial paper	-	417.9
Other current loans	20.3	138.6
Total current debt	704.5	1,055.7
Current other financial liabilities	21.5	23.6
Total current debt and other financial liabilities	726.0	1,079.3
Total debt and other financial liabilities	2,856.5	3,760.3
The summary of debt per currency is as follows:
	Dec. 31, 2019	Dec. 31, 2018
---	---	---
Euro	948.9	1,893.2
U.S. dollar	1,474.6	1,452.8
Singapore dollar	105.9	69.0
Other currencies	234.6	234.9
	2,764.0	3,649.9

Mortgage loans are secured by mortgages and pledges on vessels, real estate, inventory and receivables with a corresponding carrying value of € 622.5 million (2018: € 717.6 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 to an amount of € 272.5 million (2018: € 389.6 million) by non-possessory pledges on machinery and equipment, receivables, inventories and other current assets.

The debt position relates for € 1,865 million (67.5%) to Vopak (2018: € 1,903 million, 52.1%). This debt mainly consists of unsecured private placements in the U.S. and Asian markets. The average remaining maturity at the end of 2019 was 5.2 years (2018: 6.6 years).

For 100% of the bank debt, the applicable covenants were complied with during 2018 and 2019. The table below provides details on certain company-specific covenants that applied in 2019.

	Debt	Required	Actual
Vopak	1,303.2
Maximum senior net debt:EBITDA ratio		3.75	2.75
Minimum interest cover ratio		3.50	10.40
Other	1,460.8
Total debt	2,764.0

The application of IFRS 16 had no effect on the debt covenants of Vopak as the related ratios are based on the accounting policies that were applicable on the date of entering into the debt agreements ("frozen GAAP").

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 € 72.1 million (2018: € 60.7 million), of which € 48.1 million (2018: € 58.0 million) is included as non-current liabilities. Reference is made to note 35 on share-based compensation. Also included are earn-out and deferred/contingent payments with respect to acquisitions for € 18.4 million (2018: € 39.4 million) and other liabilities of € 2.0 million (2018: € 10.3 million). These liabilities expire during 2020 through 2024.

The fair value of debt and other financial liabilities is disclosed in note 37.

22. Accrued expenses

Accrued expenses consist of:

	Dec. 31, 2019	Dec. 31, 2018
Employee-related accruals	144.6	275.5
VAT and other tax liabilities	67.2	66.8
Other	280.7	403.7
Total accrued expenses	492.5	746.0

23. Revenues

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 Optical retail, Quoted and Unquoted segments. Sales on a wholesale basis are present in the Quoted minority interest and Unquoted segments. The Optical retail segment also includes revenues from sales to franchisees, for which revenue recognition is similar to wholesale revenues. 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 (refer to note 20). 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.

Rendering of service

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 Optical and Unquoted segments. 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 (primarily gas carriers) 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's 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.

The Company's 2019 revenue can be disaggregated as set out on the following page.

2019	Europe	USA & Canada	Asia	Other	Total	Optical retail	Quoted	Unquoted
Revenue from contracts with customers
Sale of goods	2,589.8	565.7	256.1	95.8	3,507.4	-	909.5	2,597.9
Services	890.3	238.6	301.5	187.3	1,617.7	-	1,252.7	365.0
	3,480.1	804.3	557.6	283.1	5,125.1	-	2,162.2	2,962.9
Revenue from other sources
Other revenue	13.4	0.3	14.9	6.2	34.8	-	32.3	2.5
Total revenue from continuing operations	3,493.5	804.6	572.5	289.3	5,159.9	-	2,194.5	2,965.4
Revenue from discontinued operations	3,679.7	80.7	5.2	273.7	4,039.3	4,039.3	-	-
Total revenue	7,173.2	885.3	577.7	563.0	9,199.2	4,039.3	2,194.5	2,965.4

The Company's 2018 revenue can be disaggregated as follows:

2018	Europe	USA & Canada	Asia	Other	Total	Optical retail	Quoted	Unquoted
Revenue from contracts with customers
Sale of goods	2,374.2	433.2	78.8	112.3	2,998.5	-	910.5	2,088.0
Services	882.5	278.4	335.0	9.9	1,505.8	-	1,203.2	302.6
	3,256.7	711.6	413.8	122.2	4,504.3	-	2,113.7	2,390.6
Revenue from other sources
Other revenue	89.9	21.8	15.1	1.4	128.2	-	117.0	11.2
Total revenue from continuing operations	3,346.6	733.4	428.9	123.6	4,632.5	-	2,230.7	2,401.8
Revenue from discontinued operations	3,380.7	74.4	6.0	259.9	3,721.0	3,721.0	-	-
Total revenue	6,727.3	807.8	434.9	383.5	8,353.5	3,721.0	2,230.7	2,401.8

Revenue from other sources for 2018 included € 39.0 million related to compensation for early termination of the Gucci license at Safilo. The total compensation amounted to € 90.0 million of which € 43.0 million was received in 2017 and € 8.0 million in 2016.

Expected future revenues from continuing operations can be specified as follows:

	2019	2018
Future revenues in order book	74.1	113.1
Future revenues from current projects	13.0	0.2
	87.1	113.3
Future revenues expected to be realized in 2019	-	113.1
Future revenues expected to be realized in 2020	84.0	-
Future revenues expected to be realized in 2021	0.7	0.1
Future revenues expected to be realized in 2022 - 2024	2.2	0.1
Future revenues expected to be realized in or after 2025	0.2	-

Future revenues in order book primarily relates to the office furniture and (high-pressure laminates) material-technology businesses. Future revenues from current projects mainly relate to the unfulfilled part of extended (service-type) warranties.

The table below provides a reconciliation of the contract liabilities for the periods presented.

	Deferred revenues		Customer prepayments
	2019	2018	2019	2018
Balance on January 1	100.6	136.6	68.2	61.1
Recognized as revenue in current period	(101.8)	(137.2)	(79.3)	(66.3)
Payments	80.2	98.7	109.3	76.0
Consolidation	-	0.1	(0.1)	(1.8)
Reclassification to liabilities held for sale	(36.0)	-	(62.6)	-
Exchange differences and other	0.5	2.4	4.1	(0.8)
Balance on December 31	43.5	100.6	39.6	68.2

24. Income from marketable securities and deposits

Income from marketable securities and deposits includes realized and unrealized capital gains and losses, impairment losses, interest, dividends and management fees.

Realized and unrealized capital gains and losses are calculated on an average-cost basis. Interest income on financial instruments recorded at amortized cost is recognized on an accrual basis, using the effective interest rate method. Dividends and interest on financial instruments measured at fair value through other comprehensive income are recognized when the right to receive payment is established.

	2019	2018
Capital gains/(losses) including impairments	(2.5)	(24.0)
Interest income	1.0	1.9
Dividends	7.3	14.8
Management fees	(0.3)	(0.4)
	5.5	(7.7)

25. Share of results from associates and joint ventures

Associates and joint ventures are accounted for using the equity method, which involves recognition in the consolidated statement of income the Company's share of the net result of the associate or joint venture. When the Company's 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's 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.

	2019	2018
Share of results*	192.4	(41.8)
Revaluation upon gaining control	1.1	-
Continuing operations	193.5	(41.8)
Discontinued operations	(0.7)	(0.7)
	192.8	(42.5)

Share of results from real estate joint ventures of €(4.6) million (2018: € (0.5) million) is classified as income from real estate activities in the consolidated statement of income

For details on impairments, reference is made to note 36.

26. Income from other financial assets

Interest income on loans granted is recognized on an accrual basis, using the effective interest method. Interest and dividend income on financial assets measured at fair value through other comprehensive income is recognized when the right to receive payment is established.

	2019	2018
Dividends	13.3	7.6
Other	7.0	7.3
	20.3	14.9

27. Income from real estate activities

The Company develops, leases and sells residential 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.

	2019	2018
Capital gains	-	9.7
Rental and residential income	2.3	1.3
Share of results from real estate joint ventures	(4.6)	(0.5)
Operating expenses	(0.2)	(0.3)
	(2.5)	10.2

28. Other income (net)

The 2019 other income relates primarily to the gains on the disposal of terminals by Vopak (€ 243.1 million) and the disposal of Intersafe (€ 40.3 million), partially offset by the loss on the disposal of the US retail activities of Safilo (€ 13.6 million). Reference is made to note 8 for further details on these disposals.

29. Employee expenses

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 35 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.

	2019	2018
Wages and salaries	1,046.9	852.3
Social security costs	169.9	143.1
Pension costs	72.7	48.5
Other	95.1	129.5
Continuing operations	1,384.6	1,173.4
Discontinued operations	1,398.4	1,274.3
Total	2,783.0	2,447.7

The 2018 pension costs include an exceptional gain of € 19.1 million related to the settlement of the Dutch defined benefit pensions plan of Vopak (refer to note 19). The average number of persons employed by the Company and its subsidiaries during 2019 was 57,919 (2018: 52,352) on a full-time equivalent basis. Of these persons, 34,143 (2018: 32,400) were employed at a discontinued operation.

30. Other operating expenses

Operating expenses, including rent and marketing, are recognized in the consolidated statement of income when incurred.

Other operating expenses include the following:

	2019	2018
Housing	23.5	164.2
Marketing and publicity	144.0	124.0
Staffing expenses Atlas Professionals B.V.	177.9	161.0
Information and communication	71.5	59.5
Royalty expenses	66.7	66.6
Other	648.7	563.6
Continuing operations	1,132.3	1,138.9
Discontinued operations	654.4	953.2
Total	1,786.7	2,092.1

Research and development costs expensed, included in other, amounted to € 29.0 million (2018: € 23.8 million). Expenses recognized in the consolidated statement of income in respect of low-value asset leases and short-term leases amounted to € 23.2 million and in respect of variable lease payments € 102.0 million was expensed. In 2018 € 132.4 million was recognized fas operating lease expense, excluding € 402.2 million related to discontinued operations.

31. Financial income and expense

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 ('earn-out' 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:

	2019	2018
Financial expense	178.1	231.8
Other financial income	41.5	50.0
Net finance costs continuing operations	136.6	181.8
Net finance costs discontinued operations	49.4	18.3
	186.0	200.1

Financial expense includes:

	2019	2018
Interest expense on lease liabilities	29.9	-
Other interest expense	101.1	118.6
Exchange differences, net of hedges	37.4	98.6
Revaluation of earn-out liabilities	0.6	-
Other	9.1	14.6
Continuing operations	178.1	231.8
Discontinued operations	53.1	20.2
	231.2	252.0

The 2018 financial expense includes a loss of € 50.2 million related to recycling of historical unrealized currency translation losses from equity as a result of the deconsolidation of Vopak Venezuela, refer to note 8 for more details.

Other financial income includes:

	2019	2018
Interest income	2.7	9.0
Exchange differences	28.0	38.0
Derivatives, not included in hedge accounting	3.8	-
Other	7.0	3.0
Continuing operations	41.5	50.0
Discontinued operations	3.7	1.9
	45.2	51.9

32. Income tax expense

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's estimates of whether additional taxes will be due.

	2019	2018
Current income taxes	108.3	81.6
Deferred income taxes	(13.2)	(0.2)
Income tax from continuing operations	95.1	81.4
Income tax from discontinued operations	79.2	81.6
	174.3	163.0

The 2019 tax charge includes an impairment of deferred tax assets at Safilo of € 26.1 million which mainly relates to a write down of deferred tax assets following an impairments test which resulted in a full write down of goodwill at the level of Safilo.

In 2018, future decreases in (enacted) tax rates and a reduction of the utilization period for carryforward losses, primarily in the Netherlands, incurred a net reduction in deferred tax liabilities of € 20.9 million, recognized in the income tax line.

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:

	2019	2018
Profit before income tax from continuing operations	696.9	231.4
Less: after-tax share of results from associates and joint ventures	(193.5)	41.8
Less: non-taxable other income (sale of subsidiaries and associates)	(265.5)	-
Adjusted profit before income tax	237.9	273.2
Income tax expense	95.1	81.4
Effective tax rate (%) on continuing operations	40.0	29.8

	2019		2018
Composition	Amount	%	Amount	%
Weighted-average statutory tax rate	53.4	22.5	56.6	20.7
Goodwill impairment	(12.1)	(5.1)	-	-
Recognition of tax losses*	54.9	23.1	15.2	5.6
Non-taxable income	(9.4)	(4.0)	(6.2)	(2.3)
Non-deductible expenses	15.9	6.7	36.9	13.5
Adjustment tax provisions and PY adjustments	(7.9)	(3.3)	(0.2)	(0.1)
Rate changes	0.3	0.1	(20.9)	(7.6)
Effective tax (rate) on continuing operations	95.1	40.0	81.4	29.8
Impact from discontinued operations	79.2		81.6
Effective tax	174.3		163.0

Current period losses that are not recognized increase the effective tax rate. When previously unrecognized tax losses are recognized, this reduces the effective tax rate.

Taxes recognized in other comprehensive income:

	2019	2018
Deferred tax
On changes in the fair value of fixed assets	1.2	(9.0)
On changes in the fair value of financial assets measured through other comprehensive income	0.1	(2.6)
On changes in defined benefit obligations	8.5	(2.9)
	9.8	(14.5)
Current tax
On changes in the fair value of cash flow hedges	3.5	0.9
On changes in defined benefit obligations	0.9	(0.5)
On changes in the fair value of fixed assets	(1.2)	-
On changes in the fair value of financial assets measured through other comprehensive income	2.3	-
	5.5	0.4
	15.3	(14.1)

33. Earnings per Share

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 33.64.

The calculation of the time-weighted average number of outstanding shares is as follows:

x 1,000	2019	2018
Issued and outstanding Shares at January 1	81,654	80,001
Sale and transfer of treasury shares	12	13
Purchase of treasury shares	-	(3)
Vesting of shares granted to members of the Executive Board	4	-
Dividend paid in stock	904	874
Average number of outstanding Shares at December 31	82,574	80,885

There was no dilutive effect on earnings per Share in the years presented.

34. Cash flows from operating activities

Cash flows from operating activities		2019	2018
Profit before taxes from continuing operations		696.9	231.4
Profit before taxes from discontinued operations		540.0	307.6
Depreciation and impairments	4,5	505.2	503.5
Depreciation and impairments right-of-use assets	6	312.3	-
Amortization and impairments	7	224.2	191.0
Badwill recognized on acquisitions	8	(7.3)	-
(Profit)/loss on sale of other financial assets and marketable securities	24	(5.5)	24.0
Fair value gain on remeasurement of previously held equity interest	25	(1.1)	-
Results from associates and joint ventures, net of impairments	9, 25	(187.1)	43.0
(Profit)/loss on sale of property, plant, equipment and investment properties	28	1.7	(11.4)
(Profit)/loss on assets and liabilities held for sale	28	(270.2)	-
Net financial expense	31	186.0	200.1
Other movements in provisions and pension benefits		52.2	(34.0)
Dividend from associates and joint ventures		142.6	86.2
Changes in working capital		37.6	5.9
Cash generated from operating activities		2,227.5	1,547.3

Changes in working capital, excluding exchange differences and the effect of acquisitions:

	2019	2018
Accounts receivable	(6.3)	38.4
Inventories	(25.2)	40.2
Other current assets	(51.6)	(21.9)
Accounts payable	102.3	(84.0)
Accrued expenses	18.4	33.2
	37.6	5.9

35. Share-based compensation

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:

	2019	2018
HAL Holding N.V.
Share Plan*	1.5	1.6
Vopak
Long-Term Share Plans*	5.4	2.0
Long-Term Share Plans**	0.5	0.8
Long-Term Cash Plans**	2.9	1.2
Safilo
Stock Option Plans*	-	(0.2)
Unquoted subsidiaries
Cash Plans**	1.3	10.5
Total from continuing operations	11.6	15.9
Discontinued operations	5.0	3.8
	16.6	19.7

Equity-settled
**Cash-settled

Changes in equity for share-based compensation plans amounted to:

	2019	2018
HAL Holding N.V.
Share Plan	1.5	1.6
Vopak
Long-Term Share Plans	5.4	2.0
Safilo
Stock Option Plan 2014	0.0	(0.2)
Total from continuing operations	6.9	3.4
Discontinued operations	5.6	3.0
	12.5	6.4

Liabilities recognized in relation to cash-settled share-based compensation are comprised of:

	Dec. 31, 2019	Dec. 31, 2018
Vopak
Long-Term Share Plans	0.7	1.0
Long-Term Cash Plans	3.8	1.7
Unquoted subsidiaries
Cash Plans	67.6	57.2
Total from continuing operations	72.1	59.9
Discontinued operations (2019: held for sale)	-	0.8
	72.1	60.7

The current part of this liability of € 24.0 million (2018: € 2.7 million) is included under current other financial liabilities and the non-current part of € 48.1 million (2018: € 58.0 million) under non-current other financial liabilities.

HAL Holding N.V.

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	2019	2018
Outstanding shares on January 1	59	59
Vested	(39)	-
Outstanding shares on December 31	20	59

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 is still employed with the Company on June 1, 2021. These shares are restricted until June 1, 2026. The fair value of the shares granted of € 149.40 has been determined based on the HAL Trust share price at the grant date, reduced with the expected discounted future dividends payable during the vesting period since Mr. M.F. Groot is not entitled to receive dividends during the vesting period.

The Supervisory Board resolved, on November 19, 2014, to grant each of Messrs. A.A. van 't 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, 2011, the Supervisory Board resolved to grant Mr. M.F. Groot, chairman of the Executive Board, 50,000 shares HAL Trust. These shares vested in 2016 and are restricted until May 18, 2021.

Vopak

Long-Term Share Plans (LTSP)

The LTSPs reward participants for the increase in Vopak's earnings per share (Vopak's EPS) performance during a three-year performance period, from their respective start dates in 2017, 2018 and 2019 at a pre-set Vopak EPS target. If a considerable, ambitious improvement in Vopak's EPS has been achieved during the three-year performance period, a long-term remuneration will be awarded. The 2016 LTSP was vested and settled during 2019.

The conditional awards granted under the LTSPs 2017-2019 can be summarized as follows:

x 1,000	2019	2018
Outstanding conditional awards on January 1	281	255
Granted	98	104
Forfeited	(9)	(1)
Settled	(92)	(77)
Outstanding conditional awards on December 31	278	281

The weighted-average fair value of the equity-settled LTSP awards granted in 2019 of € 41.60 (2018: € 39.00) has been determined based on Vopak's share price at the grant date.

Long-Term Cash Plan (LTCP)

For Vopak senior managers who are not eligible to participate under the LTSP but who contribute significantly to Vopak's shareholder value, three-year cash plans have been granted. These plans provide for additional pay in the form of deferred compensation under the terms and conditions of the plan after the vesting period. The financial performance is measured by Vopak's EPS growth during the three-year performance period.

Unquoted subsidiaries

Cash plans

The cash plans provide eligible participants with a right to participate in unlisted subsidiaries' 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.

36. Impairment of non-financial, non-current assets

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's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and an asset's value in use. Goodwill is allocated to groups of cash-generating units (CGU's) 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's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

For 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 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 primary impairment test for the Company relates to annual goodwill impairment testing. Property, plant and equipment (primarily terminals) as well as joint ventures are reviewed and, when required, tested. This primarily occurs at the level of Vopak whereby judgment is exercised by Vopak management.

Significant accounting estimates and judgments

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 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 for both continuing and discontinued operations:

	2019	2018
Property, plant and equipment	48.5	0.5
Goodwill	62.7	30.7
Other intangibles	36.8	24.4
	148.0	55.6

Impairment losses by segment are as follows:

	2019	2018
Unquoted	18.1	1.8
Quoted minority interests	77.9	6.3
Total from continuing operations	96.0	8.1
Discontinued operations (optical retail)	52.0	47.5
	148.0	55.6

Impairment losses, net of reversals, are included as follows in the consolidated statement of income:

	2019	2018
Amortization and impairment of intangible assets	48.6	8.6
Depreciation and impairment of property, plant, equipment and investment properties	47.4	(0.5)
Total from continuing operations	96.0	8.1
Discontinued operations (optical retail)	52.0	47.5
	148.0	55.6

All impairments are included in the exceptional items (note 2).

Discontinued operations

The carrying value of the Company's 76.72% ownership interest in GrandVision in the books of the Company amounts to € 1,225 million. At the agreed transaction price of € 28.00 per share the value of this ownership interest is approximately € 5.5 billion (level 1 fair value). As a result, management does not consider this asset to be impaired.

As a result of the announced transaction and in accordance with IFRS, no impairment testing on individual assets of GrandVision has been performed for the purpose of these financial statements subsequent to July 31, 2019 (the date this asset was classified as held for sale). Reference is made to note 3 for further information on the transaction.

Property, plant and equipment

Impairments of property, plant and equipment primarily related to Safilo and Vopak. Property plan and equipment of Safilo was impaired by € 34 million. This impairment primarily related to 100% of the remaining balance of the purchase price accounting adjustments with respect to property, plant and equipment that were recognized upon achieving deemed control (under IFRS 10) over Safilo. The impairment was recognized subsequent to the impairment at Safilo of its entire remaining goodwill balance of € 223 million (no goodwill with respect to Safilo is recorded at the Company) as a result of adverse market conditions and lower profitability than previously anticipated as well as the reorganization of the supply chain organization at Safilo.

With respect to Vopak, in performing the impairment test, Vopak management made an assessment of whether the cash-generating unit (mostly an individual terminal) 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. Key assumptions applied are the expected occupancy, the estimated storage rate per cbm (for revenues not covered by long-term contracts), sustaining capital expenditures, expected growth rates and the estimated terminal value after the 15-year period, together with the applied discount rates. The discount rates are based on 15-year government bonds, adjusted for a risk premium and specific country risks. The equity market risk premium was assumed 6.0% by Vopak management (2018: 6.0%).

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 by continuing use. For other terminals, the fair value less cost of disposal is primarily based on a combination of the estimated normalized EBITDA and transaction multiples observable in the merger and acquisition (M&A) markets for comparable terminals (level 2 fair value) together with discounted cash flow models (level 3 fair value). The value in use and fair value less cost of disposal assessments may change over time and when applicable could result in future (reversal of recognized) impairments.

2019

Vopak Terminals of Canada - Quebec City

In the fourth quarter of 2019, the Intangible assets and Property, plant and equipment of an oil terminal in Quebec City in Canada were fully impaired for € 14.7 million. This impairment is triggered by the fact that the current land lease agreement expires in 2020, and no agreement has been reached yet on the renewal of the lease, which is subject to ongoing discussions.

2018

Vopak Terminal Kandla (India)

An impairment of € 4.6 million was recognized in 2018 due to the uncertainty of renewal of the concessions for some of the terminal's land leases. As a result of this situation some of the tank capacity is currently not permitted to be upgraded and is therefore not in operation.

Vopak Terminal Vietnam

A reversal of an impairment of € 6.9 million was recognized for this terminal in 2018, partially offset by depreciation expenses of € 2.1 million. This reversal resulted from the structural improvement in performance of the terminal, driven by favorable market conditions due to strong domestic consumption and a robust manufacturing sector.

Goodwill

Vopak and Safilo are both listed entities. The 2019 financial statements include no goodwill relating to Safilo. At the end of 2019, the stock market value of the ownership interest in Vopak exceeded its carrying value by € 1,487.9 million. This stock market value qualifies as level 1 in the fair value hierarchy.

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 2019 and 2018, the value-in-use method was applied to most of the goodwill tested. For 17.9% (2018: 21.9%) of the goodwill tested, the fair value less cost of disposal used, using a discounted cash flow model.

Key assumptions used for value-in-use calculations are included as follows:

	2019	2018
Unquoted investments
Weighted-average increase in revenues	3.3%	4.3%
Weighted-average gross margin	64.3%	65.0%
Weighted-average pre-tax discount rate	12.5%	14.2%
Growth rate beyond year five	0.0%	0.0%

The result of the goodwill impairment testing process performed in the fourth quarter of 2019 was that the carrying value of goodwill relating to AN Direct was impaired for € 12.0 million, which is recorded under amortization and impairments of intangible assets in the consolidated statement of income. In the second quarter of 2019, before classification of GrandVision as held for sale, HAL recorded an impairment of € 50.7 million on GrandVision's cash-generating unit United States of America. This is included in the result from discontinued operations.

The impairment charges and recoverable amounts in the segments Optical retail ( discontinued operations as from July 31, 2019) and Unquoted can be detailed as follows:

	Impairment		Recoverable amount
	2019	2018	2019	2018
GrandVision N.V. - Italy (discontinued operations)	-	30.7	-	172.1
GrandVision N.V. - United States (discontinued operations)	50.7	-	63.2	-
AN Direct B.V.	12.0	-	4.1	-
	62.7	30.7	67.3	172.1

During the reporting period an impairment was recognized for GrandVision's activities in the United States, further detailed in note 3 on discontinued operations.

The impairment of the goodwill related to AN Direct was the result of lower sales than previously anticipated, among others due to increased competition. In addition to the full goodwill balance of € 12.0 million, also other intangibles assets were considered impaired for € 6.1 million (see below). The recoverable amount was determined using the fair value less cost of disposal method. The impairment test was performed using cash flow projections for a period of ten years, based on the new business plan. An average revenue growth of $2\%$ was included for the forecast period and no revenue growth for the calculation of the terminal value. The projected cash flows and terminal value were discounted taking into account a $12.2\%$ post-tax discount rate that excludes cost of leasing and reflects the country-specific risks of the United States. The carrying amount of the cash-generating unit included lease liabilities under the assumption that the lease liabilities would be transferred to the buyer, should the business be sold.

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 for the Unquoted segment as follows:

	2019	2018
2% lower increase in revenues	5.7	4.5
2% increase in the discount rate	22.7	12
2% lower gross margin	38.4	19

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 € 45.3 million (2018: € 19.0 million).

Other intangibles

Trademark valuations are most sensitive to the royalty rate, revenue growth and the discount rate used. In 2019 impairments were recognized on trademarks for € 3.0 million (2018: € 14.1 million), related to AN Direct subsequent to the full impairment of the goodwill relating to this subsidiary. The impairment was calculated based on the same model as the goodwill impairment model (see above).

In 2019 impairments on customer relationships were recognized of € 29.0 million (2018: nil), mainly (€ 27.2 million) related to the impairment of the full remaining balance of the purchase price accounting adjustments with respect to customer relationships that were recognized upon achieving deemed control (under IFRS 10) over Safilo, subsequent to the impairment at Safilo of its entire remaining goodwill balance of € 223.0 million (no goodwill with respect to Safilo is recorded at the Company) as a result of adverse market conditions and lower profitability than previously anticipated.

Impairments were recognized in 2019 on software of € 1.4 million (2018: € 5.6 million), mainly related to AN Direct.

The total amount of impairments recognized on other intangibles was € 36.8 million (2018: € 24.4 million).

37. Financial instruments

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 3).

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

When available, 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 analysis, using expected future cash flows and a market-related discount rate, are used (level 2).

Other liabilities

Obligations to acquire non-controlling interests 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 (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.

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.

102

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's financial instruments per line item, stating the classification of the instruments, their fair value and their level within the fair value hierarchy:

| December 31, 2019 | Fair value
fair value
comprehensive
level | Financial assets at
amortized
cost | Fair value
through
profit and
loss | Total
book
value | Total
fair
value |
| --- | --- | --- | --- | --- | --- |
| Assets | | | | | |
| Other financial assets | | | | | |
| - Quoted equity securities | 1 | 553.0 | - | 553.0 | 553.0 |
| - Unquoted debt securities | 2 | - | 188.2 | 188.2 | 188.2 |
| - Unquoted equity securities | 3 | 30.1 | - | 30.1 | 30.1 |
| Marketable securities | | | | | |
| - Quoted equity securities | 1 | - | - | 148.9 | 148.9 |
| - Quoted debt securities | 1 | 71.0 | - | 71.0 | 71.0 |
| - Unquoted equity securities | 2 | - | - | 2.7 | 2.7 |
| Derivatives | 2 | - | - | 48.7 | 48.7 |
| Other current assets | | - | 232.7 | 232.7 | 232.7 |
| Receivables | | - | 857.7 | 857.7 | 857.7 |
| Cash | | - | 1,558.6 | 1,558.6 | 1,558.6 |
| Total financial assets | | 654.1 | 2,837.2 | 3,691.6 | 3,691.6 |

104

December 31, 2019	Fair value level		Financial liabilities at amortized cost	Fair value through profit or loss	Total book value	Total fair value
Liabilities
Debt and other financial liabilities
- Non-current debt	2		2,059.5	-	2,059.5	2,298.8
- Current debt	2		704.5	-	704.5	704.5
- Other financial liabilities	2		1.9	-	1.9	1.9
- Other financial liabilities	3		-	90.6	90.6	90.6
Lease liabilities	2		955.8	-	955.8	955.8
Derivatives	2		-	46.8	46.8	46.8
Accounts payable			771.9	-	771.9	771.9
Total financial liabilities			4,493.6	137.4	4,631.0	4,870.3
December 31, 2018	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
Other financial assets
- Quoted equity securities	1	425.1	-	-	425.1	425.1
- Unquoted debt securities	2	-	167.1	-	167.1	167.1
- Unquoted equity securities	3	11.2	-	-	11.2	11.2
Marketable securities
- Quoted equity securities	1	-	-	199.5	199.5	199.5
- Quoted debt securities	1	55.8	-	-	55.8	55.8
- Unquoted equity securities	2	-	-	19.4	19.4	19.4
Derivatives	2	-	-	56.7	56.7	56.7
Other current assets		-	337.6	-	337.6	337.6
Receivables		-	895.9	-	895.9	895.9
Cash		-	2,276.5	-	2,276.5	2,276.5
Total financial assets		492.1	3,677.1	275.6	4,444.8	4,444.8
December 31, 2018	Fair value level		Financial liabilities at amortized cost	Fair value through profit or loss	Total book value	Total fair value
---	---	---	---	---	---	---
Liabilities
Debt and other financial liabilities
- Non-current debt	2		2,594.2	-	2,594.2	2,799.3
- Current debt	2		1,055.7	-	1,055.7	1,055.7
- Other financial liabilities	2		10.3	-	10.3	10.3
- Other financial liabilities	3		-	100.1	100.1	100.1
Derivatives	2		-	55.1	55.1	55.1
Accounts payable			861.0	-	861.0	861.0
Total financial liabilities			4,521.2	155.2	4,676.4	4,881.5

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. The Company's policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.

A reconciliation of level 3 financial liabilities for the period is given below:

	2019	2018
Balance on January 1	100.1	95.3
Additions	25.6	30.0
Settlements	(26.7)	(39.8)
(Gains)/losses through income continuing operations	4.6	11.8
(Gains)/losses through income discontinued operations	-	0.8
Reclassification to held for sale	(13.0)	-
Exchange differences	-	2.0
Balance on December 31	90.6	100.1

38. Derivatives and hedge accounting

Derivatives are measured at fair value with any related transaction costs expensed as incurred. Reference is made to the accounting policies in note 37 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.

106

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:

	Assets		Liabilities
	2019	2018	2019	2018
Currency derivatives	48.6	55.7	(39.4)	(44.3)
Interest rate derivatives	0.1	1.0	(7.4)	(10.8)
	48.7	56.7	(46.8)	(55.1)
Current	29.2	27.3	(39.7)	(22.4)
Non-current	19.5	29.4	(7.1)	(32.7)
	48.7	56.7	(46.8)	(55.1)

For an overview of the movements in the cash flow hedge reserve in equity, reference is made to note 17. Information on fair value measurement of derivatives is included in note 37, disclosure on financial risk management, including hedging, is provided in note 39.

39. Financial risk management

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. 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

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 is generally monitored and managed on the level of each subsidiary and on the level of the controlled minority interests (Vopak and Safilo). These receivables generally

have short payment periods, reference is made to note 12 for more information on trade receivables.

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. For credit risk on bonds, the Company tracks the credit ratings assigned to these instruments or their issuers and periodically reviews the related provision for impairment. Loans provided are generally secured and derivatives are entered into under ISDA master agreements, which provide certain credit protection. 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:

	Dec. 31, 2019	Dec. 31, 2018
Unquoted	949.3	800.9
Quoted minority interests	780.6	828.7
Real estate	3.1	2.1
Liquid portfolio	1,223.9	1,736.2
Total continuing operations	2,956.9	3,367.9
Optical retail (2019: assets held for sale)	-	421.7
	2,956.9	3,789.6

These financial assets can be further specified as follows:

	Dec. 31, 2019	Dec. 31, 2018
Loans	131.1	78.7
Trade receivables	857.7	755.6
Marketable securities and deposits	71.0	55.8
Derivative financial instruments	48.7	56.7
Other financial assets	57.1	39.3
Other current assets	232.7	243.6
Cash and cash equivalents	1,558.6	2,138.2
Total continuing operations	2,956.9	3,367.9
Optical retail (2019: assets held for sale)	-	421.7
	2,956.9	3,789.6

Cash and cash equivalents can be specified by segment as follows:

	Dec. 31, 2019	Dec. 31, 2018
Unquoted	246.5	201.9
Quoted minority interests	158.7	255.7
Real estate	0.4	-
Liquid portfolio	1,153.0	1,680.6
Total continuing operations	1,558.6	2,138.2
Optical retail (2019: assets held for sale)	-	138.3
	1,558.6	2,276.5

For the Liquid portfolio and Real estate segments, cash and cash equivalents were held by counterparties with the following short-term Standard & Poor's credit ratings:

	Dec. 31, 2019	Dec. 31, 2018
A-1+	154.1	252.2
A-1	989.5	1,419.2
Not rated	9.8	9.2
	1,153.4	1,680.6

The bonds held in the Liquid portfolio can be disaggregated based on their Standard & Poor's (equivalent) credit ratings as follows:

	Dec. 31, 2019	Dec. 31, 2018
BBB- / BBB / BBB+	43.4	37.2
B- / B / B+	15.1	18.6
CCC- / CCC / CCC+	12.5	-
	71.0	55.8

The Company is not exposed to any significant concentration of credit risk. In 2019 a € 5.8 million impairment was recorded on certain bonds held by the Company as a result of a significant increase in credit risk on these bonds. The impairment loss is included in the income from marketable securities.

Liquidity 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 Optical retail, 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's 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 2019, unused committed credit facilities were available to an amount of € 1,406.0 million (2018: € 2,080.1 million, including discontinued operations for € 840 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.

	December 31, 2019
	< 1 year	1-2 years	3-5 years	> 5 years
Non-derivative liabilities
Redemption of debt	704.5	258.6	931.3	873.2
Redemption of other financial liabilities	21.5	18.9	52.1	-
Interest payments	87.0	75.5	165.1	133.5
Payments on lease liabilities	127.9	179.7	241.7	806.1
Accounts payable	771.9	-	-	-
Financial guarantee contracts	150.9	0.8	0.7	0.9
Total undiscounted non-derivative financial liabilities	1,863.7	533.5	1,390.9	1,813.7
Derivative liabilities
Gross-settled derivative liabilities outflow	482.7	-	241.3	-
Gross-settled derivative liabilities inflow	(457.1)	-	(209.6)	-
Total gross-settled derivative liabilities	25.6	-	31.7	-
Net-settled derivative liabilities	2.0	1.8	2.6	6.5
Total undiscounted derivative liabilities	27.6	1.8	34.3	6.5
Total undiscounted financial liabilities	1,891.3	535.3	1,425.2	1,820.2

	December 31, 2018
	< 1 year	1-2 years	3-5 years	> 5 years
Non-derivative liabilities
Redemption of debt	1,055.7	363.3	1,151.9	1,079.0
Redemption of other financial liabilities	23.6	34.4	49.0	3.4
Interest payments	95.8	81.3	181.3	177.2
Accounts payable	861.0	-	-	-
Other financial liabilities	4.9	-	-	-
Financial guarantee contracts	177.3	0.7	2.1	0.3
Total undiscounted non-derivative financial liabilities	2,218.3	479.7	1,384.3	1,259.9
Derivative liabilities
Gross-settled derivative liabilities outflow	643.8	53.2	-	-
Gross-settled derivative liabilities inflow	(625.4)	(39.6)	-	-
Total gross-settled derivative liabilities	18.4	13.6	-	-
Net-settled derivative liabilities	9.2	8.8	2.6	2.4
Total undiscounted derivative liabilities	27.6	22.4	2.6	2.4
Total undiscounted financial liabilities	2,245.9	502.1	1,386.9	1,262.3

The total debt of continuing operations as of December 31, 2019, amounted to € 2,764.0 million (2018: € 3,649.9 million, including € 903.1 million related to discontinued operations). For 100% of the bank debt, the applicable covenants were complied with or waived during 2018 and 2019. Refer to note 21 for details on applicable covenants.

The movements during 2019 and 2018 in the net debt position were as follows:

	Cash and cash equivalents	Marketable securities and deposits	Total debt	Net (debt) / cash
Balance on January 1, 2018	2,205.0	584.8	(3,460.8)	(671.0)
Cash flows	72.0	(279.3)	(66.2)	(273.5)
Foreign exchange adjustments	(0.5)	9.1	(73.6)	(65.0)
Fair value movements	-	(39.9)	-	(39.9)
Other non-cash movements	-	-	(49.3)	(49.3)
Balance on December 31, 2018	2,276.5	274.7	(3,649.9)	(1,098.7)
Cash flows	(557.7)	(57.6)	(89.8)	(705.1)
Foreign exchange adjustments	2.7	4.3	25.1	32.1
Fair value movements	-	1.2	-	1.2
Reclassification to held for sale	(162.9)	-	935.3	772.4
Other non-cash movements	-	-	15.3	15.3
Balance on December 31, 2019	1,558.6	222.6	(2,764.0)	(982.8)

This net debt position represents a ratio of 0.8 (2018: 0.7, including discontinued operations) 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 debt 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 Optical retail, 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 applies a hedge ratio of 1:1.

The table on the following page shows the net assets per currency, taking into account debt instruments denominated in foreign currency and related hedging instruments. Vopak applies hedge accounting to net investments in foreign operations (hedged item) for a nominal amount of € 799.0 million (2018: € 1,206.5 million), of which € 656.2 million (2018: € 535.1 million) was hedged via foreign currency interest bearing debt and € 142.9 million (2018: € 671.1 million) via derivative financial instruments. The remaining currency exposures relate mainly to investments in foreign operations that the Company does not hedge.

	Dec. 31, 2019	Dec. 31, 2018
U.S. dollar	1,018.4	951.3
Chinese yuan renminbi	423.4	346.0
Singapore dollar	293.7	354.1
Canadian dollar	127.0	91.8
Brazilian real	105.7	93.7
Hong-Kong dollar	77.9	75.4
Thai baht	73.2	42.4
Saudi riyal	67.1	58.3
Australian dollar	57.9	57.6
South African rand	51.8	55.1
Indian rupee	24.3	21.5
U.K. pound sterling	23.1	15.9
Swiss franc	12.4	12.4
Other	147.1	152.3
Total continuing operations	2,503.0	2,327.8
Discontinued operations	787.1	869.0
	3,290.1	3,196.8

An average change in value of these currencies by 10% would have a pre-tax effect on equity of € 250.3 million (continuing operations only).

The market value of the currency derivative financial instruments per the consolidated financial statements were as follows.

	December 31, 2019				December 31, 2018
	Maturity	Assets	Liabilities	Notional amount	Assets	Liabilities	Notional amount
Fair value hedge	< 1 year	0.1	(1.1)	238.8	-	-	-
		0.1	(1.1)	238.8	-	-	-
Cash flow hedge	< 1 year	27.9	(23.7)	209.2	50.1	(40.7)	983.2
Cash flow hedge	1-5 years	19.4	-	209.6	-	-	-
		47.3	(23.7)	418.8	50.1	(40.7)	983.2
Net investment hedge	< 1 year	0.1	(0.3)	152.5	1.3	(0.3)	234.0
		0.1	(0.3)	152.5	1.3	(0.3)	234.0
No hedge accounting	< 1 year	1.1	(14.3)	869.8	4.3	(3.3)	981.4
		1.1	(14.3)	869.8	4.3	(3.3)	981.4
Total currency derivative financial instruments		48.6	(39.4)	1,679.9	55.7	(44.3)	2,198.6

In addition, one of the Company's consolidated minority interests holds cross-currency interest rate swaps to hedge fixed rate debt denominated in U.S. dollar. These interest rate swaps, with a notional amount of € 418.8 million (2018: € 685.7 million), are included under interest rate 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 € (13.2) million (2018: € (35.2) million including discontinued operations), 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 € 147.0 million (2018: € 129.8 million including discontinued operations). The aggregate effect on equity of a 10% depreciation of the foreign currencies against the euro is € (126.7) million (2018: € (109.5) million including discontinued operations).

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:

113

	EUR/USD Δ $10ct		EUR/GBP Δ £10ct		EUR/SGD Δ $10ct
	2019	2018	2019	2018	2019	2018
Impact on revenues	85.0	70.9	15.9	15.1	16.3	15.7
Impact on net profit from continuing operations	10.7	8.5	0.3	1.6	4.7	4.5

Market risk – interest rate risk

The risks with respect to the individual entities belonging to the Optical retail, 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, 2019, taking into account interest rate swaps, 68% (2018: 80%) of the total debt of € 2,764.0 million (2018: € 3,649.9 million) was at fixed rates for an average period of 5.2 years (2018: 4.9 years, 5.9 years excluding GrandVision).

The market value of the interest rate derivative financial instruments per the consolidated financial statements is shown below.

	December 31, 2019				December 31, 2018
	Maturity	Assets	Liabilities	Notional amount	Assets	Liabilities	Notional amount
Cash flow hedge	< 1 year	-	(0.1)	7.0	-	(0.7)	21.9
Cash flow hedge	1-5 years	0.1	(0.1)	29.3	0.7	(2.1)	213.0
Cash flow hedge	> 5 years	-	(6.5)	52.5	0.3	(7.3)	300.5
		0.1	(6.7)	88.8	1.0	(10.1)	535.4
No hedge accounting	< 1 year	-	(0.2)	64.7	-	-	-
No hedge accounting	1-5 years	-	(0.5)	25.8	-	(0.7)	63.0
No hedge accounting	> 5 years	-	-	-	-	-	-
		-	(0.7)	90.5	-	(0.7)	63.0
Total interest rate derivative financial instruments		0.1	(7.4)	179.3	1.0	(10.8)	598.4

The weighted-average interest rate on total debt was 3.4% (2018: 2.8%).

If variable interest rates in 2018 or 2019 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 € 7.3 million (2018: € 9.9 million). An equal but opposite change would have had a pre-tax negative impact on equity of € 7.5 million (2018: € 9.6 million negative).

Market risk – price risk

At the end of 2019, the Company had investments in equity securities (included in marketable securities and deposits and other financial assets) amounting to € 734.7 million (2018: € 655.2

million), based on quoted market prices at the statement of financial position date. If at December 31, 2019, 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 € 58.3 million (2018: € 43.6 million) and a negative impact on income of € 15.2 million (2018: € 21.9 million). A 10% increase would have had the equal but opposite effect.

The Company has not identified additional financial risk exposures in 2019 compared to the previous year, and its approach to financial risk management remained unchanged.

40. Capital risk management

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:

	Dec. 31, 2019	Dec. 31, 2018
Equity	8,012.3	7,512.2
Non-current debt	2,059.5	2,594.3
Current debt	704.5	1,055.7
Cash and cash equivalents	(1,558.6)	(2,276.5)
Total capital employed	9,217.7	8,885.7

The 2019 figures in the table above do not include the cash and debt balances of GrandVision N.V., which were classified as held for sale at December 31, 2019.

41. Related-party transactions

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:

	2019	2018
Members of the Executive Board
Short-term employee benefits	4.0	3.2
Post-employment benefits	0.8	0.9
Share-based compensation	1.5	1.6
	6.3	5.7

For details on share-based compensation plans refer to note 35.

The fixed 2019 remuneration for the Supervisory Directors of HAL Holding N.V. was € 0.4 million (2018: € 0.4 million) in total.

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115

42. Capital and financial commitments, contingent liabilities

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.

Payments on lease contracts that are not recognized on the consolidated statement of financial position (refer to note 6) are included under capital commitments. This relates mainly to payments on leases with short maturities, that are of a variable nature or for which the leased asset is of low value.

Capital commitments

On December 31, 2019, capital commitments in respect of property, plant and equipment amounted to € 395.8 million (2018: € 466.0 million).

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:

	2019	2018
No later than 1 year	115.6	114.8
Later than 1 year and no later than 5 years	330.9	235.2
Later than 5 years	87.0	12.1
	533.5	362.1

Following the implementation of IFRS 16, Leases, the off-balance sheet financial commitment, apart from the above, have become insignificant to the size of the Company. Reference is made to the basis of preparation for further details on the implementation of this new standard.

Contingent liabilities

The Company and its subsidiaries and controlled minority interests entered into various commitments to provide debt and equity financing. These commitments mainly relate to Vopak and the real estate segment. In addition, guarantees and commitments were provided by Vopak on behalf of its associates and joint ventures. The total estimated amount of these commitments not recognized in the statement of financial position comprises of:

	2019	2018
Commitments to provide debt or equity funding	174.6	131.1
Guarantees and securities provided	120.8	163.5
	295.4	294.6

The 2019 increase in commitments is primarily related to Vopak's announced construction projects for industrial terminals.

The amount of guarantees and securities provided can potentially be called within one year.

The joint venture 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, Vopak is involved in a number of legal proceedings. Vopak management is 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. In addition, Vopak can be held liable for any non-compliance with laws and regulations, including for potential compliance shortfalls.

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.

The Group is currently reviewing its compliance with anti-trust legislation in various jurisdictions. The outcome of this review is currently not certain. Non-compliance could result in (significant) penalties which are not provided in these financial statements.

43. Non-controlling interests

Non-controlling interests with respect to Vopak, Safilo and GrandVision are significant to the Company. For disclosures on GrandVision reference is made to note 3. The non-controlling interests in Vopak and Safilo can be detailed as follows:

	Vopak 2019	Vopak 2018	Safilo 2019	Safilo 2018	Total 2019	Total 2018
Profit / (loss) allocated to the non-controlling interest during the year	328.3	167.5	(70.5)	(27.9)	257.8	139.6
Accumulated non-controlling interest at December 31	1,722.7	1,548.0	183.4	261.5	1,906.1	1,809.5

Set out below is the summarized financial information for Vopak and Safilo. These are the financial statements as reported by these companies including purchase price accounting adjustments made by the Company.

	Vopak		Safilo
	2019	2018	2019	2018
Summarized balance sheet
As of December 31
Current
Assets	590.3	422.0	531.6	653.3
Liabilities	(967.5)	(610.3)	(298.8)	(484.2)
	(377.2)	(188.3)	232.8	169.1
Non-current
Assets	5,851.3	5,161.1	337.9	419.5
Liabilities	(2,210.8)	(2,060.3)	(201.2)	(100.5)
	3,640.5	3,100.8	136.7	319.0
Net assets	3,263.3	2,912.5	369.5	488.1
Summarized income statement
For the year
Revenue	1,529.1	1,286.4	964.7	1,001.9
Profit before tax	662.1	347.8	(141.0)	(50.5)
Income tax expense	(58.3)	(58.2)	(0.6)	1.0
Profit after income tax	603.8	289.6	(141.6)	(49.5)
Other comprehensive income	17.8	82.4	6.1	11.9
Total comprehensive income (CI)	621.6	372.0	(135.5)	(37.6)
CI allocated to non-controlling interest	37.1	38.1	(0.1)	-
Dividend paid to non-controlling interest	38.8	37.6	-	-
Summarized cash flow statement
For the year
Cash from operating activities	709.7	687.0	33.9	4.1
Interest paid net	(81.5)	(85.5)	(3.3)	(6.1)
Income tax (paid) / received	(71.2)	(52.4)	(1.8)	4.7
Net cash from operating activities	557.0	549.1	28.8	2.7
Net cash from investing activities	(256.1)	(589.4)	(21.3)	(28.3)
Net cash from financing activities	(282.2)	(11.2)	(122.9)	126.4
Increase/(decrease) in cash and cash equivalents	18.7	(51.5)	(115.4)	100.8
Cash and cash equivalents at beginning of year	77.5	130.0	178.2	76.2
Effect of exchange rate changes and reclassifications	(1.7)	(1.0)	1.4	1.2
Increase/(decrease) in cash and cash equivalents	18.7	(51.5)	(115.4)	100.8
Cash and cash equivalents at end of year	94.5	77.5	64.2	178.2

44. Summarized financial information on joint ventures

The summarized financial information of the joint ventures of Vopak is as follows.

Summarized statements of financial position on a $100\%$ basis:

	Europe & Africa		Asia & Middle East		LNG		Americas & Other		Total
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018

Non-current assets	104.5	87.0	1,697.8	1,766.6	1,200.3	1,044.9	187.9	154.8	3,190.5	3,053.3
Cash and cash equivalents	3.4	14.9	147.1	168.6	67.2	66.5	1.8	2.8	219.5	252.8
Other current assets	8.9	14.1	178.7	135.6	17.7	15.3	1.0	2.2	206.3	167.2
Total assets	116.8	116.0	2,023.6	2,070.8	1,285.2	1,126.7	190.7	159.8	3,616.3	3,473.3
Financial non-current liabilities	51.0	33.1	464.5	547.1	698.6	570.9	20.4	-	1,234.5	1,151.1
Other non-current liabilities	4.1	3.3	36.8	36.4	177.5	193.7	0.8	0.9	219.2	234.3
Financial current liabilities	9.8	12.2	49.0	64.4	74.4	71.3	-	-	133.2	147.9
Other current liabilities	10.7	24.5	360.7	308.3	32.3	23.3	5.2	2.6	408.9	358.7
Total liabilities	75.6	73.1	911.0	956.2	982.8	859.2	26.4	3.5	1,995.8	1,892.0
Net assets	41.2	42.9	1,112.6	1,114.6	302.4	267.5	164.3	156.3	1,620.5	1,581.3
Vopak's share of net assets	19.0	19.8	489.6	488.1	162.1	145.3	50.9	47.5	721.6	700.7
Goodwill on acquisition	-	-	6.0	6.0	60.9	60.1	-	-	66.9	66.1
Vopak's carrying amount of net assets	19.0	19.8	495.6	494.1	223.0	205.4	50.9	47.5	788.5	766.8

Summarized statements of total comprehensive income on a $100\%$ basis:

	Europe & Africa		Asia & Middle East		LNG		Americas & Other		Total
	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018
Revenues	38.3	56.1	443.6	403.2	233.0	224.2	6.2	6.1	721.1	689.6
Operating expenses	(21.8)	(40.7)	(125.1)	(133.8)	(36.1)	(39.0)	(7.2)	(5.2)	(190.2)	(218.7)
Depreciation, amortization and impairment	(8.4)	(7.8)	(105.6)	(94.3)	(55.5)	(46.7)	(0.5)	(0.6)	(170.0)	(149.4)
Operating profit (EBIT)	8.1	7.6	212.9	175.1	141.4	138.5	(1.5)	0.3	360.9	321.5
Net finance costs	(1.6)	(0.8)	(11.6)	(9.6)	(39.4)	(36.5)	3.1	2.6	(49.5)	(44.3)
Income tax	(1.3)	(0.9)	(75.2)	(40.8)	(27.7)	(27.7)	(0.3)	(0.4)	(104.5)	(69.8)
Net profit	5.2	5.9	126.1	124.7	74.3	74.3	1.3	2.5	206.9	207.4
Other comprehensive income	-	-	(0.5)	2.4	4.7	4.1	-	-	4.2	6.5
Total comprehensive income	5.2	5.9	125.6	127.1	79.0	78.4	1.3	2.5	211.1	213.9
Vopak's share of net profit	1.9	2.3	51.6	54.4	40.3	39.8	0.6	1.2	94.4	97.7
Vopak's share of OCI	-	-	(0.3)	1.1	2.3	2.0	-	-	2.0	3.1
Vopak's share of total comprehensive income	1.9	2.3	51.3	55.5	42.6	41.8	0.6	1.2	96.4	100.8

119

45. Events after the reporting period

Vopak share buy-back

In February, 2020, Vopak announced a € 100 million share buy-back program to be executed in 2020. In connection with the share buy-back program, the Company will proportionally sell part of its current shareholding in Vopak to maintain its interest at the level as of December 31, 2019. These transactions will be performed at the same average price per share as the open market trades of Vopak.

COVID-19 (Corona virus)

The spread of COVID-19 (Corona virus) during the first quarter of 2020 has a significant impact on the operations of the investee companies and our profitability will be negatively impacted. It is currently uncertain what the magnitude of the impact will be and the effect on the 2020 financial statements (among others valuation of tangible and intangible assets and inventories, allowances for credit losses, restructuring provisions). This will depend, among others, on the development of the spread of the virus and how long the restrictive measures taken by governments will last. The subsidiaries have taken measures to preserve the health and safety of their employees and customers as well as the operations of their businesses. Measures are being taken to reduce operating costs and non-business critical capital expenditures, as well as optimize working capital and liquidity.

In view of the relatively low leverage ratio and available unused committed credit facilities (refer to note 39), we believe the liquidity risk is low and have therefore no reason to assume that the situation at the level of the subsidiaries warrants disclosure of a specific, material going concern uncertainty for the Company in preparing the 2019 financial statements. HAL Trust, HAL Holding N.V. and HAL Investments B.V. do not have any bank debt and no material outstanding guarantees for their subsidiaries.

Stock market value of ownership interests in quoted companies and the liquid portfolio

The stock market value of the ownership interests in quoted companies (including GrandVision N.V.) and the value of the liquid portfolio as of December 31, 2019, amounted to € 11,750 million, which may potentially be significantly impacted going forward. During the period from December 31, 2019, through March 20, 2020, the stock market value of the ownership interests in quoted companies and the liquid portfolio was negatively impacted by changes in stock market prices for approximately € 1,750 million (€ 20.98 per share).

List of Principal subsidiaries and minority interests
as of December 31, 2019

Name	Country of incorporation	Nature of business	Interest in common shares	Interest in preferred shares	Non-controlling interest
Subsidiaries
HAL Holding N.V.	Curaçao	Holding company	100.0%	0.0%	0.0%
HAL International N.V.	Curaçao	Holding company	100.0%	0.0%	0.0%
HAL International Investments N.V.	Curaçao	Holding company	100.0%	0.0%	0.0%
HAL Investments N.V.	Curaçao	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%
FD Mediagroep B.V.	The Netherlands	Media	100.0%	100.0%	0.0%
Orthopedie Investments Europe B.V.	The Netherlands	Orthopedic devices	100.0%	100.0%	0.0%
Broadview Holding B.V.	The Netherlands	Industrial	97.4%	0.0%	2.6%
Flight Simulation Company B.V.	The Netherlands	Flight simulators	96.8%	100.0%	3.2%
Koninklijke Ahrend B.V.	The Netherlands	Office furniture	96.0%	100.0%	4.0%
Floramedia Group B.V.	The Netherlands	Communication	96.0%	100.0%	4.0%
Sports Timing Holding B.V.	The Netherlands	Timing equipment	95.5%	100.0%	4.5%
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%
Timber and Building Supplies Holland N.V.	The Netherlands	Building materials	89.3%	0.0%	10.7%
Famed Investments B.V.	The Netherlands	Financial services	81.0%	0.0%	19.0%
Infomedics Holding B.V.	The Netherlands	Financial services	81.0%	0.0%	19.0%
Atlas Professionals B.V.	The Netherlands	Staffing	80.1%	0.0%	19.9%
GrandVision N.V.	The Netherlands	Optical retail	76.7%	0.0%	23.3%
Anthony Veder Group N.V.	Curaçao	Shipping	62.9%	0.0%	37.1%
Controlled minority interests
Koninklijke Vopak N.V.	The Netherlands	Tank terminals	48.15%	0.00%	51.85%
Safilo Group S.p.A.	Italy	Optical products	49.84%	0.00%	50.16%

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 minority interests
Publicly traded
Koninklijke Boskalis Westminster N.V.	43.51%
SBM Offshore N.V.	16.80%
Other
Coolblue B.V.	49.00%
DMF Investment Management B.V.	25.00%

120

121

Information relating to estimated value of the subsidiaries and minority interests of HAL Holding N.V.

As of December 31, 2019

General

This section provides additional information about the investment portfolio of HAL Holding N.V. (the 'Company').

For the purpose of this section, book value includes goodwill and loans to the investee companies. Amounts denominated in foreign currencies have been translated at year-end exchange rates.

We emphasize that, especially with respect to unquoted investments, estimated value is based upon a number of assumptions. Values as realized upon sale of an investment can be materially different from these estimates.

Portfolio valuation methodology

The valuation of the Company's portfolio for this section is arrived at using a systematic process. The aim is to value the portfolio as a whole on a prudent and consistent basis.

Quoted investments

Quoted investments are valued at the closing price on the statement of financial position date. In certain circumstances, for example in case of trading restrictions, an appropriate discount may be applied.

Unquoted common equity investments

Unquoted investments are valued subject to overriding requirements of prudence, generally according to one of the following bases:

Earnings multiple;
Cost of a recent transaction.

Earnings multiple

Valuations using an earnings multiple are principally based on the following method:

The EBITA (earnings before interest, tax and amortization of intangible assets but including amortization of software) of the current year is used, adjusted for non-recurring items when appropriate. The estimated value of the common equity of the investee company is determined by multiplying the (adjusted) EBITA with a multiple and subtracting the net debt (excluding lease liabilities) and preferred shares of the investee company. Two investments with an aggregate value of € 107 million were valued based on an multiple of EBITDA.

EBITA multiples are applied on pre-IFRS 16 figures whereas EBITDA multiples are applied on post-IFRS 16 figures. The following factors may, among other things, be considered when selecting multiples:

the multiple paid at the time of the investment;
the multiples the Company generally would be prepared to pay for comparable investments;
multiples of a meaningful sample of comparable quoted companies. When referring to multiples of comparable companies, a discount of at least 25% is taken into account for limited marketability, unless there is a strong possibility of a short-term realization.

122

Cost of a recent transaction

A recent transaction is defined as a significant transaction in the capital of the investee company which has occurred until 12 months prior to the valuation date. An assessment is made if it is still appropriate to use this value in view of the financial performance of the investee company post acquisition compared to the assumptions made during the acquisition process, developments in earnings multiples of comparable companies or any other material positive or adverse developments. After the twelve-month period the investments are generally valued based on an earnings multiple. It is possible that the multiple applied is lower than the multiple paid at the time of the acquisition.

Unquoted other investments

Unquoted preferred shares and loans to investee companies are generally valued at cost unless the investee company has failed, or is expected to fail, its payment obligations within the next 12 months. In these circumstances, these assets are valued at the lower of cost and net realizable value.

Valuation investments

As of December 31, 2019	Estimated value	Book value	Difference
Quoted investments	10,376.2	4,694.9	5,681.3
Unquoted investments	2,106.9	1,760.7	346.2
	12,483.1	6,455.6	6,027.5

Estimated value less book value of the unquoted investments amounted to € 346 million at the end of 2019 (2018: € 297 million) or € 4.15 per Share (2018: € 3.64 per Share).

The EBITA multiples applied vary from 7 to 8. With respect to Broadview Holding B.V. (excluding Formica which was valued at cost following the acquisition in 2019) and Timber and Building Supplies Holland N.V. a multiple of 7 was applied, consistent with 2018. A change in this multiple by 1 has an effect on estimated value of these two companies of € 110 million (at 2019 earnings). Realized multiples may be materially different.

Quoted investments

	December 31, 2019
	Interest in common shares	Share price	Market value
Share price in euro
GrandVision N.V.	76.72%	27.42	5,352.5
Koninklijke Vopak N.V.	48.15%	48.33	2,974.6
Koninklijke Boskalis Westminster N.V.	43.51%	22.80	1,343.1
Safilo Group S.p.A.	49.84%	1.11	153.1
SBM Offshore N.V.	16.80%	16.59	553.0
			10,376.3

No discount was applied to the above market prices.

Supplemental information

General

The consolidated financial statements of HAL Trust include the financial statements of Koninklijke Vopak N.V. ('Vopak') and Safilo Group S.p.A. ('Safilo'). This section provides supplemental information where Vopak and Safilo are accounted for on an unconsolidated basis using the equity method. This was the accounting treatment until the application of IFRS 10, effective January 1, 2014, which requires consolidation of these entities. In all other respects, the accounting policies applied are consistent with those applied to the consolidated financial statements. The inclusion of this supplemental information is considered appropriate and useful as the control model of the Company with respect to the entities where its ownership interest exceeds 50% is materially different from the model with respect to Vopak and Safilo. Moreover, the inclusion of Vopak and Safilo in the consolidation has a significant effect on the financial statements. The following supplemental information also preserves comparability with consolidated financial statements prior to 2014.

The following pro forma consolidated statements are included as supplemental information:

Statement of Financial Position
Statement of Income
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows

The pro forma consolidated statements of financial position and income as well as the statement of changes in equity, include a bridge from the consolidated financial statements (including consolidation of Vopak and Safilo) to these pro forma statements.

A number of notes has been added to the above statements in order to provide additional information on the effect of the inclusion of Vopak and Safilo in the consolidated financial statements. These notes are based on the notes to the consolidated financial statements on pages 35 through 119. Certain notes are summarized for practical purposes.

Pro forma Consolidated Statement of Financial Position
Supplemental Information
As of December 31

In millions of euro	Consolidated		Effect exclusion Vopak/Safilo	Pro forma 2019	Pro forma 2018
	Notes	2019
Non-current assets
Property, plant and equipment	2	5,008.1	(3,790.2)	1,217.9	1,517.5
Right-of-use assets		892.8	(545.2)	347.6	-
Investment properties		34.0	-	34.0	-
Intangible assets	3	1,179.7	(327.6)	852.1	2,275.8
Investments in associates and joint arrangements	5	2,889.5	389.7	3,279.2	3,089.0
Derivatives and other financial assets	6	779.7	(180.9)	598.8	504.8
Pension benefits	10	40.5	-	40.5	68.8
Deferred tax assets	9	96.6	(72.6)	24.0	63.9
Total non-current assets		10,920.9	(4,526.8)	6,394.1	7,519.8
Current assets
Inventories	8	664.3	(235.8)	428.5	610.8
Receivables	7	857.7	(297.1)	560.6	616.2
Marketable securities and deposits		222.6	-	222.6	274.7
Derivatives and other financial assets	6	40.3	(28.6)	11.7	3.6
Other current assets		374.4	(252.1)	122.3	282.4
Cash and cash equivalents		1,558.6	(158.7)	1,399.9	2,020.8
Assets held for sale		5,118.6	(127.5)	4,991.1	55.7
Total current assets		8,836.5	(1,099.8)	7,736.7	3,864.2
Total assets		19,757.4	(5,626.6)	14,130.8	11,384.0
Equity
Equity attributable to owners of parent		8,012.3	(52.0)	7,960.3	7,471.2
Non-controlling interest		2,536.3	(1,906.0)	630.3	588.4
Total equity		10,548.6	(1,958.0)	8,590.6	8,059.6
Non-current liabilities
Deferred tax liabilities	9	386.5	(204.9)	181.6	181.8
Pension benefits	10	123.5	(68.3)	55.2	130.6
Derivatives		7.1	-	7.1	10.1
Provisions	11	105.2	(92.7)	12.5	26.3
Contract liabilities		13.0	-	13.0	8.2
Lease liabilities		849.5	(572.0)	277.5	-
Debt and other financial liabilities	12	2,130.5	(1,489.7)	640.8	922.4
Total non-current liabilities		3,615.3	(2,427.6)	1,187.7	1,279.4
Current liabilities
Provisions	11	49.9	(29.7)	20.2	26.5
Contract liabilities		70.1	(16.6)	53.5	140.8
Accrued expenses	13	492.5	(235.7)	256.8	548.3
Income tax payable		57.5	(41.3)	16.2	57.2
Accounts payable		771.9	(352.8)	419.1	537.5
Derivatives		39.7	(39.4)	0.3	2.5
Lease liabilities		106.3	(39.9)	66.4	-
Debt and other financial liabilities	12	726.0	(489.2)	236.8	695.3
Liabilities related to assets held for sale		3,279.6	3.6	3,283.2	36.9
Total current liabilities		5,593.5	(1,241.0)	4,352.5	2,045.0
Total equity and liabilities		19,757.4	(5,626.6)	14,130.8	11,384.0

124

Pro forma Consolidated Statement of Income

For the year ended December 31

Supplemental Information

In millions of euro	Notes	Consolidated 2019	Effect exclusion Vopak/Safilo	Pro forma 2019	Pro forma 2018
Revenues	14	5,159.9	(2,194.5)	2,965.4	2,401.8
Income from marketable securities and deposits		5.5	-	5.5	(7.7)
Share of results from associates and joint ventures	15	193.5	41.8	235.3	(54.4)
Income from other financial assets		20.3	(8.8)	11.5	6.7
Income from real estate activities		(2.5)	-	(2.5)	10.2
Other income (net)		268.5	(229.5)	39.0	2.7
Total income		5,645.2	(2,391.0)	3,254.2	2,359.3
Usage of raw materials, consumables and other inventory		1,619.7	(267.3)	1,352.4	1,131.2
Employee expenses	16	1,384.6	(649.2)	735.4	578.3
Depreciation and impairment of property, plant, equipment and investment properties		431.7	(321.0)	110.7	89.1
Depreciation and impairment of right-of-use assets		110.7	(53.0)	57.7	-
Amortization and impairment of intangible assets	3	132.7	(74.5)	58.2	21.2
Other operating expenses	17	1,132.3	(605.8)	526.5	477.5
Total expenses		4,811.7	(1,970.8)	2,840.9	2,297.3
Operating profit		833.5	(420.2)	413.3	62.0
Financial expense		(178.1)	134.8	(43.3)	(32.6)
Other financial income		41.5	(30.8)	10.7	3.9
Profit before income tax		696.9	(316.2)	380.7	33.3
Income tax expense	18	(95.1)	58.7	(36.4)	(23.6)
Net profit from continuing operations		601.8	(257.5)	344.3	9.7
Net profit from discontinued operations		460.8	-	460.8	226.0
Net profit		1,062.6	(257.5)	805.1	235.7
Attributable to:
Owners of parent		665.5	0.3	665.8	154.7
Non-controlling interest		397.1	(257.8)	139.3	81.0
		1,062.6	(257.5)	805.1	235.7
Average number of Shares outstanding (in thousands)		82,574	-	82,574	80,885
Earnings per Share for profit attributable to owners of parent during the period (in euro)
- basic and diluted from continuing operations		4.06	-	4.06	(0.03)
- basic and diluted from discontinued operations		4.00	-	4.00	1.90
- basic and diluted		8.06	-	8.06	1.87
Dividend per Share(in euro)		5.80*	-	5.80*	5.30

Proposed

Pro forma Consolidated Statement of Comprehensive Income

For the year ended December 31

Supplemental Information

In millions of euro	Pro forma 2019	Pro forma 2018
Net profit	805.1	235.7
Other comprehensive income (OCI)
Items that will not be reclassified to statement of income in subsequent periods
Change in fair value of financial assets through OCI	121.2	(15.6)
Income tax on change in fair value	-	(2.9)
Actuarial results on post-employment benefit obligations	(32.1)	(9.0)
Income tax on actuarial results	7.4	2.3
Associates and joint ventures - share of OCI, net of tax	(1.8)	6.7
	94.7	(18.5)
Items that may be reclassified to statement of income in subsequent periods
Change in fair value of financial assets through OCI	2.8	(7.1)
Income tax on change in fair value	2.4	0.3
Effective portion of hedging instruments	(6.4)	2.3
Income tax related to hedging instruments	2.3	(0.7)
Translation of foreign subsidiaries, net of hedges	20.7	(3.1)
Other movements	-	(0.5)
Associates and joint ventures - share of OCI, net of tax	5.0	37.1
	26.8	28.3
Other comprehensive income for the year, net of tax	121.5	9.8
Total comprehensive income for the year, net of tax	926.6	245.5
Total comprehensive income for the year, attributable to:
- Owners of parent*	792.5	162.1
- Non-controlling interest	134.1	83.4
	926.6	245.5

For both reporting periods there are no differences in other comprehensive income attributable to the owner of parent between the consolidated and the pro forma consolidated statements of comprehensive income.

Pro forma Consolidated Statement of Changes in Equity

Supplemental Information

In millions of euro	Attributable to owners of parent				Non-controlling interest	Total equity
	Share capital	Retained earnings	Other reserves	Total
Balance on January 1, 2018	1.6	7,433.4	139.0	7,574.0	485.6	8,059.6
Net profit for the year	-	154.7	-	154.7	81.0	235.7
Other comprehensive income for the year	-	(2.7)	10.1	7.4	2.4	9.8
Total comprehensive income for the year	-	152.0	10.1	162.1	83.4	245.5
Capital increase/(decrease)	-	-	-	-	1.0	1.0
Effect of acquisitions and disposals	-	(21.6)	-	(21.6)	56.0	34.4
Dividend paid to minority shareholders	-	-	-	-	(37.6)	(37.6)
Share-based compensation	-	2.4	-	2.4	-	2.4
Treasury shares	-	2.4	-	2.4	-	2.4
Dividend paid	-	(248.1)	-	(248.1)	-	(248.1)
Reclassification*	-	86.2	(86.2)	-	-	-
Transactions with the owners of parent recognized directly in equity	-	(178.7)	(86.2)	(264.9)	19.4	(245.5)
Balance on December 31, 2018	1.6	7,406.7	62.9	7,471.2	588.4	8,059.6
Changes in accounting policy (IFRS 16)	-	(95.0)	-	(95.0)	(17.9)	(112.9)
Balance on January 1, 2019	1.6	7,311.7	62.9	7,376.2	570.5	7,946.7
Net profit for the year	-	665.8	-	665.8	139.3	805.1
Other comprehensive income for the year	-	(22.6)	149.3	126.7	(5.2)	121.5
Total comprehensive income for the year	-	643.2	149.3	792.5	134.1	926.6
Reclassification	-	2.1	(2.1)	-	-	-
Effect of acquisitions and disposals	-	-	-	-	(36.3)	(36.3)
Dividend paid to minority shareholders	-	-	-	-	(38.2)	(38.2)
Share-based compensation	-	6.1	-	6.1	0.2	6.3
Treasury shares	-	2.6	-	2.6	-	2.6
Dividend paid	0.1	(216.5)	-	(216.4)	-	(216.4)
Reclassification
Other	-	(0.7)	-	(0.7)	-	(0.7)
Transactions with the owners of parent recognized directly in equity	0.1	(206.4)	(2.1)	(208.4)	(74.3)	(282.7)
Balance on December 31, 2019	1.7	7,748.5	210.1	7,960.3	630.3	8,590.6

Reclassifications mainly relate to realized results on the disposal of the shareholding in Chart Industries Inc.

The difference in equity attributable to owners of parent (€ 52.0 million) between the pro forma consolidated statement of financial position and the consolidated statement of financial position is due to the retrospective application of IFRS 10 to Vopak and Safilo.

Pro forma Consolidated Statement of Cash Flows

For the year ended December 31

Supplemental Information

In millions of euro	Notes	Pro forma 2019	Pro forma 2018
Cash flows from operating activities
Profit before taxes from continuing operations		380.7	33.4
Profit before taxes from discontinued operations		540.0	307.6
Dividend from associates and joint ventures		122.9	69.8
Changes in working capital	19	81.0	40.9
Adjustments for non-cash items		409.6	458.5
Cash generated from operating activities	19	1,534.2	910.2
Other financial income received		6.6	4.4
Finance cost paid, including effect of hedging		(55.9)	(38.6)
Income taxes paid		(165.8)	(167.1)
Net cash from operating activities		1,319.1	708.9
Cash flows from investing activities
Acquisition of associates and subsidiaries, net of cash acquired	4	(997.3)	(378.9)
Proceeds from divestiture of associates, joint arrangements and subsidiaries		70.9	4.1
Proceeds from sale of/(acquisition of) other intangibles		(67.4)	(55.0)
Purchase of property, plant, equipment and investment properties		(303.3)	(313.5)
Proceeds from sale of property, plant, equipment and investment properties		19.8	33.1
Proceeds from/(acquisition of) other financial assets	6	(26.2)	144.2
Acquisition of marketable securities and deposits		(58.8)	(79.2)
Proceeds from marketable securities and deposits		116.4	358.5
Net cash from/(used in) investing activities		(1,245.9)	(286.7)
Cash flows from financing activities
Proceeds from debt and other financial liabilities		403.4	394.3
Repayment of debt and other financial liabilities		(250.9)	(456.9)
Payments on lease liabilities		(462.9)	-
Net proceeds from/(repayments of) short-term financing		55.9	(51.5)
Capital increase non-controlling interests		-	1.0
Other non-controlling interest transactions (including dividend paid)		(65.8)	(40.7)
Movement in treasury shares		2.6	2.4
Dividend paid		(216.4)	(248.1)
Net cash from/(used in) financing activities		(534.1)	(399.5)
Increase/(decrease) in cash and cash equivalents		(460.9)	22.7
Cash and cash equivalents at beginning of year		2,020.8	1,998.8
Effect of exchange rate changes, reclassifications and accounting policy change		2.9	(0.7)
Cash and cash equivalents retranslated at beginning of year		2,023.7	1,998.1
Net increase/(decrease) in cash and cash equivalents		(460.9)	22.7
Cash and cash equivalents at end of period		1,562.8	2,020.8
Cash and cash equivalents included in assets held for sale		162.9	-
Cash as included on the consolidated statement of financial position		1,399.9	2,020.8

Notes to the pro forma Consolidated Financial Statements

All amounts in millions of euro, unless otherwise stated

Supplemental Information

1. Segmentation

The consolidated financial statements are significantly affected by the consolidation of Vopak and Safilo. Accordingly, the segmented information on a basis whereby Vopak and Safilo are not consolidated is materially different. This section provides segmented information excluding the effect of the consolidation of Vopak and Safilo.

Operating income by segment

	2019	2018
Optical retail	697.5	426.2
Unquoted	232.5	176.5
Quoted minority interests	246.9	(53.3)
Real estate	(3.5)	9.4
Liquid portfolio	2.3	(7.7)
Total operating income	1,175.7	551.1
Reconciling items:
- Discontinued operations (optical retail)	(697.5)	(426.2)
- Amortization and impairment of intangibles	(58.2)	(21.2)
- Other	(6.7)	(41.7)
Operating result as per the pro forma consolidated statement of income	413.3	62.0
Financial expense, net	(32.6)	(28.7)
Profit before tax as per the consolidated statement of income	380.7	33.3

The "other" reconciling items include corporate general and administrative expenses as well as non-recurring gains and losses (excluding those of Vopak, Safilo and Boskalis).

The composition of revenues by segment is as follows:

	2019	2018
Unquoted	2,965.4	2,401.8
Total continuing operations	2,965.4	2,401.8
Discontinued operations (optical retail)	4,039.3	3,721.0
	7,004.7	6,122.8

The composition of assets by segment is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Optical retail (2019: assets held for sale)	4,981.1	3,184.2
Unquoted	4,138.5	2,956.2
Quoted minority interests	3,417.6	3,082.5
Real estate	132.0	101.2
Liquid portfolio	1,376.0	1,955.4
Reconciling items	85.6	104.5
	14,130.8	11,384.0

Supplemental Information

The composition of investments in associates and joint ventures by segment is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Optical retail (2019: assets held for sale)	-	1.1
Unquoted	318.6	330.7
Quoted minority interests	2,864.6	2,657.4
Real estate	96.0	99.8
	3,279.2	3,089.0

The composition of capital expenditures by segment is as follows:

	2019	2018
Unquoted	281.9	240.7
Real estate	34.5	-
Reconciling items	-	0.4
Total continuing operations	316.4	241.1
Discontinued operations (optical retail)	297.5	214.7
	613.9	455.8

Capital expenditure consists of additions of property, plant and equipment, investment properties and intangible assets. The reconciling items represent corporate capital expenditure.

The composition of liabilities by segment is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Optical retail (2019: liabilities related to assets held for sale)	3,283.2	1,763.6
Unquoted	2,221.2	1,538.0
Real estate	1.6	-
Liquid portfolio	0.4	0.6
Reconciling items	33.8	22.2
	5,540.2	3,324.4

The composition of revenues by geographical area is as follows:

	2019	2018
Europe	2,516.2	2,255.1
USA & Canada	223.2	80.8
Asia	174.2	28.0
Other	51.8	37.9
Total continuing operations	2,965.4	2,401.8
Discontinued operations (optical retail)	4,039.3	3,721.0
	7,004.7	6,122.8

Supplemental Information

The composition of property, plant and equipment, investment properties, right-of-use assets, intangible assets and investment in associates and joint ventures by geographical area is as follows:

	Dec. 31, 2019*	Dec. 31, 2018
Europe	5,128.0	6,545.9
USA & Canada	325.0	137.1
Asia	265.5	30.7
Other	12.3	168.6
	5,730.8	6,882.3

As a result of the classification as held for sale, no assets of GrandVision have been included in these 2019 figures

2. Property, plant and equipment

The amount of property, plant and equipment as per the consolidated financial statements (€ 5,008.1 million) is significantly affected by the consolidation of Vopak and Safilo and in particular the tank storage terminals of Vopak (€ 3,341.2 million at the end of 2019).

The table on the next page provides information on property, plant and equipment excluding the assets of Vopak and Safilo.

Supplemental Information

	Land and buildings	Vessels	Equipment and other	Total
Cost value	864.2	606.1	1,601.1	3,071.4
Cost value - under construction	1.3	-	20.7	22.0
Accumulated depreciation and impairments	(438.8)	(152.4)	(1,174.7)	(1,765.9)
Balance on January 1, 2018	426.7	453.7	447.1	1,327.5
Investments	69.4	73.8	170.3	313.5
Consolidation and purchase price adjustments	31.2	-	63.6	94.8
Disposals	(6.9)	-	(7.0)	(13.9)
Depreciation and impairments continuing operations	(8.5)	(36.8)	(43.6)	(88.9)
Depreciation and impairments discontinued operations	(52.2)	-	(72.0)	(124.2)
Reclassification	3.1	-	(6.5)	(3.4)
Exchange differences	(1.0)	15.3	(2.2)	12.1
Balance on December 31, 2018	461.8	506.0	549.7	1,517.5
Cost value	936.3	694.4	1,928.4	3,559.1
Cost value - under construction	41.0	-	3.6	44.6
Accumulated depreciation and impairments	(515.5)	(188.4)	(1,382.3)	(2,086.2)
Balance on December 31, 2018	461.8	506.0	549.7	1,517.5
Initial application IFRS 16	-	-	(49.7)	(49.7)
Balance on January 1, 2019	461.8	506.0	500.0	1,467.8
Investments	80.0	48.8	140.0	268.8
Consolidation and purchase price adjustments	100.8	-	172.3	273.1
Disposals	(4.9)	(12.0)	(4.6)	(21.5)
Depreciation and impairments continuing operations	(9.0)	(42.1)	(59.1)	(110.2)
Depreciation and impairments discontinued operations	(30.9)	-	(42.6)	(73.5)
Reclassification	5.3	-	(10.3)	(5.0)
Reclassification to held for sale*	(278.7)	(7.5)	(309.1)	(595.3)
Exchange differences	4.0	6.3	3.4	13.7
Balance on December 31, 2019	328.4	499.5	390.0	1,217.9
Cost value	500.8	714.3	1,045.4	2,260.5
Cost value - under construction	12.6	-	37.8	50.4
Accumulated depreciation and impairments	(185.0)	(214.8)	(693.2)	(1,093.0)
Balance on December 31, 2019	328.4	499.5	390.0	1,217.9

Reclassifications to hold for sale mainly relate to GrandVision N.V.

Supplemental Information

3. Intangible assets

The intangible assets are significantly affected by the consolidation of Vopak and Safilo. This section provides information on the intangible assets excluding those of Vopak and Safilo.

Movements for goodwill and other intangibles are as follows:

	Goodwill	Software	Trade- marks	Customer relationships	Other	Total
Cost value	2,120.9	290.3	336.1	275.7	324.2	3,347.2
Accumulated amortization and impairments	(695.4)	(175.3)	(179.9)	(45.1)	(75.4)	(1,171.1)
Balance on January 1, 2018	1,425.5	115.0	156.2	230.6	248.8	2,176.1
Investments	86.0	51.0	-	0.7	4.6	142.3
Consolidation	-	3.5	6.3	67.1	14.0	90.9
Purchase price accounting adjustments	2.3	-	-	-	-	2.3
Disposals	(0.2)	(0.2)	-	-	(1.1)	(1.5)
Amortization and impairments continuing operations	-	(7.2)	(3.1)	(7.5)	(3.4)	(21.2)
Amortization and impairments discontinued operations	(30.7)	(32.5)	(21.1)	(18.6)	(10.1)	(113.0)
Reclassification	(3.0)	1.2	(0.3)	(3.1)	3.3	(1.9)
Exchange differences and other	0.2	(0.1)	0.7	2.1	(1.1)	1.8
Balance on December 31, 2018	1,480.1	130.7	138.7	271.3	255.0	2,275.8
Cost value	2,206.2	330.4	341.9	345.7	347.3	3,571.5
Accumulated amortization and impairments	(726.1)	(199.7)	(203.2)	(74.4)	(92.3)	(1,295.7)
Balance on December 31, 2018	1,480.1	130.7	138.7	271.3	255.0	2,275.8
Initial application IFRS 16	32.6	-	-	-	(212.9)	(180.3)
Balance on January 1, 2019	1,512.7	130.7	138.7	271.3	42.1	2,095.5
Investments	242.5	65.6	-	1.6	0.9	310.6
Consolidation	-	12.3	125.7	136.4	83.7	358.1
Purchase price accounting adjustments	-	-	-	-	-	-
Disposals	-	(0.6)	-	-	(0.1)	(0.7)
Amortization and impairments continuing operations	(12.0)	(15.3)	(9.9)	(17.6)	(3.4)	(58.2)
Amortization and impairments discontinued operations	(50.7)	(19.9)	(6.2)	(10.6)	(4.1)	(91.5)
Reclassification	1.2	8.5	-	33.3	(38.5)	4.5
Reclassification to held for sale*	(1,320.0)	(141.9)	(121.5)	(138.0)	(65.0)	(1,786.4)
Exchange differences and other	10.5	1.1	2.0	6.5	0.1	20.2
Balance on December 31, 2019	384.2	40.5	128.8	282.9	15.7	852.1
Cost value	510.3	122.0	154.5	331.2	44.6	1,162.6
Accumulated amortization and impairments	(126.1)	(81.5)	(25.7)	(48.3)	(28.9)	(310.5)
Balance on December 31, 2019	384.2	40.5	128.8	282.9	15.7	852.1

Reclassifications to hold for sale mainly relate to GrandVision N.V.

Supplemental Information

The "other" category consists of:

	Dec. 31, 2019	Dec. 31, 2018
Key money	-	213.1
Other	15.7	41.9
	15.7	255.0

4. Acquisitions

Below a summary is included of the acquisitions during 2019, excluding the acquisitions made by Vopak and Safilo.

	Formica	Óptica2000	Other	Total
Cash paid	725.3	89.6	91.1	906.0
Future consideration	-	-	14.3	14.3
Fair value of net assets acquired	(586.9)	(60.0)	(40.2)	(687.1)
Non-controlling interest recognized	2.0	-	-	2.0
Goodwill	140.4	29.6	72.5	242.5
Badwill (in consolidated statement of income)	-	-	(7.3)	(7.3)

Reconciliation to cash flow statement:

	Total
Cash paid for the above acquisitions	906.0
Cash acquired	(36.8)
Cash outflow due to acquisition of subsidiaries, net of cash acquired	869.2
Acquisition of associates and joint arrangements	128.1
Cash outflow due to acquisition of associates, joint arrangements and subsidiaries, net of cash acquired	997.3

Supplemental Information

5. Investments in associates and joint arrangements

The amount of investments in associates and joint arrangements in the consolidated financial statements is significantly affected by the consolidation of Vopak. Vopak has a significant amount of associates and joint arrangements on its balance sheet (€ 1,272.8 million at the end of 2019).

This section provides information about the investments in associates and joint arrangements excluding the investments in associates and joint arrangements of Vopak and Safilo.

The movement of investments accounted for using the equity method is as follows:

	Associates	Joint ventures	Total
Share of net assets	2,569.2	80.6	2,649.8
Goodwill	299.3	-	299.3
Balance on January 1, 2018	2,868.5	80.6	2,949.1
Investments	190.6	17.1	207.7
Consolidation	7.1	-	7.1
Disposals	(3.4)	-	(3.4)
Share of results - real estate	-	(0.5)	(0.5)
Share of results - discontinued operations	-	(0.7)	(0.7)
Share of results - other	(54.3)	(0.1)	(54.4)
Share of other comprehensive income	43.8	-	43.8
Dividends	(68.8)	(1.0)	(69.8)
Reclassification	(8.8)	10.4	1.6
Exchange differences and other	4.1	4.4	8.5
Balance on December 31, 2018	2,978.8	110.2	3,089.0
Share of net assets	2,673.3	110.2	2,783.5
Goodwill	305.5	-	305.5
Balance on December 31, 2018	2,978.8	110.2	3,089.0
Initial application IFRS 16	(41.0)	-	(41.0)
Balance on January 1, 2019	2,937.8	110.2	3,048.0
Investments	104.1	24.0	128.1
Disposals	(13.0)	(0.5)	(13.5)
Share of results - real estate	-	(4.6)	(4.6)
Share of results - discontinued operations	-	(0.7)	(0.7)
Share of results - other	254.9	(4.0)	250.9
Share of other comprehensive income	3.2	-	3.2
Dividends	(98.6)	(24.3)	(122.9)
Impairments	(15.6)	-	(15.6)
Reclassification to held for sale	(0.3)	(0.8)	(1.1)
Exchange differences and other	5.1	2.3	7.4
Balance on December 31, 2019	3,177.6	101.6	3,279.2
Share of net assets	2,867.3	101.6	2,968.9
Goodwill	310.3	-	310.3
Balance on December 31, 2019	3,177.6	101.6	3,279.2

Supplemental Information

The 2019 result was impacted by extraordinary gains at Vopak of € 213.2 million, net of tax. This mainly consisted of divestment gains of terminals in Amsterdam, Hamburg, Tallinn and Hainan. The share of the Company in these gains was € 102.7 million. The 2018 result was impacted by extraordinary losses at Boskalis of in total € 518.7 million, post-tax. Of these losses, € 502.2 million were non-cash impairments, with € 344.8 million relating primarily to goodwill (including goodwill embedded in the book value of joint ventures), € 136.9 million to equipment within the offshore energy division and the remainder to equipment and associates within two towage joint ventures. The share of the Company in these extraordinary losses amounted to € 191.7 million and was included in the consolidated statement of income within the line share of results from associates and joint ventures.

The amounts recognized in the statement of financial position consist of:

	Dec. 31, 2019	Dec. 31, 2018
Publicly traded	2,864.6	2,657.4
Other	414.6	431.6
	3,279.2	3,089.0

The difference between the market value of the Company's share in its publicly traded associates and the book value is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Market value	4,470.8	3,711.2
Book value	(2,864.6)	(2,657.4)
	1,606.2	1,053.8

6. Other financial assets and derivatives

The table below provides information on other financial assets and derivative assets, excluding the assets of Vopak and Safilo.

	Dec. 31, 2019	Dec. 31, 2018
Derivatives
Asset positions	0.7	4.5
Other financial assets
Investments in quoted securities	553.0	425.1
Loans to associates and joint ventures	20.8	0.1
Other loans	23.6	30.0
Other	12.4	48.7
	610.5	508.4

The category "other" includes non-current deposits and receivables.

The maturity of other financial assets and derivatives can be split as shown on the following page.

Supplemental Information

	Dec. 31, 2019	Dec. 31, 2018
Current
Derivatives	0.6	3.6
Other financial assets	11.1	-
Non-current
Derivatives	0.1	0.9
Other financial assets	598.7	503.9
	610.5	508.4

Investments in quoted securities include:

	Dec. 31, 2019	Dec. 31, 2018
Equity interest in SBM Offshore N.V. (16.80%, 2018: 15.99%)	553.0	425.1
	553.0	425.1

Amounts included in the cash flow statement comprise:

	2019	2018
Sale/(purchase) of shares in Chart Industries Inc.	-	137.8
Loans provided to associates	(20.0)	-
Other	(6.2)	6.4
Changes in other financial assets in cash flow statement	(26.2)	144.2

7. Receivables

The amount of receivables in the consolidated financial statements (€ 857.7 million at the end of 2019) is significantly affected by the consolidation of Vopak and Safilo.

This section provides information on the receivables, excluding those of Vopak and Safilo.

	Dec. 31, 2019	Dec. 31, 2018
Trade receivables	611.5	673.2
Allowance for doubtful accounts	(50.9)	(57.0)
	560.6	616.2

The ageing analysis of the trade receivables that are past due but not impaired is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Up to 3 months	106.2	114.5
Between 3 and 6 months	6.8	13.4
Between 6 and 9 months	4.6	8.3
Over 9 months	47.1	51.1
	164.7	187.3

Supplemental Information

8. Inventories

The amount of inventories in the consolidated financial statements (€ 664.3 million at the end of 2019) is significantly affected by the consolidation of Vopak and Safilo. This section provides information on the inventories, excluding those of Vopak and Safilo.

The composition of the inventories is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Raw materials	133.5	62.8
Work in progress	53.4	28.8
Finished goods	276.5	547.4
Stock in transit	11.8	7.9
Provision for obsolete inventory	(46.7)	(36.1)
	428.5	610.8

9. Deferred taxes

The movement in deferred tax assets and liabilities during the period are set out on the following page.

Supplemental Information

	Carry-forward losses	PP&E	Leases	Intangibles	Inventories	Other	Offset	Total
Assets	46.4	11.1	-	8.9	7.4	49.3	(83.1)	40.0
Liabilities	-	(61.9)	-	(164.8)	(14.3)	(24.3)	83.1	(182.2)
Net book value on January 1, 2018	46.4	(50.8)	-	(155.9)	(6.9)	25.0	-	(142.2)
Credited/(charged) to net income - cont. operations	(13.5)	7.4	-	5.8	5.2	(0.5)	-	4.4
Credited/(charged) to net income - disc. operations	30.9	-	-	9.7	0.2	0.3	-	41.1
Credited/(charged) to OCI	-	-	-	-	-	(1.0)	-	(1.0)
Acquisitions and purchase price accounting adjustments	0.2	(5.7)	-	(21.2)	(0.8)	5.7	-	(21.8)
Other movements	-	-	-	-	-	2.7	-	2.7
Reclassifications	0.7	(0.6)	-	(1.4)	-	1.3	-	-
Exchange differences	(0.2)	(1.1)	-	-	-	0.2	-	(1.1)
Net book value on December 31, 2018	64.5	(50.8)	-	(163.0)	(2.3)	33.7	-	(117.9)
Assets	64.5	10.1	-	6.6	7.1	53.4	(77.8)	63.9
Liabilities	-	(60.9)	-	(169.6)	(9.4)	(19.7)	77.8	(181.8)
Net book value on January 1, 2019	64.5	(50.8)	-	(163.0)	(2.3)	33.7	-	(117.9)
Initial application of IFRS 16 (equity impact)	-	-	32.9	-	-	-	-	32.9
Credited/(charged) to net income - cont. operations	(0.2)	(5.9)	0.1	8.7	4.3	(2.9)	-	4.1
Credited/(charged) to net income - disc. operations	10.5	1.7	(2.0)	12.3	0.3	(1.6)	-	21.2
Credited/(charged) to OCI	-	-	-	-	-	9.8	-	9.8
Acquisitions and purchase price accounting adjustments	8.0	(18.9)	-	(81.4)	(0.7)	3.8	-	(89.2)
Other movements	-	-	-	0.1	-	1.6	-	1.7
Reclassifications to held for sale	(58.7)	1.8	(11.8)	100.6	(4.9)	(45.7)	-	(18.7)
Reclassifications	0.3	-	(19.0)	18.6	0.6	(0.5)	-	-
Exchange differences	0.4	(0.8)	(0.1)	(1.5)	0.1	0.4	-	(1.5)
Net book value on December 31, 2019	24.8	(72.9)	0.1	(105.6)	(2.6)	(1.4)	-	(157.6)
Assets	24.8	0.1	40.8	1.2	6.4	17.0	(66.3)	24.0
Liabilities	-	(73.0)	(40.7)	(106.8)	(9.0)	(18.4)	66.3	(181.6)
Net book value on December 31, 2019	24.8	(72.9)	0.1	(105.6)	(2.6)	(1.4)	-	(157.6)

Supplemental Information

Unused tax losses, excluding those of Vopak and Safilo, for which deferred tax assets have not been recognized are as follows:

Expiration	2019	2018
2019	-	5.1
2020	15.1	1.3
2021	21.3	2.7
2022	23.9	7.8
2023	14.4	17.3
2024 and further years	112.3	107.3
No expiration date	293.8	85.8
Total continuing operations	480.8	227.3
Discontinued operations	334.1	301.5
	814.9	528.8
Amounts including Vopak and Safilo	1,164.9	826.8

10. Pension benefits

The pension obligations are significantly affected by the consolidation of Vopak. The present value of the funded obligations and the fair value of the plan assets as per the consolidated financial statements are € (448.8) million, respectively € 441.4 million whereas excluding Vopak these amounts are significantly lower. This section therefore provides additional information on the pension obligations, excluding those of Vopak and Safilo.

The amounts recognized on the pro forma statement of financial position comprise:

	Dec. 31, 2019	Dec. 31, 2018
Pension benefit assets	40.5	68.8
Pension benefit liabilities	(55.2)	(130.6)
	(14.7)	(61.8)

The net pension benefits consist of:

	Dec. 31, 2019	Dec. 31, 2018
Present value of funded obligations	(292.4)	(153.4)
Fair value of plan assets	326.2	196.4
Surplus/(deficit) of funded obligations	33.8	43.0
Present value of unfunded obligations	(48.5)	(104.8)
Net asset/(liability) in the statement of financial position	(14.7)	(61.8)

Supplemental Information

The movement in the net liability is as follows:

	2019	2018
Balance on January 1	(61.8)	(20.7)
Pension charge defined benefit plans continuing operations	(2.3)	(1.1)
Pension charge defined benefit plans discontinued operations	(6.4)	(7.6)
Consolidation	(29.3)	(27.2)
Contributions	7.7	2.2
Remeasurement effects	(32.1)	(9.0)
Benefits paid for unfunded plans	3.7	2.5
Plan amendments, settlements and curtailments	(27.1)	-
Reclassification to held for sale*	136.1	-
Exchange differences and other	(3.2)	(0.9)
Balance on December 31	(14.7)	(61.8)

The reclassification to held for sale mainly relates to GrandVision N.V.

The 2019 increase of € 29.3 million included in the line consolidation relates to the acquisition of Formica by Broadview Holding B.V. and acquisitions made by GrandVision N.V. (subsequently reclassified to held for sale). The amount of € 27.2 million included in the line consolidation in 2018 related to the acquisition of Westag & Getalit AG by Broadview Holding B.V. The 2019 plan amendments relate to the liquidation of a pension plan which did not have any participants. The net assets of the fund of € 27 million were transferred to the Company and did not result in any gain or loss on settlement.

The amounts recognized in the pro forma consolidated statement of income are as follows:

	2019	2018
Current service costs	2.2	1.8
Interest expense/(income)	(0.1)	(0.9)
Administrative costs	0.2	0.2
Total defined benefit costs	2.3	1.1
Other costs	23.5	22.7
Pension charges related to continuing operations	25.8	23.8
Pension charges related to discontinued operations	28.1	27.8
	53.9	51.6

Other costs mainly relate to defined contribution plans and multi-employer pension plans classified as defined contribution plans.

The principal, weighted-average assumptions used were:

	Dec. 31, 2019	Dec. 31, 2018
Discount rate/return on assets	1.69%	1.87%
Future inflation rate	2.20%	1.38%
Future salary increases	3.07%	1.79%

The latest available mortality tables were used.

Supplemental Information

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 liabilities.

As of December 31, 2019, the plan assets consist of:

	Level 1	Level 2	Level 3	Total	Total (%)
Equity instruments	93.9	44.5	-	138.4	40.8%
Debt instruments	24.5	140.6	0.1	165.2	48.7%
Cash and cash equivalents	22.2	-	-	22.2	6.6%
Other	13.0	-	0.1	13.1	3.9%
	153.6	185.1	0.2	338.9	100.0%

As of December 31, 2018, the plan assets consisted of:

	Level 1	Level 2	Level 3	Total	Total (%)
Equity instruments	76.2	0.1	-	76.3	38.8%
Debt instruments	15.6	9.7	0.2	25.5	13.0%
Cash and cash equivalents	46.3	-	-	46.3	23.6%
Other*	0.5	47.6	0.2	48.3	24.6%
	138.6	57.4	0.4	196.4	100.0%

Other financial instruments in level 2 related to the indirect right to the assets held by a Swiss foundation related to GrandVision Switzerland (Visilab).

The sensitivity of the defined benefit obligation to changes in the principal, weighted-average assumptions is as follows:

	Impact on obligation
	Change	Increase	Decrease
Discount rate/return on assets	1.00%	(25.2)	35.3
Future inflation rate	1.00%	31.2	(23.7)
Future salary increases	0.25%	1.8	(1.8)
Life expectancy	1 year	6.8	N/A

The plan liabilities are calculated using a discount rate set with reference to 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' bond holdings. The majority of the plans' obligations are to provide benefits for the lifetime of the members, so increases in life expectancy will result in an increase in the plans' liabilities.

11. Provisions

The provisions (current and non-current) as per the consolidated financial statements amount to € 155.1 million. This amount is significantly affected by the consolidation of Vopak and Safilo.

This section provides information on provisions excluding the amounts relating to Vopak and Safilo.

Supplemental Information

The composition and movement of the provisions is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Current	20.2	26.5
Non-current	12.5	26.3
	32.7	52.8

The breakdown and movement in provisions is as follows:

	Environmental	Employee related	Warranties	Claims, legal & regulatory	Other	Total
Balance on January 1, 2018	3.3	16.3	12.1	18.7	6.3	56.7
Addition to provision	0.1	23.6	2.1	-	4.1	29.9
Consolidation	-	-	1.3	-	0.3	1.6
Utilized during the year	(0.6)	(24.4)	(4.4)	(1.4)	(3.3)	(34.1)
Exchange differences	-	(0.4)	-	(0.5)	-	(0.9)
Released	-	(0.2)	(0.5)	-	(0.3)	(1.0)
Net addition related to discontinued operations	-	2.5	(2.2)	1.7	0.7	2.7
Reclassifications and other movements	-	(0.1)	(0.4)	-	(1.6)	(2.1)
Balance on December 31, 2018	2.8	17.3	8.0	18.5	6.2	52.8
Balance on January 1, 2019	2.8	17.3	8.0	18.5	6.2	52.8
Addition to provision	0.1	37.0	2.1	-	4.3	43.5
Consolidation	2.9	12.0	0.1	-	0.9	15.9
Utilized during the year	(0.6)	(40.0)	(4.4)	(0.4)	(2.1)	(47.5)
Exchange differences	-	(0.4)	-	(0.1)	0.1	(0.4)
Released	(0.1)	(1.3)	(0.3)	-	(2.0)	(3.7)
Net addition related to discontinued operations	-	7.5	3.0	1.6	2.6	14.7
Reclassification to held for sale	-	(14.1)	(4.1)	(19.7)	(4.3)	(42.2)
Reclassifications and other movements	0.1	(1.6)	-	0.1	1.0	(0.4)
Balance on December 31, 2019	5.2	16.4	4.4	-	6.7	32.7

Supplemental Information

12. Debt and other financial liabilities

The amount of debt and other financial liabilities in the consolidated financial statements (€ 2,856.5 million) is significantly affected by the consolidation of Vopak and Safilo. The amount excluding Vopak and Safilo is significantly lower as set out below.

Debt and other financial liabilities excluding Vopak and Safilo consists of:

	Dec. 31, 2019	Dec. 31, 2018
Debt	807.2	1,530.6
Other financial liabilities	70.4	87.1
	877.6	1,617.7
	Dec. 31, 2019	Dec. 31, 2018
Non-current debt and other financial liabilities
Mortgage loans	310.8	412.4
Other loans	281.1	445.0
Total non-current debt	591.9	857.4
Non-current other financial liabilities	48.9	65.0
Total non-current debt and other financial liabilities	640.8	922.4
Current debt and other financial liabilities
Bank overdrafts	25.6	92.8
Bank loans	1.1	54.3
Current portion of long-term debt	188.6	108.2
Commercial paper	-	417.9
Total current debt	215.3	673.2
Current other financial liabilities	21.5	22.1
Total current debt and other financial liabilities	236.8	695.3
Total debt and other financial liabilities	877.6	1,617.7

The summary of debt per currency is as follows:

	Dec. 31, 2019	Dec. 31, 2018
Euro	549.0	1,320.4
U.S. dollar	251.6	194.8
Other currencies	6.6	15.4
	807.2	1,530.6

Supplemental Information

13. Accrued expenses

Accrued expenses in the consolidated financial statements amount to € 492.5 million at the end of 2019, which is significantly influenced by the consolidation of Vopak and Safilo. The accrued expenses excluding the amounts related to Vopak and Safilo consist of:

	Dec. 31, 2019	Dec. 31, 2018
Employee-related accruals	100.4	234.5
VAT and other tax liabilities	47.6	66.8
Other	108.8	247.0
Total accrued expenses	256.8	548.3

14. Revenues

Revenues included in the consolidated financial statements amount to € 5.2 billion of which € 2.2 billion is related to Vopak and Safilo.

The 2019 revenues excluding those of Vopak and Safilo can be disaggregated as follows:

2019	Europe	USA & Canada	Asia	Other	Total
Revenue from contracts with customers
Sale of goods	2,191.0	207.1	162.3	37.5	2,597.9
Services	323.0	15.9	11.9	14.2	365.0
	2,514.0	223.0	174.2	51.7	2,962.9
Revenue from other sources	2.2	0.2	-	0.1	2.5
Total revenue from continuing operations	2,516.2	223.2	174.2	51.8	2,965.4
Revenue from discontinued operations	3,679.7	80.7	5.2	273.7	4,039.3
Total revenue	6,195.9	303.9	179.4	325.5	7,004.7

Supplemental Information

The 2018 revenues excluding those of Vopak and Safilo can be disaggregated as follows:

2018	Europe	USA & Canada	Asia	Other	Total
Revenue from contracts with customers
Sale of goods	1,974.5	62.0	24.0	27.5	2,088.0
Services	275.1	13.7	3.9	9.9	302.6
	2,249.6	75.7	27.9	37.4	2,390.6
Revenue from other sources	5.5	5.1	0.1	0.5	11.2
Total revenue from continuing operations	2,255.1	80.8	28.0	37.9	2,401.8
Revenue from discontinued operations	3,380.7	74.4	6.6	259.3	3,721.0
Total revenue	5,635.8	155.2	34.6	297.2	6,122.8

15. Share of results from associates and joint ventures

Results from associates and joint ventures as per the consolidated financial statements is affected by the inclusion of the results of Vopak and Safilo, in particular by the results of the joint ventures of Vopak.

The table below provides information on the results from associates excluding those of Vopak and Safilo.

	2019	2018
Share of results*	250.9	(54.4)
Impairments	(15.6)	-
Continuing operations	235.3	(54.4)
Discontinued operations	(0.7)	(0.7)
	234.6	(55.1)

Share of results from real estate joint ventures of €(4.6) million (2018: € (0.5) million) is classified as income from real estate activities in the consolidated statement of income

Supplemental Information

16. Employee expenses

The table below provides information on the employee expenses excluding the employee expenses of Vopak and Safilo.

	2019	2018
Wages and salaries	543.2	425.0
Social security costs	86.2	60.8
Pension costs	25.8	23.8
Other	80.2	68.7
Continuing operations	735.4	578.3
Discontinued operations	1,398.4	1,274.3
Total	2,133.8	1,852.6

The average number of persons employed by the Company and its subsidiaries, excluding Vopak and Safilo, during 2019 was 47,689 (2018: 41,604) on a full-time equivalent basis. Of these persons, 34,143 (2018: 32,400) were employed at a discontinued operation.

Reference is made to note 10 for details of the pension costs.

17. Other operating expenses

The table below provides information on the other operating expenses excluding the other operating expenses of Vopak and Safilo.

	2019	2018
Housing	22.1	61.3
Marketing and publicity	42.3	25.5
Staffing expenses Atlas Professionals B.V.	177.9	161.0
Information and communication	34.9	25.7
Other	249.3	204.0
Continuing operations	526.5	477.5
Discontinued operations	654.4	953.2
Total	1,180.9	1,430.7

Research and development costs expensed, excluding Vopak and Safilo, during 2019 was € 12.7 million (2018: € 7.4 million).

Supplemental Information

18. Income tax expense

Income taxes in the consolidated financial statements, and in particular the analysis of the effective tax rate, are significantly affected by the consolidation of Vopak and Safilo.

The tax charge excluding the consolidation of Vopak and Safilo can be detailed as follows:

	2019	2018
Current income taxes	40.5	28.0
Deferred income taxes	(4.1)	(4.4)
Income tax from continuing operations	36.4	23.6
Income tax from discontinued operations	79.2	81.7
	115.6	105.3

The table below provides an analysis of the effective tax rate excluding the consolidation of Vopak and Safilo.

	2019	2018
Profit before income tax from continuing operations	380.7	33.3
Less: after-tax share of results from associates and joint ventures	(235.3)	54.4
Less: non-taxable other income (sale of subsidiaries and associates)	(40.3)	-
Adjusted profit before income tax	105.1	87.7
Income tax expense	36.4	23.6
Effective tax rate (%) on continuing operations	34.6	26.9
Composition	2019
---	---	---
	Amount	%
Weighted-average statutory tax rate	27.1	25.8
Goodwill impairment	2.6	2.4
Recognition of tax losses*	4.9	4.6
Non-taxable income	(8.1)	(7.7)
Non-deductible expenses	7.1	6.8
Rate changes	(0.8)	(0.7)
Adjustment tax provisions and PY adjustments	3.6	3.4
Effective tax (rate) on continuing operations	36.4	34.6
Impact from discontinued operations	79.2
Effective tax	115.6

Current period losses that are not recognized increase the effective tax rate. When previously unrecognized tax losses are recognized, this reduces the effective tax rate.

Supplemental Information

19. Cash flows from operating activities

Cash flows from operating activities		2019	2018
Profit before taxes from continuing operations		380.7	33.4
Profit before taxes from discontinued operations		540.0	307.6
Depreciation and impairments		184.2	213.3
Depreciation and impairments right-of-use assets		259.3	-
Amortization and impairments	3	149.7	134.2
Badwill recognized on acquisitions		(7.3)	-
(Profit)/loss on sale of property, plant and equipment and investment properties		1.7	(12.3)
(Profit)/loss on sale of other financial assets and marketable securities		(5.5)	24.0
Results from associates and joint ventures, net of impairments	15	(230.0)	55.6
(Profit)/loss on assets and liabilities held for sale		(40.7)	-
Net financial expense		82.0	47.0
Other movements in provisions and pension benefits		16.2	(3.3)
Dividend from associates and joint ventures	5	122.9	69.8
Changes in working capital		81.0	40.9
Cash generated from operating activities		1,534.2	910.2

20. Share-based compensation

The amount of expenses and liabilities related to share-based compensation in the consolidated financial statements (€ 16.7 million and € 72.1 million, respectively) is also affected by the consolidation of Vopak and Safilo. The amounts excluding Vopak and Safilo are lower, as set out below.

Expenses related to share-based compensation consist of:

	2019	2018
HAL Holding N.V.
Share Plan*	1.5	1.6
Unquoted subsidiaries
Cash Plans**	1.3	10.5
Total from continuing operations	2.8	12.1
Discontinued operations	5.0	3.8
	7.8	15.9

Equity-settled
**Cash-settled

Supplemental Information

Increases in equity for share-based compensation plans amounted to:

	2019	2018
HAL Holding N.V.
Share Plan	1.5	1.6
Total from continuing operations	1.5	1.6
Discontinued operations	5.6	3.0
	7.1	4.6

Liabilities recognized in relation to cash-settled share-based compensation are comprised of:

	Dec. 31, 2019	Dec. 31, 2018
Unquoted subsidiaries
Cash Plans	67.6	57.2
Total from continuing operations	67.6	57.2
Discontinued operations (2019: held for sale)	-	0.8
	67.6	58.0

The current part of this liability of € 21.4 million (2018: € nil) is included under current debt and the non-current part of € 46.2 million (2018: € 58.0 million) under non-current debt.

21. Financial risk management

The financial risk management of the Company is set out in note 39 to the consolidated financial statements. In this note it is set out that the financial risks of Vopak, Safilo and the companies belonging to the optical retail and unquoted segment are not managed by the Company but by these entities.

As the financial risks of Vopak and Safilo are, in aggregate, substantial, the tables below provide quantitative information with respect to the financial risks of the Company excluding the amounts relating to Vopak, Safilo and discontinued operations (GrandVision).

Credit risk

The maximum exposure to credit risk can be specified by segment as follows:

	Dec. 31, 2019	Dec. 31, 2018
Optical retail (2019: assets held for sale)	-	421.7
Unquoted	949.3	800.9
Real estate	3.1	2.1
Liquid portfolio	1,223.9	1,736.4
	2,176.3	2,961.1

Supplemental Information

These financial assets can be further specified as follows:

	Dec. 31, 2019	Dec. 31, 2018
Loans	44.4	25.7
Trade receivables	560.6	475.9
Marketable securities and deposits	71.0	55.8
Derivative financial instruments	0.7	4.5
Other financial assets	12.4	4.0
Other current assets	87.3	91.0
Cash and cash equivalents	1,399.9	1,882.5
Total continuing operations	2,176.3	2,539.4
Optical retail (2019: assets held for sale)	-	421.7
	2,176.3	2,961.1

At the end of 2019, cash and cash equivalents can be specified by segment as follows:

	Dec. 31, 2019	Dec. 31, 2018
Unquoted	246.5	201.9
Real estate	0.4	-
Liquid portfolio	1,153.0	1,680.6
Total continuing operations	1,399.9	1,882.5
Optical retail (2019: assets held for sale)	-	138.3
	1,399.9	2,020.8

Liquidity risk

The following tables categorize the undiscounted cash flows of non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting periods to the contractual maturity date, excluding the amounts relating to Vopak, Safilo and discontinued operations. The financial guarantee contracts are contingent liabilities.

Supplemental Information

	December 31, 2019
	< 1 year	1-2 years	3-5 years	> 5 years
Non-derivative liabilities
Redemption of debt	215.3	103.5	336.7	151.7
Redemption of other financial liabilities	21.5	5.6	43.3	-
Interest payments	20.4	16.7	32.8	12.7
Payments on lease liabilities	74.8	121.3	80.2	100.8
Accounts payable	419.1	-	-	-
Financial guarantee contracts	17.0	0.8	0.7	0.9
Total undiscounted non-derivative financial liabilities	768.1	247.9	493.7	266.1
Derivative liabilities
Gross-settled derivative liabilities outflow	10.2	-	-	-
Gross-settled derivative liabilities inflow	(10.2)	-	-	-
Total gross-settled derivative liabilities	0.0	-	-	-
Net-settled derivative liabilities	0.6	0.1	0.1	6.5
Total undiscounted derivative liabilities	0.6	0.1	0.1	6.5
Total undiscounted financial liabilities	768.7	248.0	493.8	272.6
	December 31, 2018
	< 1 year	1-2 years	3-5 years	> 5 years
Non-derivative liabilities
Redemption of debt	673.2	111.7	552.2	193.5
Redemption of other financial liabilities	22.1	21.2	40.4	3.4
Interest payments	24.7	20.5	36.0	23.7
Accounts payable	537.5	-	-	-
Financial guarantee contracts	1.1	0.7	2.1	0.3
Total undiscounted non-derivative financial liabilities	1,258.6	154.1	630.7	220.9
Derivative liabilities
Gross-settled derivative liabilities outflow	225.5	-	-	-
Gross-settled derivative liabilities inflow	(223.7)	-	-	-
Total gross-settled derivative liabilities	1.8	-	-	-
Net-settled derivative liabilities	3.2	2.8	2.6	2.4
Total undiscounted derivative liabilities	5.0	2.8	2.6	2.4
Total undiscounted financial liabilities	1,263.6	156.9	633.3	223.3

The total debt, excluding the debt of Vopak, Safilo and discontinued operations, as of December 31, 2019, amounted to € 807.2 million (2018: € 1,530.6 million, including discontinued operations). For 100% of the bank debt, the applicable covenants were complied with during 2018 and 2019. At the end of 2019, unused committed credit facilities were available to an amount of

Supplemental Information

€ 419.5 million (2018: € 1,207.1 million, including discontinued operations). These exclude the facilities of Vopak, Safilo and discontinued operations.

Market risk - currency risk

The table below shows the net assets per currency (taking into account debt and hedging instruments denominated in foreign currency), excluding the exposures of Vopak, Safilo and discontinued operations.

	Dec. 31, 2019	Dec. 31, 2018
U.S. dollar	542.2	300.6
Chinese yuan renminbi	87.3	5.4
Canadian dollar	31.3	-
Thai baht	26.9	-
U.K. pound sterling	20.9	14.2
Checz krona	10.4	13.7
Singapore dollar	9.9	1.8
Other	83.7	83.5
Total continuing operations	812.6	419.2
Discontinued operations	787.1	869.0
	1,599.7	1,288.2

An average change in value of these currencies by 10% would have a pre-tax effect on the pro forma consolidated equity of € 81.3 million. The market value of the currency derivative financial instruments at December 31, 2019, per the consolidated financial statements is a net asset of € 9.2 million on a notional amount of € 1,679.9 million (2018: net asset € 11.4 million, notional amount € 2,198.6 million). These amounts are primarily comprised of derivatives of Vopak. The amount excluding Vopak and Safilo and discontinued operations is a net asset of € 0.6 million on a notional amount of € 92.1 million (2018: net asset € 1.7 million, notional amount € 410.8 million, including discontinued operations).

Market risk - interest rate risk

As of December 31, 2019, taking into account interest rate swaps, 42% of the total debt, excluding the bank debt of Vopak, Safilo and discontinued operations, of € 807.2 million (2018: 75% of € 1,530.6 million, including discontinued operations) was at fixed rates for an average period of 4.5 years (2018: 3.2 years, including discontinued operations). The weighted-average interest rate was 2.5% (2018: 1.2%, including discontinued operations).

22. Capital risk management

The table below summarizes the capital structure excluding the impact from the consolidation of Vopak and Safilo.

	Dec. 31, 2019	Dec. 31, 2018
Equity	7,960.3	7,471.2
Non-current debt	591.9	857.4
Current debt	215.3	673.2
Cash and cash equivalents	(1,399.9)	(2,020.8)
Total capital employed	7,367.6	6,981.0

Supplemental Information

The net asset value based on the market value of the ownership interests in quoted companies and the liquid portfolio and on the book value of the unquoted companies amounted to € 13,694 million on December 31, 2019 (2018: € 11,238 million). The net asset value consists of the sum of the shareholders' equity attributable to the owners of the parent (€ 7,960 million) and the difference between the market value of the ownership interests in quoted companies and their book value (as disclosed on page 121), calculated based on equity accounting and excluding the difference due to purchase price accounting adjustments (€ 5,734 million).

23. Capital and financial commitments

Capital commitments

The capital commitments in respect of property, plant and equipment under construction, excluding those of Vopak and Safilo, amounted to € 65.9 million (2018: € 7.4 million).

Financial commitments

Following the implementation of IFRS 16, Leases, the off-balance sheet financial commitments have become insignificant to the size of the Company. Reference is made to the basis of preparation for further details on the implementation of this new standard.

Financial Statements HAL Trust

Statement of Financial Position HAL Trust (in millions of euro)

As of December 31	2019	2018
Assets
Shareholding in HAL Holding N.V.	69.3	69.3
Trust Property	69.3	69.3

Statement of Comprehensive Income HAL Trust (in millions of euro)

For the year ended December 31	2019	2018
Dividend received from HAL Holding N.V.	433.3	496.8
Net Income	433.3	496.8

Statement of Changes in Trust Property (in millions of euro)

Balance on January 1, 2019	69.3
Dividend received from HAL Holding N.V. (in cash and in shares)	433.3
Distributed to Unit Holders (in cash and in shares)	(433.3)
Balance on December 31, 2019	69.3

Statement of Cash Flows HAL Trust (in millions of euro)

For the year ended December 31	2019	2018
Dividend received from HAL Holding N.V.	(216.5)	(248.1)
Distributed to Unit Holders	216.5	248.1
Net change	-	-

Notes to the statutory financial statements (in millions of euro)

The shares in HAL Holding N.V. are accounted for at historical cost. As of December 31, 2019, HAL Trust owned 83,448,898 shares of HAL Holding N.V. (2018: 81,763,062)

Distribution of Dividends

It is proposed to the Shareholders’ Meeting of HAL Trust to instruct the Trustee to vote, at the General Meeting of Shareholders of HAL Holding N.V., in favor of the proposals to approve the Financial Statements for 2019 and to pay a dividend of € 5.80 per Share outstanding of which € 2.90 per Share shall be payable in Shares in the share capital of HAL Holding N.V. and € 2.90 per Share in cash.

It is proposed to direct the Trustee:

to issue by way of stock dividend distribution to each HAL Trust Shareholder: such number of Shares as shall be based on the Conversion ratio, the number of Shares held by such HAL Trust Shareholder and the dividend per HAL Trust Share of € 2.90 payable in shares;
to pay a cash dividend of € 2.90 per HAL Trust Share;
and
to convey to HAL Holding N.V. for what amount cash payments are to be made to the Trustee representing the value of fractions of HAL Trust Shares (if any) to which the respective HAL Trust Shareholders will be entitled on the basis of the Conversion ratio.

Shareholders holding their shares through Euroclear Nederland will be paid via affiliated banks and security brokers. To the other Shareholders payment of the dividend due is made directly, in accordance with the conditions agreed upon with these Shareholders.

The text of Article VII, Section 7.1 of the Trust Deed reads:

Profits of the Trust. The profits of the Trust in respect of a Financial Year as they appear in the profit and loss account of the Trust as approved by an Ordinary Resolution as provided in Section 14.3 shall be applied as follows:

(A) FIRST: out of the profits such dividend as may be determined by Ordinary Resolution shall be distributed to the Trust Shareholders in proportion to the number of Units represented by the Shares held by such Trust Shareholders

(B) SECOND: the remaining part of the profits, if any, shall be retained as Trust Property.

156

Independent Auditor's Report

To the Trustee and Shareholders of HAL Trust

Report on the audit of the financial statements

Our opinion

In our opinion the accompanying consolidated financial statements and stand-alone financial statements give a true and fair view of the consolidated financial position of HAL Trust (the 'Trust') and its subsidiaries (together: the 'Group') and the stand-alone financial position of the Trust as at December 31, 2019, and of their consolidated and stand-alone financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS).

What we have audited

The consolidated financial statements and the stand-alone financial statements (collectively referred to as the 'financial statements') are included on pages 21 to 154.

The financial statements comprise:

the consolidated and stand-alone statements of financial position as of December 31, 2019;
the consolidated statement of income for the year ended December 31, 2019;
the consolidated and stand-alone statements of comprehensive income for the year ended December 31, 2019;
the consolidated statement of changes in equity and the stand-alone statement of changes in trust property for the year ended December 31, 2019;
the consolidated and stand-alone statements of cash flows for the year ended December 31, 2019; and
the notes to the consolidated and stand-alone financial statements, comprising a summary of significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the 'Auditor's responsibilities for the audit of the financial statements' section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of HAL Trust in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the ethical requirements of the Chartered Professional Accountants of Bermuda Rules of Professional Conduct (CPA Bermuda Rules) that are relevant to our audit of the financial statements. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the ethical requirements of the CPA Bermuda Rules.

Our audit approach

Overview and context

The Group is comprised of several components and therefore we considered our Group audit scope and approach as set out in the "How we tailored our group audit scope" section of our report. We paid specific attention to the areas of focus driven by the operations of the Group, as set out on the following page.

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the Executive Board of HAL Holding N.V. made subjective judgments; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain.

In the "Basis of preparation" section on page 29 of the financial statements, the Executive Board of HAL Holding N.V. describes the areas of judgment in applying accounting policies and the key sources of estimation uncertainty. Given the higher inherent risks of material misstatement in the valuation of intangible assets in acquisitions, impairment testing of tank terminal assets and joint ventures and associates and the recognition, measurement and disclosure of the impact of IFRS 16 Leases, we continued to consider these to be key audit matters in 2019. A new key audit matter this year is the classification, measurement, presentation and disclosure of the sale of GrandVision N.V. We considered this a key audit matter as the sale of GrandVision N.V. has a significant impact on the Group's financial statements as a whole. Each of these key audit matters have been set out in the section "Key audit matters" of this report.

As in all of our audits, we addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Executive Board of HAL Holding N.V. that may represent a risk of material misstatement due to fraud. This was not considered to be a key audit matter. Another area of focus that was not considered to be a key audit matter was the risk of fraud in revenue recognition.

We ensured that the audit teams both at Group and at component levels included the appropriate skills and competencies which were needed for the audit. We included specialists in the areas of IT, taxes, valuation, pensions and share-based compensation in the audit teams.

The outline of our audit approach was as follows:

Materiality

Overall materiality: € 30.8 million which represents 5% of profit before tax (adjusted for specific non-recurring items and non-controlling interest).

Group scoping

We conducted our audit work at the Trust and HAL Holding N.V.'s corporate entities and 16 components, as described in the section “How we tailored our group audit scope”.Each of the 16 components was audited by a local component audit team with whom the group audit team has been in frequent contact. Site visits were conducted for 9 components including the individually financially significant components Koninklijke Vopak N.V. (‘Vopak’), Broadview Holding B.V. (‘Broadview’) and GrandVision N.V. (‘GrandVision’).Audit coverage: 100% of consolidated revenue, 92% of consolidated total assets and 97% of consolidated profit before tax

Key audit matters

Valuation of intangible assets in acquisitionsImpairment testing of tank terminal assets and joint ventures and associatesRecognition, measurement and disclosure of IFRS 16, LeasesClassification, measurement, presentation and disclosure of the sale of GrandVision

159

Materiality

The scope of our audit was influenced by our application of materiality which is further explained in the “Auditor’s responsibilities for the audit of the financial statements” section of our report. An audit is designed to obtain reasonable assurance about whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Based on our professional judgment, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole.

Overall group materiality	€ 30.8 million
How we determined it	5% of adjusted profit before tax
Rationale for the materiality benchmark applied	We used profit before tax as the primary benchmark, a generally accepted auditing practice, based on our analysis of the common information needs of users of the financial statements. On this basis we believe that profit before tax is an important metric for the financial performance of the Group. We adjusted profit before tax of € 696.9 million to include the net profit from discontinued operations of € 460.8 million, adjusted for the tax effect included therein of € 79.2 million, and the reversal of the discontinuance of recognition of depreciation, amortization and impairments on non-current assets of GrandVision of € 265.5 million. At the request of the Executive Board of HAL Holding N.V., we further amended materiality by excluding the effect of specific non-recurring items of € 91.2 million as disclosed in note 2 to the consolidated financial statements and the profits attributable to non-controlling interest (excluding non-recurring items) of Vopak and Safilo Group S.p.A. ('Safilo') from our benchmark.
Component materiality	To each component in our audit scope, we, based on our judgment, allocated materiality that is less than our overall group materiality. The materiality allocated across components was in the range of € 0.3 million to € 22.0 million.

We also take misstatements and/or possible misstatements into account that, in our judgment, are material for qualitative reasons.

We agreed with the Executive Board and the Supervisory Board of HAL Holding N.V. that we would report to them misstatements identified during our audit above € 250,000 other than for Vopak and Safilo as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. In relation to Vopak and Safilo, we agreed with the Executive Board and Supervisory Board of HAL Holding N.V. that we would report to them misstatements identified during our audit above € 900,000 and € 250,000, respectively.

160

Emphasis of matter - subsequent event event on COVID-19

We draw attention to note 45 in the financial statements, in which management has described the possible impact and consequences of COVID-19 (Corona virus) on the Group and the environment in which the Group operates, as well as the measures taken and planned to deal with these events or circumstances. This note also indicates that uncertainties remain and that it is currently not reasonably possible to estimate the future impact. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. We have communicated the key audit matters and a summary of the audit procedures we performed on those matters, to the Supervisory Board of HAL Holding N.V. The key audit matters are not a comprehensive reflection of all matters that were identified by our audit and that we discussed.

The key audit matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We do not provide a separate opinion on these matters or on specific elements of the financial statements. Any comments we make on the results of our procedures should be read in this context.

161

Key audit matter	How our audit addressed the key audit matter
Valuation of intangible assets in acquisitions

See notes 7, 8 and 9 of the consolidated financial statements for the Executive Board’s disclosures of related accounting policies, judgments and estimates. | |
| During 2019 certain entities controlled by the Trust entered into various acquisition agreements with several unrelated parties. The combined purchase amount of these acquisitions totals to € 924.8 million in 2019. | Our audit procedures on acquisitions included an assessment of the purchase agreements, the process that management has undertaken to determine the allocation of purchase consideration including contingent adjustments, including but not limited to, understanding the scope of work, assessing the qualifications, competence and objectivity of the valuation experts engaged by the Group and evaluating the process and oversight performed by the Group’s finance team on harmonizing the accounting policies. |
| We considered this to be an area of focus given that the valuation of intangible assets in acquisitions requires significant judgment by management in allocating the purchase consideration to assets acquired and liabilities assumed based on their respective fair values. This included, but was not limited to, assessing the fair value of intangible non-current assets acquired including customer relationships and trademarks totaling to € 358.6 million. The remaining unallocated balance determined the value of goodwill, which totaled to € 242.5 million for the segment “Unquoted”. | Furthermore, with the assistance of our valuation experts we tested the fair value measurements prepared by management and their valuation experts, including evaluating the key valuation assumptions used. We corroborated and, where appropriate, benchmarked key data used in the valuation model, such as the pre-acquisition carrying values, discount rates, royalty rates and retention rates for the valuation of customer relationships and trademarks |
| As part of the valuation process, management utilizes valuation experts to assist in the determination of the total consideration and valuation of identified assets. | Based on our procedures, we considered management’s allocation of purchase consideration including contingent adjustments and fair value measurements to be appropriate. Further, we consider the related disclosures in notes 7, 8 and 9 to the consolidated financial statements to be adequate. |

162

Key audit matter	How our audit addressed the key audit matter
Impairment testing of tank terminal assets and joint ventures and associates

See notes 4, 9 and 36 of the consolidated financial statements for the Executive Board's disclosures of related accounting policies, judgments and estimates. | |
| Vopak controls a number of tank storage terminals with a total carrying value of € 3,341.2 million. Furthermore, Vopak has an interest in a number of joint ventures and associates, with a total carrying value of € 1,272.8 million (note 5 Supplemental Information). | We evaluated management’s policies and procedures to identify triggering events for potential impairments of terminal assets, joint ventures and associates. |
| We considered this to be an area of focus as the determination as to whether or not these assets are carried at more than their recoverable amounts is subject to significant management judgment. Such judgment focuses predominantly on future cash flows, which are, amongst others, dependent on economic conditions, the continued attractiveness of the terminal location for users along the major shipping routes and local market circumstances and is inherently surrounded with uncertainty. | For the tank terminal assets, joint ventures and associates that triggered impairment testing, we evaluated the impairment testing policies and procedures, we challenged primarily cash flow assumptions and corroborated them by comparing to commercial contracts, customer relationship management information, available market reports, historic trend analyses and, where available, market multiples from recent tank terminal sales transactions in the region. |
| As described in note 36 of the consolidated financial statements, Vopak recognized impairments on tank terminal assets and joint ventures and associates in an amount totaling € 14.7 million. | Valuation experts were involved to evaluate the weighted-average cost of capital by country as applied by Vopak and the appropriateness of certain assumptions in the applied value-in-use calculations or, when applicable, the fair value less cost of disposal calculations. |
| | Based on our procedures, we consider management’s key assumptions used in measuring the recoverable amount to be within a reasonable range of our own expectations and the related disclosures on key estimates, uncertainties and impairments in note 36 to the consolidated financial statements to be adequate. By nature, the assumptions applied in measuring the recoverable amount are subject to developments and change in later periods. This could potentially lead to (reversal of) impairments of individual tank terminal assets going forward. |

163

Key audit matter	How our audit addressed the key audit matter
Recognition, measurement and disclosure of IFRS 16, Leases

See section “recent accounting developments” and note 6 of the consolidated financial statements for the Executive Board’s disclosures of related accounting policies, judgments and estimates. | |
| IFRS 16, Leases, became effective for annual reporting periods beginning on or after January 1, 2019. The Group applied the modified retrospective approach. The application of this new standard gave rise to right-of-use assets of € 2,363.7 million and a corresponding increase in lease liabilities of € 2,398.3 million as of January 1, 2019, for the Group. | We evaluated the design effectiveness of management’s internal controls around the (local) implementation of IFRS 16, including completeness and accuracy of the contractual lease agreements recognized in the lease calculation tool. |
| We consider this a key audit matter in view of the significant impact this new accounting standard has on the consolidated statement of financial position and consolidated statement of income of the Group. Furthermore, significant management judgment is required in establishing the key assumptions underlying the calculation of the lease liability and right-of-use asset as of January 1, 2019, and December 31, 2019. | We challenged management on their accounting policy choice judgements and they provided us with explanations and evidence supporting these judgements. Furthermore, we challenged management’s assumptions used in determining the discount rates and lease terms. With the assistance of valuation experts we tested the discount rates applied by the Group. On a sample basis we agreed the key inputs to supporting documentation such as lease agreements. We also recalculated the right-of-use asset and lease liability calculated by the system for each material type of lease contract. |
| | Based on our audit procedures, we found that the Group has appropriately implemented IFRS 16, Leases, including the recognition of the lease liabilities and the right-of-use assets, and the adjustment to the opening balance of retained earnings of the Group as of January 1, 2019. We consider the disclosures of IFRS 16 to be adequate. |

164

Key audit matter	How our audit addressed the key audit matter
Classification, measurement, presentation and disclosure of the sale of GrandVision

See note 3 of the consolidated financial statements for the Executive Board's disclosures of related accounting policies, judgments and estimates. | |
| On July 30, 2019, HAL Holding N.V. signed an agreement to sell, subject to certain terms and conditions, its 76.72% ownership interest in the issued capital of GrandVision to EssilorLuxottica. As of this date the assets and liabilities of GrandVision were classified as “held for sale”, were measured at the lower of carrying value or fair value less cost of disposal, the depreciation, amortization and impairments of non-current assets were discontinued and GrandVision’s results for the year are presented as a single consolidated statement of income line item ‘Net profit from discontinued operations’ as required by IFRS 5, Non-current assets held for sale and discontinued operations. | Our audit procedures included, amongst others, reviewing the agreement to assess the transaction details and evaluating management’s conclusions on the date of classifying GrandVision’s assets and liabilities as ‘held for sale’. We further assessed whether these assets were measured at the lower of their carrying value or fair value less cost of disposal, and whether depreciation, amortization and impairment of the non-current assets was discontinued as of that date. |
| Management’s application of IFRS 5 is significant to our audit because of the magnitude of the transaction, the assessment of when the sales process qualifies for recognition as “held for sale”, the non-routine element in the subsequent measurement of impacted assets and the judgment required for including required and voluntary disclosures for a proper understanding of the current and future impact of this transaction on the consolidated statements of financial position and income of the Group. | We also traced required and voluntary disclosures to underlying audit evidence and checked whether the full-year net profits of GrandVision in 2019 and 2018 were accurately presented as a single financial statements line item ‘Net profit from discontinued operations’ in the consolidated statement of income of the Group. |
| | We considered the overall presentation in the consolidated financial statements, as well as the required disclosures of IFRS 5 and management’s incremental voluntary disclosures in note 3 to be adequate. |

How we tailored our group audit scope

HAL Trust holds 100% of the shares of HAL Holding N.V., a Curaçao-based limited liability company, that manages the group of entities included in the financial statements. The financial information of HAL Holding N.V. and this group of entities are included in the financial statements of HAL Trust. As indicated on pages 175 through 178, the Executive Board and the Supervisory Board reside at the level of HAL Holding N.V.

We tailored the scope of our audit to ensure that we performed sufficient work to be able to provide an opinion on the financial statements as a whole, taking into account the management structure of the Group, the nature of operations of its components, the accounting processes and controls, and the markets in which the components of the Group operate.

We conducted audit work at HAL Trust, HAL Holding N.V.’s corporate entities and 16 of its components. A full-scope audit was performed at three components as we determined these

components to be individually financially significant to the Group. These three components are: Vopak (The Netherlands), Broadview (The Netherlands) and GrandVision (The Netherlands). Additionally, two components were selected for full scope audit procedures based on our scoping determinations. At the request of the Executive Board and the Supervisory Board of HAL Holding N.V., we undertook full scope audits at 11 additional components. For HAL Trust, HAL Holding N.V. and HAL Holding N.V.'s corporate entities the group engagement team performed the audit work. For all other components that are in scope of the Group audit, the group audit team used component auditors, who are familiar with the local laws and regulations, to perform this audit work.

In establishing the overall group audit strategy and plan, we determined the type of work required to be performed at the component level by the group engagement team and by each component auditor. Where the work was performed by component auditors, the group audit team determined the level of involvement it needed to have in the audit work at those components, to be able to conclude whether sufficient appropriate audit evidence had been obtained, to support our opinion on the financial statements as a whole. The group engagement team visited local management and the component auditors of Vopak (The Netherlands), Broadview (The Netherlands) and GrandVision (The Netherlands) given the significance of these components. For each of these components the group audit team reviewed all reports regarding the audit approach and audit findings of the component auditors, has held several meetings with and reviewed the selected working papers of the component auditors and assessed the sufficiency and appropriateness of the work performed by the component auditors.

The group audit team also attended the meetings of the component auditors with local management where the outcome of the component audit was discussed for Safilo Group S.p.A. (Italy), Timber and Building Supplies Holland N.V. (The Netherlands), Koninklijke Ahrend B.V. (The Netherlands), Infomedics Groep B.V. (The Netherlands), FD Mediagroep B.V. (The Netherlands) and Atlas Professionals B.V. (The Netherlands). The group audit team reviewed all reports regarding the audit approach and audit findings of the component auditors.

In total, by performing these procedures, we achieved the following coverage on the financial line items:

Audit coverage per financial statements line item*
Revenue	100%
Total assets	92%
Profit before tax	97%

The in scope percentages are the percentages of revenue, total assets and profit before tax covered by the component auditor's audit opinions on the investments of HAL Holding N.V. notwithstanding that the audits of the financial statements of those investments do not necessarily have all their subsidiaries in scope to support their full scope (inter office) audit opinion to us

None of the remaining components represented more than 6% of total group assets. For those remaining components the group audit team performed analytical procedures to corroborate the assessment that there were no significant risks of material misstatements within those components. In instances where the remaining component was a quoted entity, the group audit team also performed reconciliations to the audited financial statements.

By performing these procedures, sufficient and appropriate audit evidence has been obtained on the Group's financial information, as a whole, to provide a basis for our opinion on the financial statements.

165

166

Other information

The Executive Board of HAL Holding N.V. is responsible for the other information, which comprises the Corporate Administration, Highlights and Financial Calendar, Report of the Trust Committee, Report of the Supervisory Board of HAL Holding N.V., Report of the Executive Board of HAL Holding N.V., Five-Year Summary Consolidated Statement of Financial Position, Five-Year Summary Consolidated Statement of Income, Financial Statements HAL Holding N.V., Distribution of Profits, HAL Trust Organization, Description Corporate Governance HAL Holding N.V. and Information in respect of members of the Supervisory Board.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

The Executive Board of HAL Holding N.V. is responsible for the preparation of the financial statements that give a true and fair view in accordance with EU-IFRS, and for such internal control as the Executive Board of HAL Holding N.V. determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Executive Board of HAL Holding N.V. is responsible for assessing the Trust's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going-concern basis of accounting unless management either intends to liquidate the Trust or to cease operations, or has no realistic alternative but to do so.

The Supervisory Board is responsible for supervising the procedures followed by the Executive Board of HAL Holding N.V. in the preparation of the financial statements.

167

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures of the Group and of the Trust, made by the Executive Board of HAL Holding N.V.
Conclude on the appropriateness of the HAL Holding N.V. Executive Board’s use of the going-concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Trust to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Group’s consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion on the Group’s consolidated financial statements.

We communicate with the Supervisory Board of HAL Holding N.V. regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Supervisory Board of HAL Holding N.V. with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Supervisory Board of HAL Holding N.V., we determine those matters that were of most significance in the audit of the financial statements of the Trust for the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Scott Watson-Brown.

Hamilton, Bermuda, March 26, 2020

PricewaterhouseCoopers Ltd.

Chartered Professional Accountants

168

Five-Year Summary

Consolidated Statement of
Financial Position

In millions of euro	2019*	2018*	2017*	2016*	2015*
Non-current assets
Property, plant and equipment	1,217.9	1,517.5	1,327.5	1,301.5	1,229.9
Right of use assets	347.6	-	-	-	-
Investment properties	34.0	-	6.9	8.3	13.3
Intangible assets	852.1	2,275.8	2,176.1	2,014.2	2,231.8
Investments in associates and joint arrangements	3,279.2	3,089.0	2,949.1	2,854.1	2,727.0
Derivatives and other financial assets	598.8	504.8	667.4	653.8	474.1
Pension benefits	40.5	68.8	86.4	72.1	74.7
Deferred tax assets	24.0	63.9	40.0	39.3	67.4
Total non-current assets	6,394.1	7,519.8	7,253.4	6,943.3	6,818.2
Current assets
Inventories	428.5	610.8	604.4	521.9	500.8
Receivables	560.6	616.2	529.2	521.0	446.1
Marketable securities and deposits	222.6	274.7	584.8	229.9	164.6
Derivatives and other financial assets	11.7	3.6	5.4	8.9	23.3
Other current assets	122.3	282.4	269.8	241.8	192.0
Cash and cash equivalents	1,399.9	2,020.8	1,998.8	2,728.6	2,029.7
Assets held for sale	4,991.1	55.7	3.2	-	50.0
Total current assets	7,736.7	3,864.2	3,995.6	4,252.1	3,406.5
Total assets	14,130.8	11,384.0	11,249.0	11,195.4	10,224.7
Equity attributable to owners of parent	7,960.3	7,471.2	7,572.6	7,599.4	6,698.0
Non-controlling interest	630.3	588.4	485.6	436.2	345.8
Non-current liabilities
Deferred tax liabilities	181.6	181.8	182.2	161.6	180.6
Provisions	67.7	156.9	135.9	102.3	99.5
Contract liabilities	13.0	8.2	5.1	-	-
Lease liabilities	277.5	-	-	-	-
Debt and other financial liabilities	647.9	932.5	884.7	986.3	1,244.1
Total non-current liabilities	1,187.7	1,279.4	1,207.9	1,250.2	1,524.2
Current liabilities
Provisions	20.2	26.5	27.9	36.3	49.9
Contract liabilities	53.5	140.8	126.9	-	-
Accrued expenses	256.8	548.3	504.4	607.1	665.3
Income tax payable	16.2	57.2	61.5	57.1	45.3
Accounts payable	419.1	537.5	468.5	470.9	301.0
Lease liabilities	66.4	-	-	-	-
Debt and other financial liabilities	237.1	697.8	793.7	738.2	595.2
Liabilities related to assets held for sale	3,283.2	36.9	-	-	-
Total current liabilities	4,352.5	2,045.0	1,982.9	1,909.6	1,656.7
Total equity and liabilities	14,130.8	11,384.0	11,249.0	11,195.4	10,224.7
Equity per share (in euro)	95.45	91.45	94.61	96.80	87.82
Net asset value per share at market value of quoted companies (in euro)	164.20	137.57	151.45	162.46	172.80

Figures used are based on the pro forma consolidated financial statements

Five-Year Summary

Consolidated Statement of
Income

In millions of euro	2019*	2018*	2017*	2016*	2015*
Revenues	2,965.4	2,401.8	5,609.5	5,497.5	5,174.7
Earnings from marketable securities and deposits	5.5	(7.7)	79.5	18.5	6.8
Share of results of associates and joint ventures	235.3	(54.4)	184.5	73.7	293.6
Income from other financial assets	11.5	6.7	7.5	10.2	25.5
Income from real estate activities	(2.5)	10.2	1.0	2.1	2.3
Other income	39.0	2.7	4.1	561.7	34.8
Total Income	3,254.2	2,359.3	5,886.1	6,163.7	5,537.7
Raw materials, consumables used and changes in inventories	1,352.4	1,131.2	1,901.2	1,864.9	1,702.6
Employee expenses	735.4	578.3	1,679.7	1,672.3	1,602.8
Depreciation and impairments property, plant and equipment and investment properties	110.7	89.1	196.9	189.8	189.3
Depreciation & impairment Right of Use assets	57.7	-	-	-	-
Amortization and impairments intangible assets	58.2	21.2	156.4	70.0	79.5
Other operating expenses	526.5	477.5	1,298.7	1,251.1	1,131.9
Total expenses	2,840.9	2,297.3	5,232.9	5,048.1	4,706.1
Operating profit	413.3	62.0	653.2	1,115.6	831.6
Financial income and (expense)	(32.6)	(28.7)	(43.8)	(31.8)	3.5
Profit before income tax	380.7	33.3	609.4	1,083.8	835.1
Income tax expense	(36.4)	(23.6)	(136.9)	(123.2)	(120.5)
Net profit from continuing operations	344.3	9.7	472.5	960.6	714.6
Net profit from discontinued operations	460.8	226.0	-	-	-
Net profit before non-controlling interest	805.1	235.7	472.5	960.6	714.6
Non-controlling interest	(139.3)	(81.0)	(81.3)	(89.9)	(85.0)
Net profit attributable to owners of parent	665.8	154.7	391.2	870.7	629.6
Earnings per Share (in euro)	8.06	1.87	4.84	10.98	8.13
Dividend per Share (in euro)	5.80**	5.30	6.20	7.10	6.50

Figures used are based on the pro forma consolidated financial statements
**Proposed

Financial Statements HAL Holding N.V.

Statement of Financial Position HAL Holding N.V. (in millions of euro)
As of December 31	2019	2018
Non-current assets
Financial assets	6,963.8	6,058.9
Current assets
Other current assets	0.8	0.2
Cash and deposits	1,050.6	1,455.9
Total assets	8,015.2	7,515.0
Equity	8,012.3	7,512.2
Current liabilities
Accrued expenses	2.9	2.8
Total equity and liabilities	8,015.2	7,515.0
Statement of Income HAL Holding N.V. (in millions of euro)
For the year ended December 31	2019	2018
Income from financial assets	678.2	168.6
General and administrative expenses	(10.4)	(9.9)
	667.8	158.7
Financial income/(expense)	(2.3)	(3.4)
Net income	665.5	155.3

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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 Curaçao. 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

Balance on January 1, 2019	6,058.9
Income	678.2
Increase/(decrease) in loans, net	100.0
Exchange differences, valuation differences and equity adjustments	126.7
Balance on December 31, 2019	6,963.8

Equity

The movement for 2019 of Shareholders’ equity is included on pages 27 and 69.

On December 31, 2019 and 2018, 83,448,898 and 81,763,062 Shares respectively were outstanding, with a nominal value of € 0.02 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 2018 dividend of € 433.0 million (excluding dividend on treasury shares) or € 5.30 per Share was distributed on June 18, 2019 (2018: € 496.2 million or € 6.20 per Share), of which € 216.5 million in cash and € 216.5 million in stock. The conversion ratio of 1:48.5 resulted in 1,685,836 new Shares being issued.

The Company owned 51,658 HAL Trust Shares as of December 31, 2019. These shares are to hedge the obligation to allot – under certain conditions – 20,000 shares HAL Trust to a member of the Executive Board and may also be used in the context of a share participation plan for management (not being members of the Executive Board).

Supervisory Directors

The 2019 fixed remuneration for the Supervisory Directors of HAL Holding N.V. was € 0.4 million in total (2018: € 0.4 million).

Distribution of Profits

The profit to be decided upon by the General Meeting of Shareholders of HAL Holding N.V. for 2019 is as follows:

In millions of euro	2019
Net income according to the Statutory Statement of Income	665.5
Available for distribution to Shareholders	665.5
Proposed distribution
In accordance with Article 31 (1), 0.03 euro for each of the 83,448,898 Shares	2.5
Available to the General Meeting of Shareholders in accordance with Article 31 (2)	663.0
Addition to the available reserves	(181.5)
Available for distribution	484.0
After approval of the dividend proposal of € 5.80 per Share by the General Meeting of Shareholders of HAL Holding N.V., the dividend shall be distributed to HAL Trust for 83,448,898 Shares at € 5.80 per Share	484.0

The above references to Articles refer to the Articles of Association of the Company.

The dividend shall be payable in Shares in the share capital of the Company for an amount of € 2.90 per Share and € 2.90 per Share in cash.

HAL Trust Organization

A Trust, which is quite common in Anglo-American law, is a property managed in accordance with a trust deed by a Trustee on behalf of the beneficial owners.

The Trust has the following three components:

The Meeting of Shareholders of HAL Trust

Except for the powers of the Trust Committee described below, control of the Trust rests with the Meeting of Trust Shareholders. The Meeting of Trust Shareholders approves the annual accounts and decides on the distribution of profits.

Execution of the decisions of the Meeting of Trust Shareholders is the task of the Trustee. The Trustee therefore votes at the General Meeting of Shareholders of HAL Holding N.V. in accordance with the outcome of the vote taken at the Meeting of Shareholders of HAL Trust.

The Annual Meeting of Trust Shareholders takes place in Rotterdam. The members of the Board of Supervisory Directors and the Executive Board of HAL Holding N.V. shall be present at the meeting in order to explain policies pursued.

The Trustee

The function of Trustee is exercised by HAL Trustee Limited, Hamilton, Bermuda.

The Board consist of Messrs. D.C. Meerburg, Chairman, C. MacIntyre, A.R. Anderson, M.P.M. de Raad and H. van Everdingen, members.

The Trustee is the legal owner of the assets of the Trust, which consist of Shares in HAL Holding N.V., Curaçao.

The powers of the Trustee are limited to execution of the decisions of the Meeting of Trust Shareholders of HAL Trust and of the Trust Committee.

The Trustee votes at the General Meeting of Shareholders of HAL Holding N.V. in accordance with the instructions of the Meeting of Shareholders of HAL Trust.

The Trust Committee

The Trust Committee is HAL Trust Committee Limited, Hamilton, Bermuda.

The Board of HAL Trust Committee Limited consists of Messrs. P.J. Kalff, Chairman, C. MacIntyre, A.R. Anderson, M. van der Vorm and A.A. van 't Hof, members.

This Board is appointed by the Stichting HAL Trust Commissie, shareholder of HAL Trust Committee Limited. The Board of the Stichting is appointed by the shareholders of HAL Trust and consists of Messrs. P.J. Kalff, M. van der Vorm and A.A. van 't Hof.

The Trust Committee is empowered to regroup the assets of the enterprise if, in special circumstances such as international political complications, it considers it necessary to do so in the interest of the shareholders and/or the enterprise. The objective of such regrouping is to replace HAL Holding N.V. with a company situated in another jurisdiction. To achieve this, HAL Holding N.V. may transfer its assets to that new company in exchange for a repurchase of shares. The Trust Committee also has the power to appoint another Trustee, if necessary. Finally, the Trust Committee has some duties of an administrative nature.

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Description Corporate Governance HAL Holding N.V.

A Curaçao public company

HAL Holding N.V. is a public company with its corporate seat in Curaçao. The Corporate Governance of HAL Holding N.V. is subject to the law of Curaçao as well as the articles of association and regulations adopted in accordance with such law. HAL Holding N.V. reports its financial position in accordance with International Financial Reporting Standards as adopted by the European Union.

HAL Holding N.V. is a holding company and parent company of a number of subsidiaries.

Share capital

HAL Holding N.V. has a share capital that is divided in shares with a nominal value of € 0.02 each. All shares have the same rights. Each share carries the right to exercise one vote in the General Meeting of Shareholders. All shares are in registered form.

HAL Trust

All shares in the capital of HAL Holding N.V. are held by HAL Trust on behalf of the Trust Shareholders. For each share in the capital of HAL Holding N.V. one Trust Share has been issued by HAL Trust. All Trust Shares have the same rights. Each Trust Share carries the right to exercise one vote in the meeting of Trust Shareholders. All distributions made by HAL Holding N.V. in respect of its shares are distributed by HAL Trust to the Trust Shareholders.

HAL Trust is a trust under Bermuda law and is subject to a trust deed, the text whereof has most recently been changed on May 18, 2011. The function of Trustee is exercised by HAL Trustee Limited. In addition, the trust deed grants certain powers to HAL Trust Committee Limited. For further information on HAL Trustee Ltd. and HAL Trust Committee Limited, see page 174. The Trust Shares are listed and traded on Euronext in Amsterdam.

Meetings of Trust Shareholders

In accordance with the provisions of the trust deed each year a meeting of Trust Shareholders is held in Rotterdam prior to the General Meeting of Shareholders of HAL Holding N.V.

The meeting of Trust Shareholders has, inter alia, the power to direct the Trustee as to the exercise by the Trustee of its voting rights in the General Meeting of Shareholders of HAL Holding N.V. This means that the Trust Shareholders have de facto control in the General Meeting of Shareholders of HAL Holding N.V.

Neither the articles of association of HAL Holding N.V. nor the trust deed contain any protective provisions which limit the control of the Trust Shareholders. All resolutions of the General Meeting of Shareholders of HAL Holding N.V. require a simple majority of the votes cast. The same holds for the decision-making process in the meeting of Trust Shareholders.

Rights of Trust Shareholders

Each Trust Shareholder has the right to attend the meetings of Trust Shareholders, either in person or by written proxy, to speak at such meetings and to exercise his voting rights. In addition, Trust Shareholders who together represent at least 10% of all outstanding Trust Shares are entitled to request the Trustee to convene a meeting of Trust Shareholders.

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Powers General Meeting of Shareholders

In accordance with the articles of association of HAL Holding N.V. the General Meeting of Shareholders of HAL Holding N.V. and therefore indirectly the meeting of Trust Shareholders, has the following powers:

appointment and dismissal of the members of the Executive Board and the Supervisory Board;
approval of the financial statements;
granting discharge to the members of the Executive Board and the Supervisory Board;
amendment of the articles of association, provided such amendment is proposed by the Executive Board and has been approved by the Supervisory Board;
remuneration of supervisory directors;
appointment of the external auditor;
decisions about the distribution of profits following payment of the primary dividend on shares, as set out in the articles of association, and after the taking of certain reserves by the Executive Board subject to the approval of the Supervisory Board;
all other powers which the articles of association do not grant to another corporate body.

Executive Board

The Executive Board of HAL Holding N.V. is responsible for the management of the Company, which means, among other things, that it is responsible for achieving the company's objectives, strategy and policy. The Executive Board is accountable to the Supervisory Board and to the General Meeting of Shareholders. In discharging its role, the Executive Board is guided by the interests of the Company and its business, taking into consideration the relevant interests of all those involved in the Company.

The Executive Board is responsible for complying with all relevant legislation and regulations, for managing the risks associated with the Company's activities and for the financing of the Company.

The number of members of the Executive Board is determined by the Supervisory Board. At present the Executive Board consists of three members. All members have been appointed by the General Meeting of Shareholders for an indefinite period of time. They can be dismissed by the General Meeting of Shareholders. In addition they can be suspended by the Supervisory Board.

With the approval of the Supervisory Board the Executive Board has adopted regulations which, inter alia, provide for additional rules in respect of the decision taking process within the Executive Board, the reporting to the Supervisory Board, the treatment of possible conflicts of interest and the fulfilment by members of the Executive Board of additional offices.

The Supervisory Board determines the remuneration of each member of the Executive Board. The remuneration consists of a fixed part and a variable part, the size whereof is determined by the Supervisory Board who also decides on additional benefits. The members of the Executive Board do not participate in any option scheme and do not receive any personal loans or guarantees from the Company.

Supervisory Board

The Supervisory Board is responsible for the supervision of the policies of the Executive Board and the general affairs of the Company and its business. It also assists the Executive Board by providing advice. In discharging its role the Supervisory Board is guided by the interests of the

Company and its business and shall take into account the relevant interests of all those involved in the Company. The Supervisory Board is responsible for the quality of its own performance.

The Supervisory Board consists of at least five members. The Supervisory Board can determine that the Board consists of more members. At present the Board has five members which have been appointed by the General Meeting of Shareholders for an indefinite period of time. Each year at least one supervisory director resigns in accordance with a retirement schedule set by the Board. A supervisory director resigning in accordance with the retirement schedule is eligible for re-appointment.

The Supervisory Board has chosen a chairman and a vice chairman from among its members.

All tasks and duties of the Supervisory Board are exercised on a collegiate and full-board basis. The Supervisory Board has adopted regulations which, inter alia, provide for rules in respect of the providing of information by the Executive Board, the matters that in any case must be addressed each year, the manner of meeting and decision taking by the Supervisory Board, the treatment of potential conflicts of interest, the individual investments by supervisory directors and the criteria which may possibly jeopardize the independent exercise of the position of supervisory director.

The Supervisory Board has prepared a profile for its composition. Each member is capable of assessing the broad outline of the overall policy. Together the supervisory directors have sufficient expertise to carry out the tasks of the Supervisory Board taken as a whole.

The General Meeting of Shareholders determines the remuneration of the members of the Supervisory Board.

Supply of information/logistics General Meeting of Shareholders

The Executive Board and the Supervisory Board provide the General Meeting of Shareholders, and the meeting of Trust Shareholders, with all relevant information that they require for the exercise of their powers, unless this would be contrary to an overriding interest of the Company.

The Executive Board and the Supervisory Board will provide all shareholders and other parties in the financial markets who find themselves in an equal position with equal and simultaneous information about matters that may influence the price of the Trust Shares.

Any possible contacts between the Executive Board on the one hand and the press and financial analysts on the other will be carefully handled and structured, and the Company shall not engage in any acts that compromise the independence of analysts in relation to the Company and vice versa.

Financial reporting

The Executive Board is responsible for the quality and completeness of publicly disclosed financial reports. The Supervisory Board sees to it that the Executive Board fulfils this responsibility.

The consolidated financial statements of HAL Holding N.V. are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. In addition HAL Holding N.V. publishes interim reports in accordance with the relevant provisions of the law and the listing requirements of Euronext in Amsterdam. All financial information is also published on the web site www.halholding.com. The financial statements are signed by the members of the Executive Board and the Supervisory Board. The Supervisory Board discusses the

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financial statements with the external auditor prior to signing of the statements by the supervisory directors.

Reference is made to the Report of the Supervisory Board (page 7) and the report of the Executive Board (page 9). These reports explain the implications and the measures that have been taken as a consequence of the application of IFRS 10 which requires the Company to consolidate the financial statements of Koninklijke Vopak N.V. ('Vopak') and Safilo Group S.p.A. ('Safilo'). As explained in these reports, the Company has entered into Memoranda of Understanding with Vopak and Safilo with respect to confidentiality, the process of exchanging information and attendance rights to the Audit Committee meetings of Vopak and the Control, Sustainability and Risk Committee meetings of Safilo of an independent financial expert appointed by the Company. This independent financial expert reports to the Company if there are any matters which should be brought to the attention of the Company prior to the signing of the financial statements.

The assessment that the Company's financial statements do not contain material errors attributable to the financial statements of Vopak and/or Safilo is based on the external audit of these companies and the involvement of the independent financial expert referred to above. The Executive Board and the Supervisory Board felt that it was necessary to take the measures outlined above, in order to provide additional comfort to the Executive Board when discharging itself of its responsibility for financial statements of the Company and to the Supervisory Board when discharging itself of its responsibilities to supervise the Executive Board and to review and sign the annual financial statements.

The General Meeting of Shareholders appoints the external auditor. Following receipt by the Board of Supervisory Directors of advice from the Executive Board, the Supervisory Board prepares a nomination for the appointment of the external auditor. HAL Holding N.V. has no internal audit function.

Material remuneration for instructions to the external auditor other than for auditing activities requires the approval of the Supervisory Board in respect of which the Board will consult with the Executive Board.

The external auditor is represented at the meetings of Trust Shareholders.

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Information in respect of members of the Supervisory Board

M. van der Vorm (61) is a Dutch citizen. Mr. van der Vorm was appointed member of the Supervisory Board of HAL Holding N.V. in 2014. In 2016 he was appointed Chairman. His current term is from 2014-2020. Mr. van der Vorm was Chairman of the Executive Board of HAL Holding N.V. from 1993-2014. It will be proposed to re-elect Mr. van der Vorm.

M.P.M. de Raad (75) is a Dutch citizen. In 2006 he was appointed member of the Supervisory Board of HAL Holding N.V. His current term is from 2018-2023. Mr. de Raad was Chief Executive Officer of SHV Makro N.V. and member of the Executive Board of SHV Holdings N.V., Metro AG (Germany) and Royal Ahold N.V.

L.J. Hijmans van den Bergh (56) is a Dutch citizen. In 2013 he was appointed member of the Supervisory Board of HAL Holding N.V. In 2016 he was appointed vice-Chairman. His current term is from 2019-2024. Mr. Hijmans van den Bergh is a partner of De Brauw Blackstone Westbroek N.V. which is one of the legal advisers of HAL Holding N.V. Mr. Hijmans van den Bergh is not involved in the provision of legal services by De Brauw Blackstone Westbroek N.V. to HAL Holding N.V. Prior to joining De Brauw Blackstone Westbroek N.V., Mr. Hijmans van den Bergh was a member of the Management Board of Royal Ahold N.V. He is chairman of the Supervisory Board of BE Semiconductor Industries N.V as well as chairman of the boards of the Utrecht University Fund, the Netherlands Cancer Institute/Antoni van Leeuwenhoek Hospital and Fortino Capital Partners N.V. He is also member of the Supervisory Council of Air Traffic Control the Netherlands.

G.J. Wijers (69) is a Dutch citizen. In 2014 he was appointed member of the Supervisory Board of HAL Holding N.V. His current term is from 2017-2022. He is a former Minister of Economic Affairs, former Senior Partner at the Boston Consulting Group and former CEO of Akzo Nobel N.V. He is chairman of the Supervisory Board of ING Groep N.V.

C.O. van der Vorm (49) is a Dutch citizen. In 2015 he was appointed member of the Supervisory Board of HAL Holding N.V. His current term is from 2015-2021. He is based in London and serves as a managing director of Southberg Holdings Ltd., which is active in agricultural operations in South America and Eastern Europe.

It will be proposed to appoint Mrs. M. Harris member of the Board of Supervisory Directors.

M. Harris (53) has the British and Dutch nationality and is a former partner of McKinsey & Co. She is currently vice-chair of the supervisory board of Unibail-Rodamco-Westfield S.E., non-executive director of ITV plc and RB Group plc as well as member of the remuneration committee of St Hilda's College, Oxford University.

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HAL Trust — Annual Report 2019

9905_10-k_2020-04-02_6a056440-3ca3-4ceb-8cc6-20d15ac40910.pdf

Financial calendar

HAL Trust

Introduction

Dividend

Prospects

Strategy

Risks

Concentration risk

Optical retail activities

Quoted minority interests

Market value risk

Interest rate risk

Currency risk

Credit risk

Liquidity risk

Acquisition risk

Financial reporting risk

Other

Acquisitions unquoted companies

Increased ownership in quoted minority interests

Divestitures

Subsidiaries

Optical retail

Unquoted companies

Unquoted minority interests

Quoted minority interests

Real estate

Liquid portfolio

Results

Optical retail

Unquoted companies

Quoted minority interests

Administrative organization, risk management systems and financial reporting

Basis of preparation

Use of estimates and judgments

Recent accounting developments

New and amended standards and interpretations adopted by the Company

Impact analysis - consolidated statement of income

Impact analysis - consolidated statement of financial position

Supplemental information

Consolidation

Critical accounting estimates and judgments

Foreign currencies

Functional and presentation currency

Transactions and balances

Company’s subsidiaries

Cash flow statement

1. Segmentation

2. Exceptional items

3. Discontinued operations and assets and liabilities held for sale

Critical accounting estimates and judgments

Details of the announced sale of GrandVision N.V.

Goodwill impairment

Software impairment

4. Property, plant and equipment

Critical accounting estimates and judgments

5. Investments properties

6. Right-of-use assets and lease liabilities

Right of use assets

Lease liabilities

Lessor accounting

Critical accounting estimates and judgments - lease terms

Critical accounting estimates and judgments - discount rates

7. Intangible assets

Goodwill

Trademarks

Customer relationships

Software

8. Acquisition, divestment and deconsolidation of subsidiaries

Critical accounting estimates and judgments

Acquisitions

Formica Group

GrandVision - Óptica2000

Divestments and deconsolidation

Vopak - divestment Amsterdam and Hamburg terminals

Safilo - divestment Solstice

Divestment Intersafe

HAL Trust Annual Report 2019