5 Expenses by Nature


Vessel - related expenses  
Operating lease expenses - vessels467,527471,259
Port disbursements and other voyage costs337,609361,265
Bunker consumed382,706338,507
Depreciation - owned vessels114,537107,603
Employee benefit expenses (Note)97,82990,747
Vessel operating expenses41,37338,499
Lubricating oil consumed10,52310,095
Net losses/(gains) on bunker swap contracts1,796(5,815)
Provision for impairment losses - trade receivables (Note 11)-2,022
General and administrative overheads
Employee benefit expenses including directors' emoluments (Note)48,38943,386
Operating lease expenses - land and buildings3,1363,312
Depreciation - other PP&E1,7981,684
Auditors' remuneration
- audit858823
- non-audit8970
Net foreign exchange (gains)/losses(43)137
Other general and administrative expenses5,5815,027
Other expenses  
Write-off of loan arrangement fees1,623-
Provision/(write-back) for impairment losses  
- vessels705-
- other receivables(7)112
- assets held for sale-830
Realised losses on forward freight agreements5848
Losses on disposal of PP&E37539
Office relocation costs-1,391
Towage exchange loss-1,306
The sum of the above reconciles to the following headings in the consolidated income statement.
(i) "cost of services", (ii) "indirect general and administrative overheads" and (iii) "other expenses"
Total general and administrative (“G&A”) overheads
US$ Million20182017
Direct G&A overheads included in cost
of services53.849.1
Indirect G&A overheads6.05.3
Total G&A overheads59.854.4

Operating lease expenses

The total vessel operating lease expenses of US$467.5 million (2017: US$471.3 million) above include contingent lease payments amounting to US$16.8 million (2017: US$20.8 million). These relate to the vessels chartered-in on an index-linked basis.

Accounting policy – Impairment

(i) Impairment of investments and non-financial assets

Assets that have an indefinite useful life, such as goodwill, are not subject to amortisation but are tested annually for impairment. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In assessing whether there is any indication that an asset may be impaired, internal and external sources of information are considered. If any such indication exists, the recoverable amount of the asset is assessed. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount, being the higher of (a) an asset’s fair value less costs to sell and (b) the value-in-use.

The fair values of vessels and vessels under construction are determined either by the market valuation or by independent valuers.

The value-in-use of the vessels represents estimated future cash flows from the continuing use of the vessels. For the purposes of assessing impairment, assets are grouped into the lowest levels at which there are separately identifiable cash flows. This level is described as a cashgenerating unit (“CGU”).

Assets other than goodwill that suffer impairment are reviewed for possible reversal of the impairment at each balance sheet date.

(ii) Impairment of trade and other receivables

A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect the amount due according to the original terms of that receivable. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the assets is reduced through the use of a provision for impairment account, and the amount of the loss is recognised in the income statement within “Cost of services”. When a trade receivable is uncollectable, it is written off against the provision for impairment.