111 / 158
27. TRADE AND OTHER PAYABLES
31 DECEMBER
2016
2015
Trade payables
192,526
199,967
Taxes and social security payables
66,210
60,710
Amounts due to joint ventures and associated companies
1,815
6,323
Other creditors and accruals
825,133
997,099
1,085,684
1,264,099
The trade and other payables are generally not interest-bearing.
28. FINANCIAL INSTRUMENTS
GENERAL
Pursuant to the financial policy maintained by the Board of Management, the Group and its Group
companies use several financial instruments in the ordinary course of business. The policy with respect to
financial instruments is disclosed in more detail in the Annual Report in the Corporate Governance chapter.
The Group’s financial instruments are cash and cash equivalents, trade and other receivables, certificates of
(listed) shares, interest-bearing loans and bank overdrafts, trade and other payables and derivatives. The
Group enters into derivative transactions, mainly foreign currency forward contracts, foreign currency
options and to a limited extent interest rate swaps, solely to hedge against the related risks. The Group’s
policy is not to trade in derivatives.
FINANCIAL RISK MANAGEMENT
28.1
The Group has exposure to the following risks from its use of financial instruments:
credit risk
liquidity risk
market risk, consisting of: currency risk, interest rate risk and price risk
28.1.1 CREDIT RISK
The Group has a strict acceptance and hedging policy in place for credit risk, resulting from payment and
political risks. Credit risks are covered by means of bank guarantees, insurance, advance payments, etc.,
except where it pertains to creditworthy, first class debtors. Credit risk procedures and the (geographical)
diversification of the operations of the Group reduce the risk with regard to credit concentration.
Exposure to credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. Credit risk arises principally from the Group’s trade and other
receivables. The Group’s exposure to credit risk is mainly determined by the characteristics and location of
each individual customer.
A large part of the Group’s work in progress within the Dredging & Inland Infra and Offshore Energy
operational segments is directly or indirectly performed on behalf of state-controlled authorities and oil and
gas producers (or contractors thereof) in various countries and geographical areas. Salvage receivables
(part of Towage & Salvage) are mainly outstanding with shipping companies and their Protection &
Indemnity Associations, or ‘P&I clubs’. The creditworthiness of new customers is individually analyzed
before payment and delivery terms and conditions are offered. The same applies for contracting activities
with clients the Group has done business with previously, even if business has been done for many years.
The Group’s review may include external credit ratings, if available, and bank references. Customers that
fail to meet the Group’s creditworthiness criteria may only transact with the Group on the basis of
prepayment or a bank guarantee. In general there is a healthy diversification of receivables from different
customers in several countries in which the Group performs its activities. Ongoing credit assessment is
performed on the financial condition of accounts receivable. The credit history of the Group over recent
years indicates that bad debts expenses incurred are insignificant compared to the level of activities.
Therefore, management is of the opinion that credit risk is adequately controlled by the currently applicable
procedures.
111
ANNUAL REPORT 2016 – BOSKALIS