Boskalis_Annual Report_2017

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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. The maximum credit risk as at the balance sheet date, without taking into account the aforementioned financial risk coverage policy and instruments consists of the carrying amounts of the financial assets as stated below:

31 DECEMBER 2017

2016

-

Financial instruments available-for-sale

115,379

1,249

Other non-current receivables

1,061

318,942 25,681 414,516 29,876 17,705 191,948 999,917

Trade receivables

274,429 22,647 300,852 80,804

Amounts due from joint ventures and associated companies

Other receivables and prepayments

Derivatives

Income tax receivable

7,495

Cash and cash equivalents

965,331

1,767,998

The maximum credit risk on trade receivables by operational segment was as follows as at the reporting date:

31 DECEMBER 2017

2016

200,385 114,182

Dredging & Inland Infra Offshore Energy Towage & Salvage Holding & Eliminations

165,498 104,045

3,606

4,279

769

607

318,942

274,429

ANNUAL REPORT 2017 – BOSKALIS A L REP RT 2017 -- BOSKALIS