Boskalis_Annual_Report_2016

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27. TRADE AND OTHER PAYABLES

31 DECEMBER 2016

2015

Trade payables

199,967 60,710

192,526 66,210

Taxes and social security payables

Amounts due to joint ventures and associated companies

6,323

1,815

Other creditors and accruals

997,099

825,133

1,264,099

1,085,684

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: ƒ credit risk ƒ liquidity risk ƒ 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.

ANNUAL REPORT 2016 – BOSKALIS