Boskalis Annual Report 2020
FINANCIAL RISK MANAGEMENT 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
29.1.1 CREDIT RISK The Group has a strict acceptance and hedging policy in place for credit risks resulting from payment and political risks. Credit risks are usually covered by bank guarantees, insurance, advance payments, etc., except where the risk pertains to creditworthy, first class debtors. Credit risk procedures and the geographical and other 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 unbilled revenue, 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 contracting activities within the Dredging & Inland Infra and Offshore Energy operational segments is directly or indirectly performed on behalf of state-controlled authorities, wind power companies 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 adequate credit insurance, 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 assessments are performed on the financial condition of accounts receivable. The credit history of the Group over recent years indicates that credit losses are insignificant compared to the level of activity. Therefore, management is of the opinion that credit risk is adequately controlled by the currently applicable procedures.
ANNUAL REPORT 2020 – BOSKALIS FINANCIAL STATEMENTS 2020 A NUAL REPORT 2020 -- BOSKALIS FINANCIAL S AT MENTS 20 Other non-current receivables Trade receivables Unbilled revenue Other receivables and prepayments Derivatives Income tax receivable Cash and cash equivalents
The payment behavior of the Group’s customers remains unchanged in 2020. The outbreak of COVID-19 has not impacted the Group’s expected credit loss and allowances for doubtful accounts materially.
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 2020
Amounts due from joint ventures and associates
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