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CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes continued
for the 12 months to 31 December 2016
33. CONTINGENT LIABILITIES
CONTINUED
Other contingencies
continued
viii) On 6 December 2016, the Company announced to the ASX that it had been made aware of additional proceedings relating to an
alleged failure to disclose the report to the AFP (referred to in (vi) above) which had commenced on 23 November 2016. The
additional proceedings purport to be for the same class as the proceedings in (vii) above and in relation to similar issues. The
Company denies the claim and will defend the proceedings.
ix) On 24 June 2015 the Senate of the Parliament of the Commonwealth of Australia referred an inquiry into foreign bribery to the
Senate Economics References Committee. The inquiry lapsed at the proroguing of the 44
th
Parliament. On 11 October 2016, the
Senate readopted the inquiry. The Committee is to report by 30 June 2017. The Company anticipates that the matter referred to in
(vi) above will be a subject of the inquiry.
34. CAPITAL RISK MANAGEMENT
Capital planning forms part of the business and strategic plans of the Group. Decisions relating to obtaining and investing capital are made
following consideration of the Group’s key financial objectives including total shareholder return and the maintenance of an investment
grade credit rating. Performance measures include return on revenue, return on equity, earnings growth, liquidity and borrowing capacity.
The Group has access to numerous sources of capital both domestically and internationally, including cash balances, equity, bank debt,
capital markets, insurance and lease facilities. The Group is not subject to any externally imposed capital requirements.
35. FINANCIAL INSTRUMENTS
The activities of the Group result in exposure to credit, liquidity and market risk (equity price, foreign currency and interest rate).
a) Credit risk
Credit risk represents the risk that a counterparty will not complete its obligations under a financial instrument resulting in a financial loss
to the Group. The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. The Group minimises
concentrations of credit risk by undertaking transactions with a large number of customers in various countries. Derivative and deposit
counterparties are limited to investment grade financial institutions. At the reporting date, other than the trade receivables relating to
the Gorgon LNG Jetty and Marine Structures Project, and the loan receivables from HLG Contracting (refer to Note 8:
Trade and other
receivables
), there were no other significant concentrations of credit risk. The Group’s maximum exposure to credit risk is represented
by the carrying amount of each financial asset, including derivative financial instruments, in the statement of financial position. The
Group’s maximum exposure to credit risk for receivables at the reporting date by geographic region was: Australia Pacific $1,145.6 million
(31 December 2015: $682.7 million) and Asia, Middle East, Americas & Africa $3,299.8 million (31 December 2015: $2,866.1 million).
The ageing of the Group’s receivables at the reporting date was: not past due: $564.1 million
(31 December 2015: $497.7 million); past
due: $353.5 million
(31 December 2015: $282.5 million). Past due is defined under AASB 7
Financial Instruments: Disclosures
to mean any
amount outstanding for one or more days after the contractual due date. Past due receivables aged greater than 90 days:
8%
(31
December 2015: 6%).
Provision for impairment of trade debtors
12 months to
December 2016
$m
12 months to
December 2015
$m
Balance at beginning of reporting period
(5.4)
(12.0)
Net provision (made) / used
3.5
6.6
Balance at reporting date
(1.9)
(5.4)
The impairment provision relates to trade debtors identified as being impaired. The Group did not obtain financial or non-financial assets
as collateral during the period as a result of default by a counterparty (31 December 2015: $nil).
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