REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

20. FINANCIAL INFORMATION CONCERNING THE COMPANY’S ASSETS AND LIABILITIES,
FINANCIAL POSITION AND PROFITS AND LOSSES
20.1 CONSOLIDATED FINANCIAL STATEMENTS FOR 2007, 2006 AND 2005
Credit and counterparty risk
The Group’s financial assets primarily comprise cash and cash equivalents – particularly investments – as well as
trade and other receivables (see Note 33 “Financial instruments”).
The financial assets which could expose the Group to credit or counterparty risk chiefly correspond to the
following:
• Trade receivables: at December 31, 2007 trade receivables represented a gross amount of €96 million and a
net amount of €81 million (see Note 23 “Trade and other receivables”). The Group’s exposure to customer
credit risk is not material and is monitored daily through cash collection and debt recovery processes.
• Investments: the Group’s policy is to invest in (i) money market securities such as certificates of deposit and
commercial paper; and (ii) other monetary instruments with short-term maturities, generally not exceeding
one month. It also takes care to diversify its investments and ensure that the securities in its portfolio are
issued by leading companies and financial institutions in order to minimize counterparty risk.
At December 31, 2007, the Group’s short-term investments – which amounted to €155 million (see Note 24
“Cash and cash equivalents”) – mainly comprised money market securities (certificates of deposit and
commercial paper) with maximum maturities of three months and issued by companies or financial
institutions with a good credit rating (a minimum of A2/P2 or equivalent). Consequently, these investments
do not expose the Group to a significant level of counterparty risk.
In addition, as part of its foreign exchange risk management strategy, the Group sets up hedges with leading
financial institutions for which the counterparty risk is deemed as negligible.
Analysis of trade receivables
At December 31, 2007 trade receivables totaled €96 million and provisions for doubtful receivables amounted to
€15 million.
At the balance-sheet date, substantially all past-due receivables were classified as doubtful and provisions had
been recorded based on statistical recovery rates. At December 31, 2006 and 2007 the amount of past-due trade
receivables that had not been written down was not material.
150 - Iliad – Registration Document 2007