BUILDING LANDMARKS, CHARTING GROWTH
239
Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS
Financial risk management
Overview
The Group has exposure to the following risks arising from financial instruments:
• credit risk
• liquidity risk
• market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risks, and the Group’s management of capital.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risks limits and controls, and to monitor risks and adherence to limits. The Group’s overall risk management
strategy seeks to minimise any adverse effects from the unpredictability of financial markets on the Group’s financial
performance. Risk management policies and procedures are reviewed regularly to reflect changes in market conditions
and the Group’s activities.
The Audit and Risk Committee (“ARC”) oversees the effectiveness of the compliance with the Group’s risk management
policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the
Group. The ARC is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad-hoc review
of risk management controls and procedures, the results of which are reported to the ARC.
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, and arises primarily from the Group’s receivables from customers and investment securities.
Trade and other receivables related mainly to the tenants from its operating assets and balances with related parties.
The carrying amounts of financial assets in the statements of financial position represent the Group and the Company’s
maximum exposures to credit risk, before taking into account any collateral held. The Group and the Company do not
hold any collateral in respect of their financial assets.
Risk management policy
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk
exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers
who wish to trade on credit terms are subject to credit verification procedures. Management has established credit limits
for customers and monitors their balances on an ongoing basis. Credit evaluations are performed by management before
lease agreements are entered into with tenants. In addition, receivable balances are monitored on an ongoing basis with
the result that the Group’s exposure to bad debts is not significant.
For cash and cash equivalents, the Group and the Company minimise credit risk by dealing exclusively with high credit
rating counterparties.
