150 PERENNIAL HOLDINGS PRIVATE LIMITED KEY RISKS Perennial Holdings takes the management of key risks as a key consideration towards fulfilling the Company’s strategic priorities and value creation objectives. Towards this end, it also undertakes a comprehensive review at least once a year to identify, monitor, manage and report key risks across the Group. Among all the risks identified, the key risks that are closely tracked are as follows: Key Risk Objective Value Impact Mitigating Measures Key Risk Indicators Linkage to Strategic Priority (see legend below) Project Development Risk – Inability to meet completion timeline and project specifications To minimise the likelihood and the impact of negative risk events that will affect timeliness, quality and safety of the development projects • Permit or approval not obtained due to non-compliance with specifications • Project delay due to inadequate resources or reworks • Reputational damage • Proactive management process to monitor project progress per approved timeline • Stringent pre-qualification procedures to appoint well-qualified vendors contractors with proven track records • Regular site visits by the Management and asset managers to monitor the development progress • Project cost overrun as a percentage of total project cost • Progress of the project compared to targeted timeline Financial/ Liquidity Risk – Access to financing resources – Foreign exchange and interest rate fluctuation To contain exposures to the various types of financial risks (liquidity, interest rate, foreign currency etc.) in order to limit any negative impact on the Group’s results and financial position • Increased financing costs which adversely impact financial performance • Inability to fulfil financial obligations or secure funding • Insufficient cash flows • Active monitoring of debt maturity profile and cash flows • Maintaining an adequate level of cash flows and available loan facilities • Expanding sources of funding through retail bond market and multicurrency debt issuance programme • Instilling financial discipline in all levels and maintaining a financially sound balance sheet • Improving cash flows through acquisition of new investments to generate recurring income and contribute to a stable income stream (For more details on how various types of financial risk are managed, please see pages 212 to 219) • Gearing and debt ratios • Working capital ratio Investment Risk – Financial loss on investment To ensure investments are made according to the stated investment strategy, consistent with the portfolio objectives, through careful analysis and assessment of the potential risks and returns (including the behavior and business practices of our joint venture partners) • Investment loss • Adverse impact on financial and operational performance • Adopting a systematic approach of risk assessment and risk evaluation for each investment proposal, including macro and project-specific risk analyses • Objective evaluation based on a comprehensive set of investment parameters, supported by due diligence, feasibility studies and sensitivity analyses on key investment assumptions and variables • Early identification of potential business and partnership synergies • Active tracking of project updates and overall investment portfolio performance • Return on investment ratio • Overall portfolio asset valuation Risk Management
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