Page 19 - TreasuryChinaTrust

Treasury China Trust Annual Report 2010 78

NOTES TO THE FINANCIAL STATEMENTS

Period from 19 May 2010 (date of constitution) to 31 December 2010

25 Earnings per unit (Continued)

(b) Diluted earnings per unit

In calculating diluted earnings per unit, the net profit attributable to Unitholders of the Trust and weighted average number of units in issue during the period are adjusted for the effects of dilutive potential units:

Group 2010 $’000

Profit for the period attributable to Unitholders 39,610

2010 Number of units

Weighted average number of units used in calculation of basic earnings per unit 240,926,697

Weighted average number of unissued units from:

– Options under TCT Substitution Option Scheme 2,982,705 Weighted average number of units outstanding during the period (diluted) 243,909,402

26 Financial risk management

Overview

The Group has exposure to the following risks in the normal course of business:

• 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 risk. Further quantitative disclosures are included throughout these financial statements. There were no changes in the Group’s approach to financial risk management during the period.

Risk management framework

The Trustee-Manager has overall responsibility for the establishment and oversight of the Group’s risk management framework.

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The Manager continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

(a) Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Group, as and when they fall due.

The Trust limits its exposure to credit risk on its investments by only investing surplus funds with approved financial institutions with credit ratings of “A” or equivalent.