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28 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 year.
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 Trustee-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.
Trade receivables relate mainly to the Group’s tenants. The Group’s exposure to credit risk is influenced by the
individual characteristics of each tenant. Customers are grouped according to their trade/business e.g. retail,
office, mixed use. Receivables are reviewed monthly. There are no significant concentrations of credit risk with
a single customer as the Group has a large number of tenants who pay their rentals in advance and some
properties are rented subject to deposits, so that in the event of non-payment, the Group has recourse to this
deposit. The Group establishes an allowance for impairment that represents its estimate of incurred losses in
respect of trade and other receivables, if required.
The carrying amount of financial assets represents the maximum credit exposure.
SAR1112034_TCT_AR_().indb 105
3/23/2012
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