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NOTES TO THE
FINANCIAL STATEMENTS
28 FINANCIAL RISK MANAGEMENT (CONTINUED)
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 loss 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.
(b) Liquidity risk
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities that are to be settled by delivering cash or another
financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when due, under both normal
and stressed conditions, without incurring unacceptable losses or risking damage to the
Group’s reputation.
The Trustee-Manager monitors and maintains a level of cash and cash equivalents deemed
adequate by management to finance the Group’s operations and to mitigate the effects of
fluctuations in cash flows.