SEO Version
ANNUAL REPORT 2011
This note presents information about the Group’s exposure to each of the above risks, the Gro
and processes for measuring and managing risk, and the Group’s management of capital.
Risk management is integral to the whole business of the Group and the Trust. The Manager of th
a system of controls in place to create an acceptable balance between the benefts derived fr
the cost of managing those risks. The Manager also monitors the Trust’s risk management pr
an appropriate balance between control and business objectives is achieved. Risk manageme
are reviewed regularly to refect changes in market conditions and the Trust’s strategic directio
The Audit Committee of the Manager oversees howmanagement monitors compliance with the
policies and procedures and reviews the adequacy of the risk management framework in relatio
to those risks. The Audit Committee’s oversight role is assisted by an internal audit function
an independent professional frm (“Internal Audit”). Internal Audit undertakes both regular and
management controls and procedures, the results of which are reported to the Audit Committ
(c)
Credit risk
Credit risk is the potential fnancial loss to the Group resulting from the failure of a tenant or co
to settle its fnancial and contractual obligations, as and when they fall due.
The carrying amount of fnancial assets represents the maximum credit risk exposure. The maxi
risk at the reporting date was:
Loans and receivables
Cash and cash equivalents
The Manager has an established process to evaluate the creditworthiness of its tenants and
minimise potential credit risk. Credit evaluations are performed by the Property Manager befor
entered into with prospective tenants. Security in the form of bankers’ guarantees, insurance
deposits are obtained prior to the commencement of the lease. As such, the Manager belie
allowance is necessary in respect of the loans and receivables as these amounts mainly arise
good payment records and have placed suffcient security with the Group and Trust in the form
or cash security deposits.
The Group establishes an allowance account for impairment that represents its estimate of losse
receivables. The main component of this allowance is estimated losses that relate to specifc te
The allowance account is used to provide for impairment losses. Subsequently when the Gr
recovery of such losses is possible, the fnancial asset is considered irrecoverable and the
allowance account is then written off against the carrying amount of the impaired fnancial ass
Sabana AR 2011 Financial V9.indd 97
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