NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2025 41 FINANCIAL INSTRUMENTS Financial risk management Overview The Group has exposure to the following risks arising from financial instruments: • 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. Risk management framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Management is responsible for developing and monitoring the Group’s risk management policies. Management reports regularly to the Board of Directors on its activities. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Group has a system of controls in place to maintain an acceptable balance between the cost of risks occurring and the cost of managing the risks. Management 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. The Audit & Risk Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. It is, and has been throughout the current and previous financial years, the Group’s policy that no derivatives shall be undertaken for speculative purposes except for its use as hedging instruments where appropriate and cost efficient. (i) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This arises principally from the Group’s and Company’s receivables from customers, amounts owing by associates and joint ventures, other receivables, the Group’s debt investments, and the Company’s amounts owing by subsidiaries. As at 31 December 2025, the Group had gross amounts owing by HCP Group of $364.9 million (2024: $381.7 million) (note 16) and subscribed for a bond of $295.5 million (2024: $312.5 million) (note 10) issued by Sincere Property Group. As at 31 December 2025 and 31 December 2024, the amounts owing by HCP Group and the investment in bond were fully impaired. In addition, the amounts owing by subsidiaries and joint ventures represent 95% (2024: 94%) of the Company’s financial assets. Except as disclosed, there is no significant concentration of credit risk for the Group and the Company. The carrying amounts of financial assets and contract assets represent the Group’s and the Company’s maximum exposures to credit risk, before taking into account any collateral held. ANNUAL REPORT 2025 | 195
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