NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2024 41 FINANCIAL INSTRUMENTS (CONT’D) Risk management framework (cont’d) 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 2024, the Group had gross amounts owing by HCP Group of $381.7 million (2023: $374.0 million) (note 16) and subscribed for a bond of $312.5 million (2023: $304.4 million) (note 10) issued by Sincere Property Group. As at 31 December 2024 and 31 December 2023, 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 94% (2023: 93%) 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. Impairment losses on trade and other receivables and amounts owing by associates recognised in profit or loss and included in “other operating expenses” were as follows: Group Note 2024 2023 $’000 $’000 Other receivables 3,220 743 Amounts owing by associates 8 – 57 Trade receivables and accrued receivables 14,515 7,142 17,735 7,942 Trade and other receivables and contract assets The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Group limits its exposure to credit risk from trade receivables by collecting deposits as collateral, where possible. For trade receivables and contract assets relating to sale of development properties, if a purchaser defaults on payments, the Group may enforce payments via legal proceedings or if the purchaser is assessed to be insolvent, the Group may take possession of the units, retain a portion of the sales consideration, and resell the property. In monitoring customer credit risk, the Group considers the trade history of the customers with the Group, aging profile, maturity and existence of previous financial difficulties. FINANCIALS CITY DEVELOPMENTS LIMITED 174
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