22. Financial risk management objectives and policies The Group’s and the Fund’s financial risk management policies seek to ensure that adequate financial resources are available for the development of the Group’s and Fund’s portfolios whilst managing their credit risks, liquidity risks and financing rate risks. The Group and the Fund have taken measures to minimise their exposure to the risks associated with its financing, investing and operating activities and operates within clearly defined guidelines as set out in the SC Guidelines and the Fund’s Trust Deed. The following sections provide details regarding the Group’s and the Fund’s exposure to the above-mentioned financial risks and the objectives, policies and procedures for the management of these risks: (a) Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in financial loss to the Group and the Fund. Credit risk with respect to trade and other receivables is managed through the application of credit approvals, credit limits and monitoring procedures. Credit is extended to the customers based upon careful evaluation of the customers’ financial condition and credit history. At the end of the reporting period, the Group’s and the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. Information regarding credit enhancements for trade receivables, other receivables and amount due from related companies is disclosed in Note 13. Credit risk concentration profile The Group and the Fund determine concentrations of credit risk by monitoring individual profile of their trade receivables on an ongoing basis. At the end of the reporting period, approximately 59% (2020: 82%) of the Group's and Fund's trade receivables was due from third party. The risk of default arising from non-performance by this party is low. The following sections provide details regarding the Group’s and the Fund’s exposure to the above-mentioned financial risks and the objectives, policies and procedures for the management of these risks: (cont’d) (b) Liquidity risk Liquidity risk is the risk that the Group and the Fund may encounter difficulty in meeting financial obligations on time due to shortage of funds. The Group’s and the Fund’s exposure to liquidity risk arises from mismatches of the maturities of financial assets and liabilities. The Group’s and the Fund’s approach are to maintain a balance between continuity of funding and flexibility through the use of their credit and financing facilities. The Group and the Fund manage liquidity risk by maintaining adequate reserves, banking facilities and financing facilities, by continuously monitoring forecast and actual cash flow from their portfolios, and by matching the maturity profiles of financial assets and liabilities. A L - S A L Ā M R E I T A N N U A L R E P O R T 2 0 2 1 174 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2021 (CONT’D)
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