Page 60 - GMT and GMT Bond Issuer Annual Report 2017 v2

NOTES TO THE
14. FINANCIAL RISK MANAGEMENT (CONTINUED) 14.3 Credit risk
FINANCIAL STATEMENTS
Credit risk arises from cash, derivative nancial instruments, advances to joint venture, the construction loan receivable, other investments and credit exposures to customers. For banks and nancial institutions only independently credit rated parties are accepted, and when derivative contracts are entered into their credit risk is assessed. For advances to joint venture the nancial performance of the joint venture is monitored and assessed. For the construction loan receivable and other investments the Group assesses credit quality, nancial position and market indicators of the counterparty. For customers the Group assesses the credit quality of the customer, taking into account its nancial position, past experience and any other relevant factors. The overall credit risk is managed with a credit policy that monitors exposures and ensures that the Group does not bear unacceptable concentrations of credit risk.
continued
For the year ended 31 March 2017
The Group’s maximum exposure to credit risk is best represented by the total of its debtors, the construction loan receivable, other investments, advances to joint venture, derivative nancial instrument assets and cash as shown in the Balance Sheet. To mitigate credit risk the Group holds security deposits, bank guarantees, parent company guarantees or personal guarantees as deemed appropriate.
14.4 Liquidity risk
Liquidity risk is the risk that the Group will encounter dif culty in meeting obligations from its nancial liabilities. The Group’s approach to management
of liquidity risk is to ensure that it will always have suf cient 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 Group manages this risk through active monitoring of the Group’s liquidity position and availability of borrowings from committed facilities.
The following table outlines the Group’s nancial liabilities by their relevant contractual maturity date. Values are the contractual undiscounted cash ows and include both principal and interest where applicable.
$ million Year 1
2017
Borrowings 78.7 Derivative financial instruments 17.7 Creditors and other liabilities 27.6
Total 124.0
2016
Borrowings 34.0 Derivative financial instruments 23.3 Creditors and other liabilities 34.0
Total 91.3
Year 2
180.2 16.7 -
196.9
178.6 22.0 -
200.6
Year 3
163.0 16.7 -
179.7
178.2 17.3 -
195.5
Year 4
164.6 14.8 -
179.4
173.4 14.4 -
187.8
Year 5
6.4 11.3 -
17.7
119.0 12.1 -
131.1
Year 6 and later
291.9 11.8 -
303.7
323.9 19.6 -
343.5
Total cash flows
884.8 89.0 27.6
1,001.4
1,007.1 108.7 34.0
1,149.8
Carrying value
704.8 18.2 27.9
750.9
814.9 40.9 34.0
889.8
GOODMAN PROPERTY TRUST ANNUAL REPORT 2017 FINANCIAL STATEMENTS
58 NOTES TO THE FINANCIAL STATEMENTS