21 FINANCIAL RISK MANAGEMENT (CONT'D) 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, and arises principally from the Group’s receivables from customers. In addition, tenants may experience financial difficulty and are unable to fulfil their lease commitments or tenants may fail to occupy and pay rent in accordance with lease agreements. The Group mitigates credit risk through staggered lease maturities, diversification of revenue sources by ensuring no individual tenant contributes a significant percentage of the Group’s gross revenue and obtaining security deposits or letter of credits from the tenants. At the end of the reporting period, approximately 47% (2023: 78%) of the Group’s trade receivables were due from 3 tenants. The Group’s risk for trade receivables is disclosed in Note 5. The Manager believes that there is no other credit risk inherent in the Group’s remaining trade receivables, based on historical payment behaviours and the security deposits held. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statements of financial position. Cash is placed with financial institutions which are regulated. Financial derivatives are entered into with bank and financial institution counterparties which are regulated. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Manager monitors the liquidity risk of the Group and maintains a level of cash and credit facilities deemed adequate to finance its operations and to mitigate the effects of fluctuations in cash flows. The Manager also monitors and observes the CIS Code issued by the MAS concerning limits on total borrowings. The Group’s credit facilities are set out in Note 9. As disclosed in Note 2.3, 6 and 9, the Group has undertaken a Recapitalisation Plan to strengthen the Group’s balance sheet, fund the liquidity needs of the Group, and allow it to manage its aggregate leverage level. The following are the contractual maturities of financial liabilities, including estimated interest payments: Cash flows Carrying amount Contractual cash flows Within 1 year Within 2 to 5 years More than 5 years US$’000 US$’000 US$’000 US$’000 US$’000 Group 2024 Non-derivative financial liabilities Trade and other payables and security deposits^ 36,071 36,071 32,809 1,646 1,616 Preferred units 822 1,150 − − 1,150 Loans and borrowings 745,952 901,278 36,423 864,855 − 782,845 938,499 69,232 866,501 2,766 2023 Non-derivative financial liabilities Trade and other payables and security deposits^ 38,192 38,192 34,242 1,550 2,400 Preferred units 904 1,265 − − 1,265 Loans and borrowings 920,323 1,131,684 89,770 866,130 175,784 959,419 1,171,141 124,012 867,680 179,449 ^ Excluding deferred revenue ANNUAL REPORT 2024 | 183 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2024
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