Principal and Emerging Risks Facing the

Group (continued)

Risk category

Operational Description

Climate Change and the Environment

Failure by the Company or its developments to take appropriate measures regarding climate change and the environment or meet satisfactory carbon targets could result in future regulatory, financial and reputational issues for the Company.

Key Risk Management Measures

• Established and will continue to develop ESG strategy, monitoring best practice, political and legislative developments.

• Focussed on constructing sustainable buildings and sustainable communities and ensuring our developments continue to improve in terms of reducing embodied carbon and carbon in-use.

• Proposed plans for the SWSH Waterfront include measures to overcome potential flooding.

• Encouraging alternative modes of transport through improved infrastructure and amenities.

Risk category

Operational Description

Financial Viability

Build cost inflation in Jersey has exceeded RPI in recent years increasing the risk of profit erosion or loss on projects and making future projects financially unviable without increased sale prices or rents to compensate. Falling property values also increase the risk of profit erosion or loss on existing projects making future projects unviable.

Operational Description

Liquidity & Funding

Liquidity or funding problems from construction projects or cash flow forecasts not adhering to plan could lead to noncompliance with bank loan covenants, events of default or the risk that lack of equity will limit future activities.

Operational Description

Labour shortages

The risk that on-island labour continues to reduce from outward migration and the high cost of living in Jersey.

Principal and Emerging Risks RAG Colour

Key:

High Risk Moderate Risk Low Risk

Key Risk Management Measures

• Enter into fixed price contracts to mitigate against increases during the course of construction, and only proceed with a development once it has secured an appropriate level of pre-let / pre-sale that has been agreed with the Shareholder.

• Covenant strength of the main contractor is a key and ongoing part of project due diligence.

• Alternative procurement routes reviewed, and projects continually value engineered. Includes consideration of modern methods of construction (MMC) to ensure the optimum design and most appropriate build solution.

Key Risk Management Measures

• Sensitivity analysis and reverse stress testing for development appraisals prior to committing to construction or incurring costs.

• Budget to actual, cash flow projections and banking covenants reviewed every month.

• Maintain appropriate cash reserves based on prevailing and forecast market conditions.

Key Risk Management Measures

• Review MMC options that will reduce the level of on-island labour required to deliver projects.

• Consideration of the main contractor’s ability to procure construction elements from off-island companies that bring their own labour to the island for the period of their build element.