Notes to the Consolidated Financial Statements (continued)

3. Financial Risk Management (continued)

The Group’s liquidity position is monitored monthly by the management and is reviewed at least quarterly by the Board of Directors. A summary table with the maturity of liabilities presented below is used by key management personnel to manage liquidity risk and is derived from managerial reports at the Company level. The amounts disclosed in the tables below are the contractual undiscounted cash flows. Undiscounted cash flows in respect of balances due within 12 months generally equal their carrying amounts in the statement of financial position as the impact of discounting is not significant.

a) Liquidity risk

The table below summarises the maturity profile of the Group’s financial liabilities based on undiscounted contractual payments (including interest payments): b) Capital Management

The obligations in respect of liabilities maturing in years 2 to 5 will be met from rental income and with borrowing arrangements to assist with financing development projects.

Capital comprises of share capital, capital contributions and retained earnings. When managing capital, the Group’s objectives are to safeguard the Group’s ability to continue as a going concern to provide returns to the shareholder. The Group aims to deliver these objectives by ensuring that:

• before commencing a commercial development, the Group has a sufficient level of legally binding pre-lets to create a value that exceeds the construction cost being committed to; and

• before commencing a residential development, the Group has legally binding pre-sale agreement whose total sales value exceeds the construction cost being committed to.

The general costs of the group are met through operating revenue.

3. Financial Risk Management (continued)

c)

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

Credit risk arises from cash and cash equivalents held at banks, trade receivables, including rental receivables from lessees and rental guarantees.

Credit risk is managed on a group basis. The Group structures the levels of the credit risk it accepts by limiting its exposure to a single counterparty or groups of counterparties. Such risks are subject to a quarterly or more frequent review.

The Group has policies in place to ensure that rental and sale contracts are entered into only with lessees and buyers with an appropriate credit history, but the Group does not monitor the credit quality of receivables on an ongoing basis. The Group reviews the receivables on a regular basis to measure significant expected credit losses (ECLs). Generally, trade receivables are referred to Petty Debts court, as appropriate.

At 31 December 2022, the Group had one customer (2021: one) that owed more than £250,000 and accounted for approximately 37% (2021: 40%) of all the receivables outstanding. ECLs on the customer has arisen because of business disruption due to the Covid-19 pandemic. Based on the available information, the Group believes that it can recover at least 50% of the outstanding dues of the amount owed until 25 August 2021 and the balance 50% has been recorded as ECLs. Amounts invoiced since this date have been paid in full.

Set out below is the information about the credit risk exposure on the Group’s trade receivables and other receivables using a provision matrix:

Cash and short-term deposits are held only with financial institutions with a Moody’s credit rating of A or better. The loan to the joint venture does not have an external credit rating.