Notes to the Financial Statements For the financial year ended 31 December 2024 20 SHARE CAPITAL (continued) In addition, the Company has a share purchase mandate as approved by its shareholders which allows the Company greater flexibility over its share capital structure with a view to improving, inter alia, its return on equity. The shares which are purchased are held as treasury shares which the Company may transfer for the purposes of or pursuant to its employee share-based incentive schemes so as to enable the Company to take advantage of tax deductions under the current taxation regime. The use of treasury shares in lieu of issuing new shares would also mitigate the dilution impact on existing shareholders. The Group’s capital structure is regularly reviewed and managed. Adjustments are made to the capital structure in light of changes in economic conditions, regulatory requirements and business strategies affecting the Company or the Group. The Group’s subsidiaries in The People’s Republic of China (PRC) and India are subject to foreign exchange rules and regulations promulgated by the PRC and India government which may impact how the Group manages capital. In addition, seven of the Group’s subsidiaries (2023: seven) are required to maintain certain minimum base capital and financial resources, or shareholders’ funds as they are holders of Capital Markets Services licenses registered with the Monetary Authority of Singapore or the Securities Commission Malaysia to conduct the regulated activity of Real Estate Investment Trust (REIT) management. In addition, the REITs are subject to aggregate leverage limits. The consolidated REITs of the Group have complied with the applicable capital requirements throughout the year. There were no changes in the Group’s approach to capital management during the year. 21 OTHER RESERVES The Group The Company 2024 2023 2024 2023 $’M $’M $’M $’M Reserve for own shares (664) (352) (664) (352) Equity compensation reserve 46 61 17 25 Capital reserve (3,537) (4,775) 1 1 Hedging reserve 1 19 – – Fair value reserve 4 13 – – Foreign currency translation reserve (1,059) (1,185) – – (5,209) (6,219) (646) (326) (a) Reserve for own shares comprises the purchase consideration for issued shares of the Company acquired and held as treasury shares. (b) The equity compensation reserve comprises the cumulative value of employee services received for shares under the share plans of the Company (note 19(b)). (c) The capital reserve comprises mainly the reserves set aside by certain subsidiaries in compliance with the relevant regulations in the PRC, the Group’s share of associates’ and joint ventures’ capital reserve and reserve on consolidation amounting to -$4,328 million (2023:–$5,569 million) which represents the difference between the consideration paid for the acquisition of interest in entities under common control as part of the internal restructuring of the Group in 2021 and the share capital of the acquirees. 152 CapitaLand Investment Limited Notes to the Financial Statements For the financial year ended 31 December 2024 21 OTHER RESERVES (continued) (d) The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments related to hedge transactions that have not yet affected profit or loss. During the year, the risk categories of components resulting from cash flow hedge accounting are as follows: 2024 2023 $’M $’M The Group Change in fair value: – Interest rate risk (23) (77) – Foreign currency risk 6 7 Amount reclassified to profit or loss: – Interest rate risk 11 (5) – Foreign currency risk (3) – Share of cash flow hedges of associates and joint ventures (20) (30) (e) The fair value reserve comprises the cumulative net change in the fair value of equity investments designated at FVOCI. (f) The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign entities, the effective portion of the hedging instrument which is used to hedge against the Group’s net investment in foreign operations as well as from the translation of foreign currency loans used to hedge or form part of the Group’s net investments in foreign entities. The Group’s foreign currency translation reserve arises mainly from Chinese Renminbi, US Dollars and Malaysian Ringgit. 22 PERPETUAL SECURITIES The Group’s perpetual securities as at 31 December 2023 were issued by its subsidiary, CLAS (the Issuer). The perpetual securities comprised: Perpetual securities Issue date Principal amount $’M CLAS – Fixed rate perpetual securities with an initial distribution rate of 4.68% per annum 30 June 2015 250 – Fixed rate perpetual securities with an initial distribution rate of 3.88% per annum 4 September 2019 150 The perpetual securities have no fixed redemption date and redemption is at the option of the Issuer in accordance with the terms of issue of the securities. The distribution will be payable semi-annually at the discretion of the Issuer and will be non-cumulative. These perpetual securities rank pari passu with the holders of preferred units (if any) and rank ahead of the stapled security holders of CLAS, but junior to the claims of all other present and future creditors of CLAS. As the perpetual securities have no fixed maturity date and the payment of distributions is at the discretion of the Issuer, the Issuer is considered to have no contractual obligations to repay the principal or to pay any distributions, and the perpetual securities do not meet the definition for classification as a financial liability under SFRS(I) 1-32 Financial Instruments: Presentation, they are presented within equity, and distributions are treated as dividends. As of 31 December 2024, there were no perpetual securities as the Group ceased to consolidate CLAS as a subsidiary in accordance with SFRS(I) 10 Consolidated Financial Statements and now accounts for it as an associate following the sale of 4.88% stake in CLAS in December 2024 (note 29). 153 Annual Report 2024
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