Notes to the Financial Statements For the financial year ended 31 December 2024 32 FINANCIAL RISK MANAGEMENT (continued) (b) Market risk (continued) (ii) Foreign currency risk The Group operates internationally and is exposed to various currencies, including Australian Dollars, Chinese Renminbi, Euro, Japanese Yen, Malaysian Ringgit and US Dollars. The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which its property or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. As at reporting date, the Group uses certain foreign currency denominated borrowings, which include bank loans and medium term notes, amounting to $382 million (2023: $647 million) to hedge against the currency risk arising from the Group’s net investment in certain subsidiaries. The Group also uses forward exchange contracts or currency swaps to hedge its foreign currency risk, where feasible. It generally enters into forward exchange contracts or currency swaps with maturities ranging between three months and two years. The foreign exchange forwards and currency swaps are denominated in the same currency as the highly probable transactions, therefore the economic relationship is 100% effective. Hedge ineffectiveness may occur due to: • Changes in timing of the forecasted transaction from what was originally planned; and • Changes in the credit risk of the derivative counterparty of the Group. The net carrying amount of the forward exchange and cross currency swap contracts as at 31 December 2024 was net liabilities of $5 million (2023: assets of $86 million), comprising derivative assets of $12 million (2023: $89 million) and derivative liabilities of $17 million (2023: $3 million). Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. 172 CapitaLand Investment Limited Notes to the Financial Statements For the financial year ended 31 December 2024 32 FINANCIAL RISK MANAGEMENT (continued) (b) Market risk (continued) (ii) Foreign currency risk (continued) The Group’s exposure to major foreign currencies was as follows: Singapore Dollars US Dollars Australian Dollars Chinese Renminbi Japanese Yen Euro British Pound Malaysian Ringgit $’M $’M $’M $’M $’M $’M $’M $’M The Group 31 December 2024 Equity securities 119 18 – 22 11 12 – 2 Trade and other receivables 673 407 13 666 75 50 159 23 Cash and cash equivalents 1,390 118 33 494 107 43 18 35 Bank borrowings and debt securities (4,835) (397) (211) (1,198) (155) (442) (1) (652) Trade and other payables (714) (288) (45) (498) (38) (56) (17) (68) Gross currency exposure (3,367) (142) (210) (514) (*) (393) 159 (660) Adjustments for: Net financial liabilities denominated in the respective entities’ functional currencies 3,238 254 157 847 (98) 422 (1) 655 Bank borrowings and debt securities designated for net investment hedge – – 11 371 – – – – Cross currency swaps/ foreign exchange forward contracts – (19) – (400) 97 – (147) – Net currency exposure (129) 93 (42) 304 (1) 29 11 (5) Singapore Dollars US Dollars Australian Dollars Chinese Renminbi Japanese Yen Euro British Pound Malaysian Ringgit $’M $’M $’M $’M $’M $’M $’M $’M The Group 31 December 2023 Equity securities 111 16 – – 9 15 – – Trade and other receivables 434 1,468 230 527 207 293 431 23 Cash and cash equivalents 1,273 161 97 374 162 171 77 38 Bank borrowings and debt securities (6,395) (2,325) (282) (875) (1,123) (382) (522) (626) Trade and other payables (825) (377) (64) (555) (54) (91) (32) (65) Gross currency exposure (5,402) (1,057) (19) (529) (799) 6 (46) (630) Adjustments for: Net financial liabilities denominated in the respective entities’ functional currencies 5,035 1,193 232 642 573 187 52 634 Bank borrowings and debt securities designated for net investment hedge – – 18 – 211 278 140 – Cross currency swaps/ foreign exchange forward contracts – (66) – – 104 (179) – – Net currency exposure (367) 70 231 113 89 292 146 4 * Less than $1 million 173 Annual Report 2024
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