NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2023 29. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued) Interest rate risk Statement of total return Unitholders’ funds 100 bp 100 bp 100 bp 100 bp increase decrease increase decrease $’million $’million $’million $’million Group and Trust 2023 Interest rate swaps and cross currency interest rate swap – – 10.6 (10.6) Variable rate instruments (5.6) 5.6 – – Cash flow sensitivity (net) (5.6) 5.6 10.6 (10.6) 2022 Interest rate swaps – – 8.8 (8.8) Variable rate instruments (7.0) 7.0 – – Cash flow sensitivity (net) (7.0) 7.0 8.8 (8.8) Foreign currency risk The Group is exposed to foreign currency risk on cash holdings and operating expenses that are denominated in a currency other than the respective functional currencies of the Group entities. The currencies giving rise to this risk are primarily the US$ and RMB. The Manager’s strategy is to achieve a natural hedge through local RMB financing. To mitigate the foreign currency cashflow, the Manager will enter into foreign currency forwards to limit on exposure for the RMB denominated cashflow and cross currency interest rate swap to hedge the foreign currency exposure from the net investment in certain subsidiaries in China. The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The Group assess whether the derivative designated in each hedging relationship is expected to be and has been effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method. The Group’s and Trust’s exposure to foreign currencies is as follows: US$ RMB Total $’000 $’000 $’000 Group 2023 Cash and cash equivalents 2,437 30 2,467 2022 Cash and cash equivalents 2,615 108 2,723 ANNUAL REPORT 2023 215 Financials Framework Portfolio Performance Leadership Overview
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