NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 19 SHARE CAPITAL (CONT’D) Preference share capital The Company has in issue 297,786,832 (2022: 330,874,257) non-redeemable convertible non-cumulative preference shares (Preference Shares), listed on the Official List of Singapore Exchange Securities Trading Limited. The Preference Shares are convertible only at the option of the Company, into fully-paid ordinary shares of the Company at the conversion ratio of 0.136 ordinary share for each Preference Share. In the event the Company exercises its right of conversion, the Company shall pay to preference shareholders a one-off preference cash dividend at the fixed rate of 64% (net) of the issue price for each Preference Share (Additional Preference Dividend) and any preference dividend accrued but unpaid. As at 31 December 2023, a maximum number of 40,499,009 (2022: 44,998,898) ordinary shares are issuable upon full conversion at the sole option of the Company of all the Preference Shares. Holders of Preference Shares have no voting rights, except under certain circumstances provided for in the Singapore Companies Act and as set out in the Company’s Constitution. The Preference Shares rank: (i) pari passu without any preference or priority among themselves; and (ii) in priority over the ordinary shares (a) in respect of payment of the preference dividend (when, as and if declared) and the Additional Preference Dividend; and (b) in the event of a winding-up of or return of capital by the Company, payment of any preference dividend that has accrued to holders of Preference Shares and is unpaid, the Additional Preference Dividend (whether or not then due) as well as the amount paid up on the Preference Shares (including the premium paid thereon). Capital management policy The Group’s primary objective in capital management is to maintain a strong capital base so as to maintain investor, creditor and market confidence, and to continue to maintain the future development and growth of the business. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. For this purpose, the Group defines “capital” as including all components of equity, including non-controlling interests. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders or issue new shares or other financial instruments. The Group monitors capital using a net debt equity ratio, which is defined as net borrowings divided by total capital employed. Note 2023 2022 $’000 $’000 Gross borrowings 12,313,507 10,381,801 Cash and bank balances (including restricted cash and cash and cash equivalents included in assets held for sale) 18 (2,511,233) (2,369,691) Net debt 9,802,274 8,012,110 Total capital employed 9,539,344 9,564,822 Net debt equity ratio 1.03 0.84 19 SHARE CAPITAL (CONT’D) Capital management policy (cont’d) No changes were made to the above objectives, policies and processes during the years ended 31 December 2023 and 2022. The Group derives income from its investments in the People’s Republic of China. The conversion of the Chinese Renminbi is subject to the rules and regulations of foreign exchange control promulgated by the People’s Republic of China government. Under the Housing Developers (Control and Licensing) Act, in order to qualify for a housing developer’s licence, certain subsidiaries of the Group are required to maintain a minimum paid-up capital. These entities complied with the capital requirement during the current and prior year. 20 RESERVES Group Company 2023 2022 2023 2022 $’000 $’000 $’000 $’000 Capital reserve 231,426 232,681 63,743 63,743 Fair value reserve 68,842 73,456 47,159 49,966 Hedging reserve 6,993 17,355 7,909 18,272 Other reserves 24,651 24,651 – – Share option reserve 293 15,482 – – Foreign currency translation reserve (457,318) (334,364) – – Accumulated profits 7,340,013 7,195,677 4,918,316 4,020,199 7,214,900 7,224,938 5,037,127 4,152,180 The capital reserve comprises mainly: (a) negative goodwill on the consolidation of subsidiaries which arose prior to 1 January 2017 under the previous accounting standards adopted; (b) issue expenses; and (c) reserves arising from the Group’s acquisition of non-controlling interests in subsidiaries. The fair value reserve comprises the cumulative net change in the fair value of equity instruments designated at FVOCI. The hedging reserve comprises the effective portion of the cumulative net changes in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred (net of tax). Other reserves comprise mainly reserves set aside by certain subsidiaries in compliance with the relevant regulations in the People’s Republic of China and share of other reserves of associates and joint ventures. The share option reserve comprises share of cumulative value of employee services received for the issue of share options of a joint venture. FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 185 184
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