NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 41 FINANCIAL INSTRUMENTS (CONT’D) (i) Credit risk (cont’d) Guarantees As at the reporting date, the Group has issued guarantees to certain banks in respect of credit facilities granted to buyers of a development property in China and an associate of the Group. These guarantees are subject to the impairment assessment under SFRS(I) 9. Management continually monitors credit risk and considers events such as default on instalment payments by buyers and performs credit evaluation on the associate. At the reporting date, the Group did not recognise any liabilities in respect of the financial guarantees granted in view of remote default risk. Derivatives Derivatives are only entered into with bank and financial institution counterparties with sound credit ratings. Cash and cash equivalents The cash and cash equivalents are held with bank and financial institution counterparties with sound credit ratings. Impairment on cash and cash equivalents has been measured on the 12-month expected loss basis and reflects the short maturities of the exposures. The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. The amount of the allowance on cash and cash equivalents as at 31 December 2023 and 31 December 2022 was negligible. (ii) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s objective when managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group monitors its liquidity risk and maintains a level of cash and cash equivalents and credit facilities deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. As at the reporting date, the Group has provided financial guarantees in favour of an associate and buyers of overseas development properties. At the reporting date, the maximum of the Group’s exposure in respect of the financial guarantees issued was $22.7 million (2022: $51.1 million). As at 31 December 2022, the Company’s maximum exposure to financial guarantees provided for borrowings of a subsidiary amounted to $231.0 million. The financial guarantee was discharged on 31 March 2023. The Group has contractual commitments to incur capital expenditure on its property, plant and equipment and investment properties, purchase properties and to invest in joint ventures, associates and investees (see note 37). 41 FINANCIAL INSTRUMENTS (CONT’D) (ii) Liquidity risk (cont’d) The following are the remaining contractual maturities of financial liabilities. The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of netting agreements: Carrying amount Contractual cash flows Within 1 year After 1 year but within 5 years After 5 years $’000 $’000 $’000 $’000 $’000 Group 31 December 2023 Non-derivative financial liabilities Interest-bearing borrowings 11,625,933 (12,349,157) (3,922,664) (8,262,401) (164,092) Lease liabilities 670,940 (1,253,934) (48,580) (171,705) (1,033,649) Trade and other payables^ 1,243,826 (1,270,844) (1,270,844) – – Other liabilities^ 184,735 (184,735) (15,736) (143,139) (25,860) Financial guarantees – (22,670) (22,670) – – 13,725,434(15,081,340) (5,280,494) (8,577,245) (1,223,601) Derivative financial instruments Derivative liabilities Forward exchange contracts (gross-settled): 10,486 - Outflow (814,409) (814,409) – – - Inflow 803,602 803,602 – – Interest rate swaps (net-settled) 6,479 (8,344) 255 (8,599) – 16,965 (19,151) (10,552) (8,599) – Derivative assets Cross-currency swaps (gross-settled): (37,503) - Outflow (492,086) (318,761) (173,325) – - Inflow 530,800 350,419 180,381 – Forward exchange contracts (gross-settled): (2,427) - Outflow (477,335) (477,335) – – - Inflow 480,921 480,921 – – Interest rate swaps (net-settled) (14,388) 12,217 10,672 1,545 – (54,318) 54,517 45,916 8,601 – (37,353) 35,366 35,364 2 – 13,688,081(15,045,974) (5,245,130) (8,577,243) (1,223,601) ^ Excluding deferred income FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 223 222
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