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) (ii) Liquidity risk (cont’d) Carrying amount Contractual cash flows Within 1 year After 1 year but within 5 years After 5 years $’000 $’000 $’000 $’000 $’000 Company 31 December 2022 Non-derivative financial liabilities Interest-bearing borrowings 7,452,244 (8,059,612) (1,554,860) (6,504,752) – Lease liabilities 32,522 (34,731) (6,660) (28,071) – Trade and other payables^ 2,241,789 (2,262,592) (2,262,592) – – Other liabilities^ 759,708 (764,965) – (764,965) – Financial guarantee – (231,040) (231,040) – – 10,486,263 (11,352,940) (4,055,152) (7,297,788) – Derivative financial instruments Derivative liabilities Cross-currency swaps (gross-settled): 780 - Outflow (16,235) (16,235) – – - Inflow 15,423 15,423 – – Forward exchange contracts (gross-settled): 780 - Outflow (48,463) (48,463) – – - Inflow 47,512 47,512 – – Interest rate swaps (net-settled) 645 (853) 129 (982) – 2,205 (2,616) (1,634) (982) – Derivative assets Cross-currency swaps (gross-settled): (43,696) - Outflow (501,351) (215,789) (285,562) – - Inflow 547,091 235,485 311,606 – Forward exchange contracts (gross-settled): (49,636) - Outflow (914,487) (914,487) – – - Inflow 960,816 960,816 – – Interest rate swaps (net-settled) (18,917) 20,443 8,298 12,145 – (112,249) 112,512 74,323 38,189 – (110,044) 109,896 72,689 37,207 – 10,376,219 (11,243,044) (3,982,463) (7,260,581) – ^ Excluding deferred income 41 FINANCIAL INSTRUMENTS (CONT’D) (ii) Liquidity risk (cont’d) The maturity analyses show the contractual undiscounted cash flows of the Group and the Company’s financial liabilities on the basis of their earliest possible contractual maturity. The cash inflows/(outflows) disclosed represent the contractual undiscounted cash flows relating to derivative financial instruments held for risk management purposes and which are usually not closed out prior to contractual maturity. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement e.g. forward exchange contracts. Netsettled derivative financial assets are included in the maturity analyses as they are held to hedge the cash flow variability of the Group’s floating rate loans. The interest payments on variable interest rate loans and bonds and notes in the table above reflect market forward interest rates at the period end and these amounts may change as market interest rates changes. It is not expected that the cash flows in the maturity analysis could occur significantly earlier, or at significantly different amounts. (iii) Market risk Market risk is the risk that changes in market prices such as interest rates, foreign exchange rates and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the return on risk. Interest rate risk The Group’s exposure to interest rate risk relates primarily to its interest-bearing financial assets and debt obligations. The Group adopts a policy of managing its interest rate exposure by maintaining a debt portfolio with both fixed and floating interest rates. Derivative financial instruments are used to manage interest rate risk, to the extent that the perceived cost of variable rate borrowings is considered to outweigh the benefits of their flexibility, and the Group actively monitors the need and timing for such derivatives. The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts. The Group assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method. FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 227 226
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