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) (iii) Market risk (cont’d) Foreign currency risk (cont’d) Sensitivity analysis A 5% strengthening of the following major currencies against the functional currency of each of the Group’s entities at the reporting date held by the Group and the Company would (decrease)/increase profit and other components of equity before any tax effect by the amounts shown below. Similarly, a 5% weakening would have the equal but opposite effect. This analysis assumes that all other variables, in particular interest rates, remain constant. 2023 2022 Profit before tax Equity Profit before tax Equity $’000 $’000 $’000 $’000 Group United States Dollar (17,513) (10,261) (14,515) (9,931) Singapore Dollar (1,452) – 3,972 – Hong Kong Dollar 8,421 – 9,523 – Australian Dollar (5,437) – (2,950) – Sterling Pound 17,966 – 23,039 – Renminbi 8,244 (687) 7,255 (716) Japanese Yen 16,358 (11,871) 4,548 – Euro (1,886) (2,978) (746) (3,028) Thai Baht 10,041 – 8,264 – New Zealand Dollar – – 447 – Company United States Dollar 20,221 – 23,897 – Hong Kong Dollar (820) – 106 – Japanese Yen 2,882 – 319 – Sterling Pound (2,355) – (558) – Renminbi 47,430 – 47,773 – Australian Dollar (6,026) – 724 – Euro (15) – (14) – Equity price risk The Group and the Company are exposed to equity price changes arising on its quoted equity investments at FVOCI and FVTPL. A change in the underlying equity prices of the quoted investments at the reporting date by 5% for the Group and the Company would impact profit and other components of equity (before any tax effect) by the amounts shown below. Similarly, a change in the revalued net asset values of the unquoted equity investments at FVOCI and FVTPL and a change in the price-to-sales multiple for the unquoted equity investments at FVTPL by 5% for the Group and the Company would impact profit and other components of equity (before any tax effect) by the amounts shown below. This analysis assumes that all other variables remain constant. 41 FINANCIAL INSTRUMENTS (CONT’D) (iii) Market risk (cont’d) Equity price risk (cont’d) Equity investments Increase by 5% Decrease by 5% Increase by 5% Decrease by 5% Group Group Company Company $’000 $’000 $’000 $’000 2023 Quoted equity investments at FVOCI and FVTPL Equity 1,360 (1,360) 1,144 (1,144) Profit before tax 1,140 (1,140) 95 (95) Unquoted equity investments at FVOCI and FVTPL Equity 21,317 (21,317) 20,204 (20,204) Profit before tax 9,225 (9,225) – – 2022 Quoted equity investments at FVOCI and FVTPL Equity 1,300 (1,300) 1,093 (1,093) Profit before tax 1,482 (1,482) 98 (98) Unquoted equity investments at FVOCI and FVTPL Equity 21,608 (21,608) 20,395 (20,395) Profit before tax 6,836 (6,836) – – (iv) Hedge accounting Net investment hedges A foreign currency exposure arises from the Group’s net investments in subsidiaries that have a different functional currency from that of the Company. The risk arises from the fluctuation in spot exchange rates between the functional currency of the subsidiaries and the Company’s functional currency, which causes the amount of the net investments to vary in the consolidated financial statements of the Group. The hedged risk in the net investment hedges is the risk of a weakening of the United States Dollar, Euro, Renminbi and Japanese Yen (2022: United States Dollar, Euro and Renminbi) against Singapore Dollar that will result in a reduction in the carrying amount of the Group’s net investments in subsidiaries. An economic relationship exists between the hedged net investment and hedging instrument due to the shared foreign currency risk exposure. FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 235 234
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