CapitaLand Integrated Commercial Trust - Annual Report 2021

Notes to the Financial Statements YEAR ENDED 31 DECEMBER 2021 29 FINANCIAL RISK MANAGEMENT (continued) Hedge accounting (continued) Net investment hedges The Group has foreign currency exposures from the net investment in its foreign subsidiaries in Luxembourg and Netherlands that has EUR functional currency. The risk arises from fluctuation in spot exchange rates between EUR and SGD that will result in a fluctuation in the carrying amount of the Group’s net investment in its foreign subsidiaries in Luxembourg and Netherlands. As at reporting date, the Group’s net investment in its foreign subsidiaries is hedged by a number of EUR-denominated unsecured bank loans of carrying amount of $497,776,000 (2020: $517,183,000), which mitigates the foreign currency risk arising from the subsidiaries’ net assets. The fair value of these borrowings at 31 December 2021 is $497,501,000 (2020: $519,497,000). These loans are designated as a hedging instrument for the changes in the value of the net investment that is due to changes in the EUR/SGD spot rate. The amounts related to items designated as hedging instruments were as follows: Nominal amount Carrying amount – assets Carrying amount – liabilities $’000 $’000 $’000 Group 2021 Foreign exchange denominated debt (EUR) (498,670) – (497,776) The amounts related to items designated as hedged items were as follows: Group 2021 EUR net investment N/A Not applicable CapitaLand Integrated Commercial Trust 296