CapitaLand Integrated Commercial Trust - Annual Report 2023

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2023 3 MATERIAL ACCOUNTING POLICIES (continued) 3.5 Financial instruments (continued) (vi) Derivative financial instruments and hedge accounting (continued) Hedges directly affected by interest rate benchmark reform Phase 2 amendments: Replacement of benchmark interest rate – when there is no longer uncertainty arising from interest rate benchmark reform When the basis for determining the contractual cash flows of the hedged item or the hedging instrument changed as a result of interest rate benchmark reform and therefore there is no longer uncertainty arising about the cash flows of the hedged item or the hedging instrument, the Group amended the hedge documentation of that hedging relationship to reflect the change(s) required by interest rate benchmark reform. A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met: • the change is necessary as a direct consequence of the reform; and • the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e. the basis immediately before the change. For this purpose, the hedge designation was amended only to make one or more of the following changes: • designating an alternative benchmark rate as the hedged risk; • updating the description of hedged item, including the description of the designated portion of the cash flows or fair value being hedged; or • updating the description of the hedging instrument. The Group amended the description of the hedging instrument only if the following conditions were met: • it makes a change required by interest rate benchmark reform by changing the basis for determining the contractual cash flow of the hedging instrument or using another approach that is economically equivalent to changing the basis for determining the contractual cash flows of the original hedging instrument; and • the original hedging instrument is not derecognised. The Group also amended the formal hedging documentation by the end of the reporting period during which a change required by interest rate benchmark reform is made to the hedged risk, hedging item or hedging instrument. These amendments in the formal hedge documentation do not constitute the discontinuation of the hedging relationship or the designation of a new hedging relationship. If changes were made in addition to those changes required by interest rate benchmark reform described above, then the Group first considered whether those additional changes result in the discontinuation of the hedge accounting relationship. If the additional changes did not result in the discontinuation of hedge accounting relationship, then the Group amended the formal hedged documentation for changes required by interest rate benchmark reform as mentioned above. When the interest rate benchmark on which the hedged future cash flows had been based was changed as required by interest rate benchmark reform, for the purpose of determining whether the hedged future cash flows are expected to occur, the Group deemed that the hedging reserve recognised in the Statement of Movements in Unitholders’ Funds for that hedging relationship is based on the alternative benchmark rate on which the hedged future cash flows will be based. 198 CAPITALAND INTEGRATED COMMERCIAL TRUST

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