174 CapitaLand Integrated Commercial Trust Notes to the financial statements Year ended 31 December 2024 29 FINANCIAL RISK MANAGEMENT (continued) Foreign currency risk (continued) Net investment hedge The Group designates foreign currency loans to hedge the changes in the value of its net investments that are attributable to changes in the EUR/SGD and AUD/SGD spot rates (2023: EUR/SGD and AUD/SGD spot rates). The Group’s policy is to hedge the net investment only to the extent of the debt principal. The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency and amount. The Group assesses the effectiveness of each hedging relationship by comparing changes in the carrying amount of the debt that is due to a change in the spot rate with changes in the investment in the foreign operation due to movements in the spot rate (the offset method). Exposure to foreign currency risk The Group’s exposure to foreign currency risk is as follows: USD HKD EUR AUD JPY $’000 $’000 $’000 $’000 $’000 Group 31 December 2024 Cash and cash equivalents – – 57 – – Loans and borrowings (402,603) (976,301) (464,139) (518,118) (86,877) Net Statement of Financial Position exposure (402,603) (976,301) (464,082) (518,118) (86,877) Add: Effect of cross currency swaps 402,603 976,301 – – 86,877 Add: Loans designated as net investment hedge – – 456,892 518,118 – Net exposure – – (7,190) – – 31 December 2023 Cash and cash equivalents – – 83 – – Loans and borrowings (395,373) (955,597) (480,603) (539,043) (93,190) Net Statement of Financial Position exposure (395,373) (955,597) (480,520) (539,043) (93,190) Add: Effect of cross currency swaps 395,373 955,597 – – 93,190 Add: Loans designated as net investment hedge – – 473,108 539,043 – Net exposure – – (7,412) – –
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