ANNUAL REPORT 2025 183 NOTES TO THE FINANCIAL STATEMENTS 31 Financial risk and capital management (Continued) (e) Foreign currency exposure The Group entered into cross currency swap contracts to hedge its foreign currency exposure in respect of the guaranteed notes denominated in United States dollars with principal amount of US$500 million (approximately HK$3,900 million) to HK dollar borrowings. The eff ects of the cross currency swap contracts on the Group’s fi nancial position and performance are as follows: 2025 Average exchange rate (HK$/US$) 7.7732 Notional amount in local currency (US$’000) 500,000 Notional amount (HK$’000) 3,886,580 Hedge ratio 1:1 Change in fair value of outstanding hedging instruments since 1 January (HK$’000) 17,810 Change in value of hedged item used to determine hedge eff ectiveness (HK$’000) (17,810) For overseas subsidiaries, associated companies and joint ventures, which consist of non-Hong Kong dollar assets, the Group generally monitors the development of the Group’s cash fl ows and debt market and, when appropriate, would expect to refi nance these businesses with local currency borrowings. Currency risk as defi ned by HKFRS 7 arises on other fi nancial instruments denominated in a currency that is not the functional currency and being of a monetary nature except for the currency risk between United States dollar and Hong Kong dollar given the two currencies are under the linked exchange rate system. Diff erences resulting from the translation of fi nancial statements of overseas subsidiaries into the Group’s presentation currency are therefore not taken into consideration for the purpose of the sensitivity analysis for currency risk. The impact of a hypothetical 5% weakening of the HK dollar against all exchange rates at the end of the reporting period, with all other variables held constant, on the Group’s profi t for the year is set out as below. Hypothetical (decrease)/ increase in profi t 2025 2024 HK$’000 HK$’000 Renminbi 38,018 245,343 Singapore dollar (172) (116) 37,846 245,227
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