26. FINANCIAL RISK MANAGEMENT (continued) Financial risk factors (continued) (a) Market risk (i) Currency risk The Group’s portfolio of properties is located in PRC, held via special purpose vehicles incorporated in PRC and the cash flows from the operation of the Properties are denominated in RMB. The PRC’s special purpose vehicles are held by holding companies in Singapore, which are in turn held by ECW. ECW will pay distributions in Singapore dollars. These various levels of shareholding expose ECW to fluctuations in the currency rates of RMB and SGD. In order to manage the currency risk involved in the investment of assets outside Singapore, the Manager has adopted strategies that may include: • the use of borrowings denominated in the respective entities’ functional currency to match the currency of the investment asset as a natural currency hedge; • entering into cross currency interest rate swaps that are used to reduce the Group’s exposure to currency risk on its borrowings and interest; and • entering into currency forward contracts or currency options to manage the foreign currency income received from the onshore assets, back into Singapore Dollars. The Group’s currency exposure based on the information provided to key management is as follows: SGD RMB USD Total S$’000 S$’000 S$’000 S$’000 Group As at 31 December 2024 Financial assets Cash and bank balances 1,465 3,007 41 4,513 Trade and other receivables* 5 168,386 – 168,391 Intra-group balances 608,943 448,646 19,162 1,076,751 Total financial assets 610,413 620,039 19,203 1,249,655 Financial liabilities Trade and other payables^ (34,037) (139,847) – (173,884) Intra-group balances (608,943) (448,646) (19,162) (1,076,751) Borrowings (244,702) (132,986) (102,694) (480,382) Total financial liabilities (887,682) (721,479) (121,856) (1,731,017) Net financial liabilities (277,269) (101,440) (102,653) (481,362) Add: Firm commitments and highly probable forecast transactions in foreign currencies – (274) – (274) Less: Net financial liabilities denominated in the respective entities’ functional currency 267,491 52,934 (19,162) 301,263 Net currency exposure (9,778) (48,780) (121,815) (180,373) ANNUAL REPORT 2024 113 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024
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