Investor Presentaiton
HKAS 1.51(a)
HKAS 1.49
HKFRS 7.24B(b)(i), (ii)
24C(b), 24E & 24F
HK Listco Ltd
Financial statements for the year ended 31 December 2023
The following table provides a reconciliation of the hedging reserve in respect of foreign currency risk
and shows the effectiveness of the hedging relationships:
2023
2022
$'000
$'000
Balance at 1 January
1,427
1,965
Effective portion of the cash flow hedge recognised in other comprehensive
income
(145)
(119)
Amounts reclassified to profit or loss (note (i))
(300)
(280)
Amounts transferred to the initial carrying amount of the hedged items (note
(ii))
(236)
(220)
Related tax
119
81
Balance at 31 December (note (iii))
865
1,427
Change in fair value of the forward exchange contracts during the year
(145)
(119)
Hedge ineffectiveness recognised in profit or loss
Effective portion of the cash flow hedge recognised in other comprehensive
income
(145)
(119)
Notes:
HKFRS 7.31 & 33
HKFRS 7.22A & 22B
(i) Amounts reclassified to profit or loss are recognised in the "Cost of sales" line item in the consolidated statement of profit or
loss (see note 5(c)).
(ii) Amounts removed from the hedging reserve are recognised in the "Inventory" line item in the consolidated statement of
financial position and will be recognised in profit or loss when the inventory is sold (see note 5(c)).
(iii) The entire balance in the hedging reserve relates to continuing hedges276
(ii) Recognised assets and liabilities
Changes in the fair value of forward exchange contracts that economically hedge monetary assets
and liabilities denominated in foreign currencies are recognised in profit or loss (see note 5(c)). The
net fair value of forward exchange contracts used by the group as economic hedges of monetary
assets and liabilities denominated in foreign currencies at 31 December 2023 was $253,000 (2022:
$659,000), recognised as derivative financial instruments.
In respect of other trade receivables and payables denominated in foreign currencies, the group
ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies
at spot rates where necessary to address short-term imbalances.
Except for the borrowings designated to hedge a net investment in a subsidiary (as described
below), all of the group's borrowings are denominated in the functional currency of the entity taking
out the loan or, in the case of group entities whose functional currency is Hong Kong dollars, in
either Hong Kong dollars or United States dollars. Given this, management does not expect that
there will be any significant currency risk associated with the group's borrowings.
(iii) Hedge of net investment in a foreign subsidiary275
A foreign currency exposure arises from the group's net investment in its Singaporean subsidiary
(see note 14) that has Singapore dollar as its functional currency. The risk arises from the fluctuation
in spot exchange rates between the Singapore dollar and the Hong Kong dollar, which causes the
carrying amount of the net investment to vary. The company's Singapore dollar denominated
secured bank loan is designated as a hedging instrument for the changes in the value of the net
investment that is attributable to changes in the HKD/SGD spot rate. It is the group's policy to hedge
the net assets of the Singaporean subsidiary up to an amount of SGD [•]. This policy is reviewed
every [•] years in light of the subsidiary's performance and dividend policy.
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