OVERVIEW PERFORMANCE SUSTAINABILITY FINANCIALS APPENDIX 25 FINANCIAL INSTRUMENTS (continued) Market risk (continued) Currency risk Risk management policy The Group is exposed to currency risk mainly arising from sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currencies giving rise to this risk include United States Dollar (“USD”) and Chinese Renminbi (“RMB”). The Group management monitors the Group’s currency risk exposure and does not hedge foreign currency exposure. The Group’s exposure to currency risk is as follows: 2023 2022 USD RMB USD RMB $’000 $’000 $’000 $’000 Group Cash and cash equivalents 45,375 – 1,948 – Trade and other receivables 24,634 40,170 25,210 40,766 Trade and other payables (6,493) (49,919) (6,645) (58,555) 63,516 (9,749) 20,513 (17,789) Sensitivity analysis A reasonable possible strengthening/(weakening) of the above currencies against the respective functional currencies of Group entities at the reporting date would have increased/(decreased) profit or loss (before any tax effects) by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant. Group Profit or loss 2023 2022 $’000 $’000 USD (5% strengthening) 3,176 1,026 RMB (5% strengthening) (487) (889) USD (5% weakening) (3,176) (1,026) RMB (5% weakening) 487 889 Interest rate risk Risk management policy Interest rate risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate because of changes in market interest rates. The Group manages its interest rate exposure by entering into a mixture of fixed rate instruments and variable rate instruments. Notes to the Financial Statements Year ended 31 December 2023 207 ANNUAL REPORT 2023
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