Notes to the Financial Statements For the financial year ended 31 December 2025 Notes to the Financial Statements For the financial year ended 31 December 2025 23 FINANCIAL INSTRUMENTS (continued) Liquidity risk (continued) Exposure to liquidity risk (continued) The Group has several bank loans subject to various covenants. A future breach of any covenant may require the Group to repay the loan earlier than indicated in the table above. The covenants are monitored on a regular basis by the Treasury department and regularly reported to management to ensure compliance with the covenants. The interest payments on variable interest rate loans and borrowings reflect market forward interest rates at the period end and these amounts may change as market interest rates change. Except for these financial liabilities, it is not expected that the cash flows included in the maturity analysis above could occur significantly earlier, or at significantly different amounts. In addition to the above table, the Group has exposure to liquidity risk from financial guarantees issued to certain financial institutions, in respect of banking facilities drawn by its subsidiaries and joint ventures of $2,614 million (2024: $2,398.1 million). At reporting date, the Group does not consider that it is probable that a claim will be made against the Group under the financial guarantee contracts. Accordingly, the Group does not expect any net cash outflows resulting from the financial guarantee contracts. See Note 24 for further information. Market risk Market risk is the risk that changes in market prices, such as foreign currency exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. When necessary, the Group uses financial instruments such as foreign currency borrowings for the purposes of managing certain financial risks and does not engage in speculation. 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”), Chinese Renminbi (“RMB”) and Hong Kong Dollar (“HKD”). 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: 2025 2024 USD RMB HKD USD RMB HKD $’000 $’000 $’000 $’000 $’000 $’000 Group Cash and cash equivalents 2,351 253 7,621 2,697 326 25 Trade and other receivables 23,984 – – 25,292 32,331 – Trade and other payables (5,890) (64,460) (118) (6,666) (67,505) – Loans and borrowings – (106,192) (127,073) – (20,407) (134,096) 20,445 (170,399) (119,570) 21,323 (55,255) (134,071) 23. FINANCIAL INSTRUMENTS (continued) Market risk (continued) Currency risk (continued) Sensitivity analysis for foreign currency risk 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 2025 2024 $’000 $’000 USD (5% strengthening) 1,022 1,066 RMB (5% strengthening) (8,520) (2,763) HKD (5% strengthening) (5,979) (6,704) USD (5% weakening) (1,022) (1,066) RMB (5% weakening) 8,520 2,763 HKD (5% weakening) 5,979 6,704 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. Exposure to interest rate risk At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was as follows: Group Company Nominal amount Nominal amount Note 2025 2024 2025 2024 $’000 $’000 $’000 $’000 Fixed rate instruments Loans to joint ventures 7 27,378 27,378 – – Loans to subsidiaries 26 – – – 406,806 Cash and cash equivalents 11 49,995 47,381 873 919 Loans and borrowings 12 (404,091) (98,760) (77,709) (77,632) Trade and other payables 13 – (35,599) – – Lease liabilities 27 (192,171) (53,222) (1,268) (1,569) (518,889) (112,822) (78,104) 328,524 OVERVIEW PERFORMANCE SUSTAINABILITY FINANCIALS APPENDIX 227 226 PERENNIAL HOLDINGS PRIVATE LIMITED ANNUAL REPORT 2025
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