184 CapitaLand Ascendas REIT Notes to the Financial Statements 31 December 2025 28. Financial Risk Management (continued) (b) Market risk (continued) (ii) Interest rate risk (continued) . Hedge accounting The Group determines the economic relationship between the fixed rate borrowings and the interest rate swap and between borrowings denominated in foreign currencies and cross currency swap, by matching the critical terms of the hedging instrument with the terms of the hedged item. The hedge ratio is determined to be 1:1. Other than late designation of hedge accounting for certain hedged items and hedging instruments, there were no expected sources of ineffectiveness on the Group’s cash flow hedge as the critical terms of the hedging instrument swap match exactly with the terms of the hedged item. Movement in cash flow hedge reserve: Group Trust 2025 $’000 2024 $’000 2025 $’000 2024 $’000 At the beginning of the financial year (3,621) (28,301) (15,262) (28,301) L oss / (gain) arising from changes in fair value of hedging instrument (64,604) 24,680 (40,023) 13,039 At the end of the financial year (68,225) (3,621) (55,285) (15,262) The effects of applying hedge accounting on the Group’s and Trust’s Statements of Financial Position and Consolidated Statement of Total Return as follows: Cash flow hedge Group Trust 2025 2024 2025 2024 Hedged item Floating rate borrowings Carrying amount of hedged item ($’000) 3,070,176 1,418,426 1,329,010 774,261 A ccumulated fair value adjustments on the hedged item ($’000) (56,217) (3,621) (44,782) (15,262) L ine item in the Statements of Financial Position that includes the hedged item Loans and borrowings Hedging instrument Receive variable/pay fixed interest rate swap A ccumulated fair value adjustments on the hedging instrument ($’000) (80,101) (3,621) (43,701) (15,262) L ine item in the Statements of Financial Position that includes the hedging instrument Derivative assets and liabilities Amount of hedge ineffectiveness ($’000) 24,965 – – – L ine item in the Consolidated Statement of Total Return in which hedge ineffectiveness is included Net change in fair value of financial derivatives Hedged item HKD-denominated fixed rate borrowings Carrying amount of hedged item ($’000) 511,187 – 511,187 – A ccumulated fair value adjustments on the hedged item ($’000) (11,584) – (11,584) – L ine item in the Statements of Financial Position that includes the hedged item Non-current loan and borrowings Hedging instrument Receive fixed/pay fixed cross currency swaps A ccumulated fair value adjustments on the hedging instrument ($’000) (11,584) – (11,584) – L ine item in the Statements of Financial Position that includes the hedging instrument Derivative assets and liabilities – Derivative assets and liabilities –
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