ITF

ITF Trust Annual Report and Financial Statements 2022 37 In hedges of future cash flows, ineffec veness may arise if the ming of the forecast transac on changes from what was originally es mated, or if there are changes in the credit risk of the deriva ve counterparty or country in which they or the group are based. There was no ineffec veness during 2022 or 2021 in rela on to foreign exchange hedges. e) Market risk Financial risk management Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the group's income or the value of its holdings of financial instruments. The group's financial risk management objec ve is to control the exposure to foreign exchange fluctua ons especially in Sterling and to a lesser extent the Euro and Australian Dollar, against the US Dollar. Sterling: The group has entered into forward currency contracts to buy £37,300,000 (2021: £23,840,000) at an average exchange rate of US$1.2915/£1 for hedges expiring in 2023 and US$1.1907 for hedges expiring in 2024 (2021: US$1.3727/£1 expiring in 2022 and US$1.3537 expiring in 2023). These contracts mature at various dates throughout 2023 and 2024 to match budgeted Sterling expenditure. The fair value of these hedges, based on the mark to market valua ons of the contracts at the balance sheet date, using prices on that date to purchase the same forward contracts, was a liability of$1,897,000 (2021: liability of $163,000) with a corresponding entry in reserves. A movement of $0.01 in the mark to market valua on would result in a change in the fair value of $373,000 on the Sterling hedges contracts. The group's exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial instruments except deriva ves when it is based on no onal amounts: Sterling $000 Euro $000 US Dollar $000 Other $000 Total $000 31 December 2022 Cash at bank and in hand 197 772 16,156 2,194 19,319 Trade receivables 524 694 14,697 78 15,993 Investments - - 40,679 - 40,679 Trade payables (2,450) (50) (6,869) 66 (9,303) Forward exchange contracts - - (1,814) - (1,814) Net exposure (1,729) 1,416 62,849 2,338 64,874 Sterling $000 Euro $000 US Dollar $000 Other $000 Total $000 31 December 2021 Cash at bank and in hand 1,777 349 10,488 2,337 14,951 Trade receivables 285 991 7,451 515 9,242 Investments - - 65,365 - 65,365 Trade payables (1,509) (243) (4,493) (30) (6,275) Forward exchange contracts - - (163) - (163) Net exposure 553 1,097 78,648 2,822 83,120

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