ITF

38. Financial instruments (continued) (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 objective is to control the exposure to foreign exchange fluctuations 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 £45,300,000 (2024: £45,600,000) at an average exchange rate of US$1.3235/£1 for hedges expiring in 2026 and US$1.3368 for hedges expiring in 2027 (2024: US$1.2746/£1 expiring in 2025 and US$1.2985 expiring in 2026). These contracts mature at various dates throughout 2026 and 2027 to match budgeted Sterling expenditure. The fair value of these hedges, based on the mark to market valuations of the contracts at the balance sheet date, using prices on that date to purchase the same forward contracts, was an asset of $671,000 (2024: liability of $581,000) with a corresponding entry in reserves. A movement of $0.01 in the mark to market valuation would result in a change in the fair value of $453,000 on the Sterling hedges contracts (2024: $456,000). The group's exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial instruments except derivatives when it is based on notional amounts: 31 December 2025 Sterling $000 Euro $000 US Dollar $000 Other $000 Total $000 Cash at bank and in hand 1,979 4,578 5,257 354 12,168 Trade receivables 486 5,802 20,161 - 26,449 Investments - - 30,015 - 30,015 Trade payables (3,008) (781) (15,837) (6) (19,632) Forward exchange contracts - - 727 - 727 Net exposure (543) 9,599 40,323 348 49,727 31 December 2024 Sterling $000 Euro $000 US Dollar $000 Other $000 Total $000 Cash at bank and in hand 367 824 7,292 378 8,861 Trade receivables 818 12,573 16,493 46 29,930 Investments - - 22,827 - 22,827 Trade payables (2,727) (1,446) (3,455) (18) (7,646) Forward exchange contracts - - (918) - (918) Net exposure (1,542) 11,951 42,239 406 53,054 Price risk The group's exposure to equity securities price risk arises from investments held by the group and classified in the balance sheet as fair value through profit or loss. To manage its price risk arising from investments, the group diversifies its portfolio in accordance with the limits set by the group. All the group's investments are publicly traded. Sensitivity Increases and decreases in the world equity markets have a material effect on the group's post-tax surplus for any year. The group has identified the MSCI World Index to be reflective of movements in world equity prices. Based on recent volatility an increase of 15.2% and a decrease of 10.1% are reasonably possible for which the impact on the group's post-tax surplus is estimated to be: MSCI increase 15.2% - 2025 post-tax deficit decreases by $2,250,000 (2024: +17.1%, $3,861,000 decrease); MSCI decrease 10.1% - 2025 post-tax deficit increases by $1,495,000 (2024: -11.4%, $2,575,000 increase). These sensitivities are based on the carrying value of equity-exposed investments at the reporting date and assume that all other variables remain constant. ITF Trust Annual Report and Consolidated Financial Statements 41

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