FFIINANNANCCIALIAL S STTAATTEEMMEENNTTSS NOTES TO THE FINANCIAL STATEMENTS CONTINUED S 23 FINANCIAL INSTRUMENTS CONTINUED TR Foreign currency exposure continued A The following significant exchange rates applied: TE G I C Average rate Average rate Closing rate Closing rate R 2023 2022 2023 2022 E Euro 1.15 1.17 1.15 1.13 P O R Chinese renminbi 8.75 8.26 9.04 8.36 T US dollar 1.23 1.25 1.27 1.20 Japanese yen 172.09 160.24 179.72 158.72 G O VE Currency risk – sensitivity R The following table demonstrates the sensitivity to a change in the US dollar, Euro, Chinese renminbi and Japanese yen exchange rates, with all other NAN variables held constant, of the Group’s result after tax (due to changes in the fair value of monetary assets and liabilities) assuming that none of the US dollar or Euro exposures are used as hedging instruments. C E Effect on result Effect on result (Increase)/ after tax after tax decrease 2023 2022 F I in rate £m £m NAN US dollar (5%) (7.3) (7.8) C US dollar 5% 8.1 8.6 IAL Euro (5%) 8.5 12.5 S T Euro 5% (9.4) (13.8) A T Chinese renminbi (5%) (0.3) (4.3) E M E Chinese renminbi 5% 0.4 4.8 N T Japanese yen (5%) (3.4) (1.7) S Japanese yen 5% 3.8 1.9 F U $1,085.5m and $335m Senior Secured Notes R T In December 2020, the Group took out First Lien and Second Lien SSNs at $1085.5m and $335m, respectively. The Group has not hedged the SSNs since H E inception. Foreign currency gains/(losses) on these SSNs, due to exchange rate movements between the US dollar and sterling, are charged to the R Consolidated Income Statement within finance income/(expense). A corresponding change in the translated sterling value of these SSNs is reflected in the INF Consolidated Statement of Financial Position. In March 2021, the Group issued additional First Lien SSNs of $98.5m. During the year ended 31 December OR 2023, the Group paid down $121.7m of Second Lien SSNs (year ended 31 December 2022: $40.3m of First Lien SSNs and $143.8m of Second Lien SSNs). M A No hedging relationship has been established in 2022 or 2023. T I $400m Senior Secured Notes ON The Group had designated $400m of SSNs as a hedging instrument in respect of $400m of highly probable forecast US dollar sales that are not already hedged with forward contracts. These SSNs were repaid in December 2020 and hedge accounting was discontinued from the date of repayment. As the forecast transactions are still expected to occur, the amount accumulated in the cash flow hedge reserve at the repayment date has been fully released to the Consolidated Income Statement in line with the profile of the US dollar sales to which it related. Hedge accounting The Group is primarily exposed to US dollar currency variations on the sale of vehicles and parts, and Euro currency variations on the purchase of raw material parts and services. As part of its risk management policy, the Group uses derivative financial instruments in the form of currency forward contracts to manage the cash flow risk resulting from these exchange rate movements. The Group had designated the foreign exchange movement on $400m of repaid SSNs as part of a cash flow hedging relationship, to manage the exchange rate risk resulting from forecast US dollar intercompany sales. Together, these are referred to as cash flow hedges. The cash flow hedges give certainty over the transactional values to be recognised in the Consolidated Income Statement, and in the case of the forward contracts, certainty around the value of cash flows arising as foreign currencies are exchanged at predetermined rates. The Group hedges significant foreign currency exposures as follows: – Firstly, when practical, with currency forward contracts on a reducing basis with the highest coverage in the year immediately following the year-end date. When practicable, the Group places additional hedges on a regular basis so that the percentage of the foreign currency exposure hedged increases as the time to maturity of the foreign currency exposure reduces. – Secondly, the Group has designated $400m of repaid SSNs as a hedging instrument in respect of $400m of highly probable forecast US dollar sales that are not already hedged with forward contracts. These SSNs were repaid in December 2020. The Group currently has no active currency forward contract cash flow hedges beyond 2024. The Group does not mitigate all transactional foreign currency exposures, with the unhedged proportion converted at exchange rates prevailing on the date of the transaction. ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023 180