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The derivative assets and liabilities relating to foreign exchange risk on commercial transactions have been included in other receivables and other payables and accrued expenses in the statement of financial position. The amount of derivative assets of CHF 5.9 million as of December 31, 2023 (2022: CHF 5.5 million) represents the Group%u2019s exposure to credit risk from derivative financial instruments.Foreign Exchange Risk on Other TransactionsForeign exchange risk arises from committed future cash flows of transactions, such as dividends, acquisitions or disposals, that are denominated in a currency that is not the entity%u2019s functional currency. The Group%u2019s policy is that Group companies are required to hedge their foreign exchange risk exposure arising from such foreign currency cash flows.Foreign Exchange Risk on Monetary assets and LiabilitiesForeign exchange risk arises when recognized monetary assets or liabilities are denominated in a currency that is not the entity%u2019s functional currency. Group companies are not authorized to borrow or hold cash in a currency other than their functional currency unless such borrowings or cash holdings are the result of short-term liquidity management, regulatory restrictions or market inefficiencies.Foreign Currency SensitivityThe following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR and JPY exchange rates, with all other variables held constant. The impact on the Group%u2019s profit before tax is due to changes in carrying amount of monetary assets and liabilities including foreign currency derivatives. The Group%u2019s exposure to foreign currency changes for all other currencies is not material.CurrencyChange foreign currency exchange rate 2023 2022USD +5%/-5% 5.6/(5.6) 8.4/(8.4) EUR +5%/-5% 2.6/(2.6) 3.6/(3.6) JPY +5%/-5% 0.1/(0.1) 0.3/(0.3) (ii) Interest Rate RiskThe Group%u2019s income and operating cash flows are fairly independent of changes in market interest rates. The Group%u2019s cash is subject to changes in interest rates as the majority is contracted short-term at floating interest rates.In terms of borrowing, the treasury policy dictates that, to the extent that the Group is in a net debt position, the external debt with a remaining tenor of over 12 months should at least amount to 66.6% of the maximum forecast net debt over the next 12 months period. Of the long-term debt, at least 50.0% has to be held in fixed interest instruments, which can be achieved using interest rate derivatives. However, given the low level of financial leverage, changes in interest rates do not have a significant impact on the financial standing of the Group.As of December 31, 2023, if variable interest rates on interest-bearing borrowings had been 0.5% higher with all other variables held constant that the Group assumes to be reasonably possible, and the higher interest rates are applied to the borrowings as of December 31, pre-tax profit for the year would have been CHF 2.0 million (2022: CHF 2.4 million) lower. Assuming the higher interest rates increase the yield on interest-bearing cash and financial assets, the impact of the higher interest rates on the Group%u2019s pre-tax profit for the year will be offset by the increased income from these instruments. If interest rates on interest-bearing cash and financial assets had been 0.5% higher with all other variables held constant, and the higher interest rates are applied to the interest-bearing cash DKSH Annual Report 2023 111