FORWARD TOGETHER 94 Notes to Condensed Consolidated Financial Information 30 June 2023 30. FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued) The Group entered into derivative financial instruments, including foreign currency forward contracts, put option contract and cross-currency interest rate swap. The fair values of foreign currency forward contracts are measured using quoted prices of similar financial assets adjusted for the transaction expenses. The fair values of cross-currency interest rate swaps are based on financial institution's net present value calculation. The fair value of put option contract is determined using option pricing model based on the present value techniques that reflect both the time value and the intrinsic value of an option. The inputs used in the present value techniques included the estimated share price and discount rate, which involve a significant degree of management judgement where adjustments may be made by management for differences between the share price of investment in associate and the referenced comparable. The summary of significant unobservable inputs to the valuation of financial instruments together with a quantitative sensitivity analysis as at 30 June 2023 and 31 December 2022 is as follows: Valuation technique Key unobservable input Range Sensitivity of the fair value to the input Unlisted financial assets at fair value through other comprehensive income and profit or loss Net asset value Net asset value 2023: US$28,000 to US$663,338,000 2022: US$51,000 to US$1,761,000,000 1% increase (decrease) in net asset value would result in increase (decrease) in fair value by 1% Investment in OCD at fair value Discounted cash flow Cost of equity 2023: 10.25% 2022: 10.25% 1% increase (decrease) in cost of equity would result in (decrease) increase in estimated fair value by 0.06% Put option contract Option pricing model Share price of investment in associate 2023: JPY712 2022: JPY712 5% increase (decrease) in share price of investment in associate would result in (decrease) increase in estimated fair value by (US$1,965,000) and US$2,333,000 Discount rate 2023: 1.45% 2022: 1.45% 10 basis points increase (decrease) in discount rate would result in (decrease) increase in estimated fair value by US$21,000 Redemption value of option Discounted cash flow Net asset fair value 2023: US$1,035,016,000 2022: US$962,485,000 1% increase (decrease) in net asset fair value would result in increase (decrease) in estimated fair value by 1%
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