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Indicators & objectives
Objectives
Our capital management objectives include:
employing the appropriate strategy to manage
currency risk;
diversifying our funding sources;
maintaining a healthy balance sheet by keeping
gearing at a sensible level; and
ensuring suffcient liquidity to meet our
business requirements.
Currency Risk
a-iTrust is exposed to foreign currency risk as a result of
having operations in two countries. Whilst the distribution
to unitholders is made in Singapore Dollar (reporting
currency), the Trust's income is earned in Indian Rupee
(functional currency). Please see the section on income
hedging strategy for detailed explanation of measures
used to lower exposure of distributable income to
currency risk.
The currency exposure as a result of borrowing in
Singapore Dollar to fund developments and/or
acquisitions in India is managed through currency swaps.
In addition, our policy is to hedge at least 50% of the
Indicators
As at 31 March 2014
Gearing ratio
22%
1
Interest service coverage
(EBITDA
2
/ Interest expenses)
4.8 times
(FY13/14)
Percentage of fxed rate debt
100%
Secured borrowings / Asset value 3.0%
3
Effective weighted average cost
of debt (Net of tax shield benefts)
6.1%
1
Ratio of gross borrowings to the value of Trust property.
2
Earnings before interest, tax, depreciation & amortisation (excluding gains/losses from foreign exchange translation and mark-to-market revaluation of forward foreign exchange contracts).
3
Excluding non-controlling interests.
4
Value-at-risk is calculated by multiplying (i) the percentage of Singapore Dollar borrowings with (ii) gearing ratio. 50% X 40% = 20%.
5
Value-at-risk is calculated by multiplying (i) the percentage of Singapore Dollar borrowings
with (ii) gearing ratio. 35% X 22% = 8%.
Trust's borrowings to Indian Rupee. This limits the
maximum value-at-risk to currency movement at 20%
4
as
a-iTrust has a gearing limit of 40% without a credit rating.
As at 31 March 2014, 8% of the Trust's asset value was
exposed to currency risk
5
. We will periodically review the
policy, and make adjustments if changes in prevailing
market conditions warrant it.
To address the short term operating requirements for
currencies other than Indian Rupee, we will buy or sell
foreign currency at the prevailing spot rate.
1
Funding strategy
Our strategy is to diversify funding sources from
fnancial institutions and capital markets to reduce
a-iTrust's reliance on any single source of fund. We have
established a S$500 million MediumTerm Note (“MTN”)
programme and our principal bankers include DBS Bank,
Citibank, HSBC and Standard Chartered Bank. As at 31
March 2014, we have total gross borrowings
of S$235
million, comprising S$90 million of MTN notes and S$145
million of bilateral loans.
Our approach to equity raising is predicated on
maintaining a strong balance sheet by keeping the Trust's
gearing ratio at a sensible level. We will carefully consider
the impact on a-iTrust’s DPU and net asset value before
making any decision on raising equity.
We lower our borrowing cost by having a mix of Indian
Rupee and Singapore Dollar borrowings. As at 31 March
2014, 65% of our gross borrowings was denominated
in Indian Rupee with the remaining 35% in Singapore
Dollar. The weighted average interest cost of Singapore
Dollar and Indian Rupee borrowings were 3.5% and
8.7% respectively as at 31 March 2014. a-iTrust’s overall
weighted average cost of debt (net of tax shield benefts)
was 6.1% as at 31 March 2014.
We do not borrow Indian Rupee loans onshore in India
at present. This is because, based on current market
conditions, the cost of fully-hedged borrowing in Singapore
Dollar is lower than borrowing directly in Indian Rupee.
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