Objectives
Our key capital management objectives are:
• Employ the appropriate strategy to manage
currency risk;
• Diversify our funding sources;
• Maintain a healthy balance sheet by keeping
gearing at a sensible level; and
• Ensure sufficient liquidity to meet our business
requirements.
!
Currency Risk
The Trust 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 the 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. The Trust’s policy is to hedge at least 50%
of its 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%.
As at 31 March 2015, only 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.
1
Funding strategy
Our strategy is to diversify funding sources
from financial institutions and capital markets
to reduce the Trust’s reliance on any single
source of funding. The Trust has a S$500
million Medium Term Note (“MTN”) programme
and its principal bankers include DBS Bank,
Citibank, Mizuho Bank, HSBC and Standard
Chartered Bank. As at 31 March 2015, the
Trust has total effective borrowings
6
of S$312.1
million, comprising S$136.5 million of MTN
notes and S$175.6 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.
1
Ratio of effective borrowings to the value of deposited properties.
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
Excludes non-controlling interests.
4
Value-at-risk is calculated by multiplying (i) the percentage of Singapore dollar effective borrowings with (ii) gearing ratio. 50% X 40% = 20%.
5
Value-at-risk is calculated by multiplying (i) the percentage of Singapore dollar effective borrowings with (ii) gearing ratio. 33% X 25% = 8%.
6
Calculated by adding/(deducting) derivative financial instruments liabilities/(assets) to/from gross borrowings.
Overview
Key Indicators
Indicator
As at 31 March 2015
Gearing Ratio
25%
1
Interest Service
Coverage (EBITDA
2
/
Interest Expenses)
4.2 times
Percentage of
Indian Rupee Debt
67%
Percentage of Fixed
Rate Debt
100%
Secured Borrowings/
Asset Value
2.0%
3
Effective Weighted
Average Cost of Debt
6.7%
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