Page 129 - Report_to_Unitholders_2012

Notes to the Financial Statements
26. Capital and financial risk management (Cont'd)
Financial risk management (Cont'd)
Statement of total return Unitholders’ funds
100 bp 100 bp 100 bp 100 bp
increase decrease increase decrease
$’million $’million $’million $’million
Group and Trust
2012
Interest rate swaps – – 2.4 (2.4)
Variable rate instruments (1.5) 1.5 – –
Cash flow sensitivity (net) (1.5) 1.5 2.4 (2.4)
2011
Interest rate swaps – – 2.8 (2.8)
Variable rate instruments (1.3) 1.3 – –
Cash flow sensitivity (net) (1.3) 1.3 2.8 (2.8)
Foreign currency risk
The Group is exposed to foreign currency risk on cash holdings and operating expenses that are denominated
in a currency other than the respective functional currencies of the Group entities. The currency giving rise to
this risk is primarily the United States dollar (“US dollar”) and Chinese Renminbi (“RMB”).
As the Trust intends to be a long term investor in China, the Manager has taken a view not to hedge the RMB
equity exposure arising from its investments in China unless certain risks are specifically identified. The Manager’s
strategy is to achieve a natural hedge through local RMB financing and any non-RMB denominated loan will
be hedged into RMB where possible, to protect the going concern of the Trust in the event of large currency
fluctuation. However, the Manager will hedge the RMB cash flow from operations if it is determined with certainty
that they are to be remitted back to Singapore for distribution purposes.
The Group’s and Trust’s exposures to foreign currency are as follows:
US Dollars RMB Total
S$’000 S$’000 S$’000
Group
2012
Cash and cash equivalents 241 15,308 15,547
2011
Cash and cash equivalents 3,755 – 3,755
Trust
2012
Loans to subsidiaries 306,544 – 306,544
Non-trade amounts due from subsidiaries 157,748 – 157,748
Cash and cash equivalents 71 15,295 15,366
464,363 15,295 479,658
2011
Loans to subsidiaries 325,054 – 325,054
Non-trade amounts due from subsidiaries 175,774 – 175,774
Cash and cash equivalents 675 – 675
501,503 – 501,503
CapitaRETAIL china trust | Report to UNITHOLDERS 2012 127