Page 139 - ar2013

Financial
Statements
137 Management Reports
26 CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued)
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
2013
Cash and cash equivalents 167 86 253
2012
Cash and cash equivalents 241 15,308 15,549
Trust
2013
Loans to subsidiaries 315,480 – 315,480
Non-trade amounts due from subsidiaries 159,677 – 159,677
Cash and cash equivalents 11 71 82
475,168 71 475,239
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
Sensitivity analysis
A 10% strengthening of Singapore dollar against the US dollar and RMB at the reporting date would increase/
(decrease) total return after tax by the amounts shown below. This analysis assumes that all other variables, in
particular interest rates, remain constant. The analysis is performed on the same basis for 2012.