Key Financial Indicatorsi As at 31 December 2023 As at 31 December 2022 Total Gross Borrowings S$1,956.4 million S$1,950.9 million Aggregate Leverageii 41.5% 39.6% Net Debt/ EBITDAiii 8.5 8.5 Interest Coverage (times)iv 3.3 3.8 Adjusted Interest Coverage (times)iv 3.1 3.6 Average Term to Maturity (years) 3.5 3.4 Average Cost of Debtv 3.57% 2.97% i All key financial indicators exclude the effect of FRS116 Leases effective from 1 January 2020. ii The aggregate leverage is calculated based on proportionate total borrowings over the deposited properties in accordance with the Property Funds Appendix. The Manager is of the view that the higher aggregate leverage will not have a material impact on the risk profile of CLCT as the aggregate leverage of 41.5% is still within a manageable range in the short-term and the Manager will remain prudent and disciplined in managing the overall leverage profile of CLCT. iii Net Debt refers to the outstanding debt on the balance sheet as at 31 December and EBITDA refers to net income of CLCT Group before fair value changes, non-operational gain and/or loss, interest, tax, depreciation and amortisation. iv Ratio of EBITDA over consolidated interest expenses (excluding finance lease interest expenses under FRS 116) in accordance with MAS guidelines. Ratio is calculated by dividing the trailing 12 months EBITDA by the trailing 12 months interest expense (excluding FRS 116 finance expense). Adjusted Interest Coverage Ratio includes the perpetual securities distributions (per guidelines from the Monetary Authority of Singapore (MAS)). v Ratio of the consolidated interest expense over weighted average borrowings on balance sheet for that financial year. CAPITAL MANAGEMENT OUR OBJECTIVES CLCT adheres to a disciplined and prudent set of capital management principles that focuses on maintaining a healthy balance sheet and ensuring diversified sources of funding. CLCT strives to achieve a balanced debt maturity profile with optimal funding costs. In addition, CLCT emphasises the monitoring of its cash flow position to ensure sufficient liquidity and financial capacity. To mitigate risks associated with interest rates and foreign exchange fluctuations, CLCT adopts proactive monitoring and prudent hedging strategies. STRONG FINANCIAL CAPABILITIES To address refinancing requirements as well as support portfolio growth initiatives and working capital needs, we proactively secure funding from both financial institutions and capital markets. CLCT has ample untapped facilities, including undrawn loan facilities amounting to S$378.0 million. Additionally, there is S$750.0 million available through the S$1 billion Multicurrency Debt Issuance Programme. As at 31 December 2023, CLCT's total outstanding debt stood at approximately S$2.0 billion, with an aggregate leverage of 41.5% and an effective cost of debt at 3.57% per annum. CLCT’s interest coverage ratio (ICR)1 stood at a healthy 3.3 times. Assuming CLCT utilises the maximum 50% limit set by the Monetary Authority of Singapore (MAS), the debt headroom would be approximately S$0.8 billion (RMB4.2 billion) if the acquired asset is fully funded by debt. The ample headroom provides greater flexibility for CLCT to manage its capital structure, capitalise on potential acquisition opportunities as well as withstand any unprecedented business developments that may arise. In 2023, we successfully launched the inaugural RMB600 million (approximately S$112 million) 3.8% per annum Free Trade Zone offshore RMB bonds (FTZ Bonds) due in 2026, marking our first issuance of RMB denominated bonds within the China (Shanghai) Pilot FTZ. With the issuance, CLCT emerged as the first Singapore-based issuer to launch FTZ Bonds. This transaction has allowed us to broaden and diversify our funding sources, expanding our RMB-denominated debt facilities to 20% as at 31 December 2023 (from 13% as at 31 December 2022). In addition, we were able to achieve overall interest savings as we pared down SGDdenominated offshore debts bearing higher interest rates, while increasing our overall natural hedge profile. 1 With effect from 1 January 2022, a new minimum ICR requirement has been implemented by MAS. S-REITs are required to have a minimum Adjusted ICR of 2.5 times before they are allowed to increase their leverage to beyond the prevailing 45% (up to 50%). With Adjusted ICR of 3.1x, CLCT is well above the requirement. FUNDING SOURCE SGD denominated Debts 72% RMB denominated Debtsi 20% MTN 8% i Includes FTZ Bonds and Cross Currency Interest Rate Swap (CCIRS) on SGD loans to RMB. 46 CAPITALAND CHINA TRUST
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