Notes to the financial statements
Year ended 31 March 2016
30 Financial ratios
Group
2016
2015
%
%
Ratio of expenses to weighted average net asset value
(1)
0.95
1.03
Ratio of expenses to weighted average net asset value
(2)
1.28
1.03
Ratio of expenses to net asset value
(3)
5.02
5.01
Portfolio turnover rate
(4)
0.74
0.21
(1)
The annualised ratio is computed in accordance with guidelines of the Investment Management Association of Singapore. The expenses used in
the computation relate to expenses at the Group level, excluding property related expenses, borrowing costs and performance component of
management fees.
(2)
The annualised ratio is computed in accordance with guidelines of the Investment Management Association of Singapore. The expenses used in the
computation are the same as in (1) above except that performance fee has been included.
(3)
The ratio is computed based on the total property expenses, including all fees and charges paid to the Trustee, the Manager and related parties for
the financial year and as a percentage of net asset value as at the end of the financial year.
(4)
The annualised ratio is computed based on the lesser of purchases or sales of underlying investment properties of the Group expressed as a percentage
of weighted average net asset value.
31 Financial risk management
Capital management
The Group’s and the Trust’s objective when managing capital is to optimise Unitholders’ value through the mix of available
capital sources which include debt, equity and convertible instruments, whilst complying with statutory and constitutional
capital and distribution requirements, maintaining gearing, interest service coverage and other ratios within approved
limits.
The Board of Directors of the Manager (the “Board”) reviews the Group’s and the Trust’s capital management as well as
financing policy regularly so as to optimise the Group’s and the Trust’s funding structure. The Board also monitors the
Group’s and the Trust’s exposure to various risk elements and externally imposed requirements by closely adhering to
clearly established management policies and procedures.
The Group is subject to the aggregate leverage limit as defined in the Property Funds Appendix of the CIS Code. With
effect from 1 January 2016, the CIS Code stipulates that the total borrowings and deferred payments (together the
“Aggregate Leverage”) of a property fund should not exceed 45.0% of the Deposited Property. Prior to 1 January 2016,
the Aggregate Leverage of a property fund may go up to a maximum of 60.0% if a credit rating of the property fund from
Fitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to the public, and such credit rating is maintained
and disclosed for so long as its Aggregate Leverage exceeds the previous lower limit of 35.0% of the Deposited Property.
Notwithstanding the change to a single tier Aggregate Leverage limit, the Trust continues to maintain an issuer rating
of A3 by Moody’s (2015: A3). As at 31 March 2016, the Aggregate Leverage of the Group is 37.3% (2015: 33.5%). The
Group and the Trust are in compliance with the Aggregate Leverage limit of 45.0% (2015: 60.0%) during the financial
year.
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A-REIT ANNUAL REPORT
2015/2016
