Notes to the financial statements
Year ended 31 March 2016
31 Financial risk management (continued)
Currency risk
As at 31 March 2016, the Group’s exposure to fluctuations in foreign currency rates relates primarily to its short term
bank borrowings, medium term notes and CCS that are denominated in a currency other than the functional currency of
the Trust as well as investments in non-Singapore properties. The currencies giving rise to this risk are Australian Dollars
(AUD), Japanese Yen (JPY) and Hong Kong Dollar (HKD).
In relation to foreign currency risk arising from JPY and HKD denominated medium term notes, the Group and the Trust
had concurrently entered into CCS to hedge the risk (Note 14).
In relation to foreign currency risk arising from investments in non-Singapore properties, the Group and the Trust had
borrowed in the foreign currency of underlying investments and entered into CCS to achieve a natural hedge. The Group and
the Trust had also entered into forward exchange contracts to hedge the cash flows from overseas investments (Note 14).
Sensitivity analysis
A 5% (2015: 5%) strengthening of Singapore dollars against AUD, JPY and HKD at reporting date would increase/
(decrease) total return (before any tax effects) by the amounts shown in the table below. This analysis assumes that all
other variables, in particular interest rates, remain constant.
Increase/(decrease) in total return
AUD
HKD
JPY
$’000
$’000
$’000
Group
2016
Short term bank borrowings
10,637
–
–
Medium term notes
–
15,312
14,760
Cross currency swaps
16,592 (17,044)
(16,284)
Forward exchange contracts
389
–
–
Interest rate swaps
403
–
–
28,021
(1,732)
(1,524)
2015
Medium term notes
–
11,151
14,071
Cross currency swaps
–
(12,402)
(16,136)
–
(1,251)
(2,065)
Trust
2016
Short term bank borrowings
10,637
–
–
Medium term notes
–
15,312
14,760
Cross currency swaps
16,592 (17,044)
(16,284)
Forward exchange contracts
389
–
–
27,618
(1,732)
(1,524)
2015
Medium term notes
–
11,151
14,071
Cross currency swaps
–
(12,402)
(16,136)
–
(1,251)
(2,065)
A 5% (2015: 5%) weakening of Singapore dollars against AUD, JPY and HKD would have had the equal but opposite
effect on the amounts shown above, on the basis that all other variables remain constant.
.201
A-REIT ANNUAL REPORT
2015/2016
