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CapitaLand Mall Trust
Annual Report 2015
25 Financial risk management
(continued)
Liquidity risk
The Manager monitors and maintains a level of cash and cash equivalents deemed adequate by management
to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. Typically, the Group
ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days,
including the servicing of financial obligations.
Market risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective
of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return on risk.
Foreign currency risk
The Group is exposed to foreign currency risk on interest-bearing borrowings that were denominated in a
currency other than the functional currency of the Group. The currencies giving rise to this risk are United
States Dollars (“USD”), Hong Kong Dollars (“HKD”) and Japanese Yen (“JPY”). The Group hedges this risk
by entering into cross currency swaps with notional contract amounts of USD400.0 million, HKD1.15 billion,
JPY10.0 billion, HKD885.0 million, JPY10.0 billion, JPY5.0 billion, HKD650.0 million, HKD1.104 billion and
JPY8.6 billion. All sums payable in respect of the cross currency swaps are guaranteed by the Trustee.
Sensitivity analysis
A 10.0% strengthening of Singapore dollar against the following foreign currency at the reporting date would
decrease the Statement of Total Return and Unitholders’ Funds as at 31 December 2015 by the amounts
shown below. This analysis assumes that all other variables, in particular, interest rates, remain constant.
Statement of
Total Return
$’000
Unitholders’
Funds
$’000
Group
2015
USD
–
(3,682)
HKD
–
(8,463)
JPY
–
(3,196)
–
(15,341)
2014
USD
–
(5,918)
HKD
–
(4,618)
JPY
–
(2,312)
–
(12,848)
A 10.0% weakening of Singapore dollar against the above currency would have had an equal but opposite
effect on the above currency to the amounts shown above, on the basis that all other variables remain constant.
Notes to the Financial Statements
Year ended 31 December 2015
