NOTES TO THE
FINANCIAL STATEMENTS
Year ended 31 December 2014
24 FINANCIAL INSTRUMENTS (CONT’D)
Capital management
The Manager reviews the Group’s and the Trust’s capital structure regularly and uses a combination of debt and
equity to fund acquisition and asset enhancement projects.
The objectives of the Manager are to:
(a)
maintain a strong balance sheet by adopting and maintaining an optimal gearing ratio;
(b)
secure diversified funding sources from financial institutions and/or capital markets; and
(c)
adopt a proactive financial risk management strategy to manage financial risks related to interest rate and
foreign currency fluctuations.
The Manager seeks to maintain an optimal combination of debt and equity in order to minimise the cost of capital
and maximise returns to Unitholders. The Manager also monitors the externally imposed capital requirements
closely and ensures the capital structure adopted comply with these requirements.
The Group is subjected to the Aggregate Leverage limit as defined in the Property Funds Appendix of the CIS
Code. The CIS Code stipulates that the total borrowings (the “Aggregate Leverage”) of a property fund should not
exceed 35.0% of the fund’s Deposited Property. The Aggregate Leverage of a property fund may exceed 35.0%
of the fund’s Deposited Property (up to a maximum of 60.0%) only 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. The property fund should continue
to maintain and disclose a credit rating so long as its Aggregate Leverage exceeds 35.0% of the fund’s Deposited
Property.
During the financial year, the Group maintained a credit rating of BBB and Baa2 from Fitch Inc. and Moody’s
respectively. The Aggregate Leverage of the Group as at 31 December 2014 was 35.2% (2013: 33.0%) of the
Group’s Deposited Property. This complied with the stipulated Aggregate Leverage limit.
During the year, the Group has complied with all externally imposed capital requirements.
There were no changes in the Group’s approach to capital management during the year.
140
PA R K WAY L I F E R E I T
