NOTES TO THE FINANCIAL STATEMENTS
25 Financial instruments (Cont’d)
Sensitivity analysis for variable rate instruments
As at 31 December 2014 and 2013, a change of 100 basis points in interest rates would have increased/(decreased)
Unitholders’ funds and total return by the amounts shown below:
Total Return
Unitholders’
Funds
Group and Trust
100 bp
increase
100 bp
decrease
100 bp
increase
100 bp
decrease
$’000
$’000
$’000
$’000
31 December 2014
Variable rate instruments
– Interest expense
(3,000)
2,213
(3,000)
2,213
Interest rate swaps
– Interest expense
2,500
(1,845)
2,500
(1,845)
– Change in fair value of financial derivatives
3,455
(2,591)
3,455
(2,591)
2,955
(2,223)
2,955
(2,223)
31 December 2013
Variable rate instruments
– Interest expense
(3,122)
691
(3,122)
691
Interest rate swaps
– Interest expense
2,500
(553)
2,500
(553)
– Change in fair value of financial derivatives
5,903
(2,455)
5,903
(2,455)
5,281
(2,317)
5,281
(2,317)
The Group does not designate interest rate swaps as hedging instruments under a cash flow hedge accounting
model. Therefore a change in interest rates at the reporting date would not affect Unitholders’ funds.
Currency risk
At present, all transactions involving the Group are denominated in Singapore dollars and the Group faces no
currency risk. If this were to change in the future, the Manager would consider currency hedging to the extent
appropriate.
Liquidity risk
The Manager monitors the liquidity risk of the Group and maintains a level of cash and cash equivalents deemed
adequate by management to finance the Group’s operations. Typically, the Group ensures that it has sufficient
cash on demand to meet expected operational expenses for a reasonable period, including the servicing of
financial obligations; this excludes the potential impact of extreme circumstances that cannot be reasonably
predicted, such as natural disasters.
The Manager monitors and observes the CIS Code issued by the MAS concerning limits on total borrowings.
CAMBRIDGE INDUSTRIAL TRUST | ANNUAL REPORT 2014
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