Capital
Risk Management
TheTrustee-Manager employs a mix of debt
and equity for the financing of acquisitions
and enhancement initiatives of the medical
and healthcare assets in the RHT portfolio.
The RHT Trust Deed has set a gearing
limit of 60% with credit rating. As at
31 March 2015, RHT has a net debt
of S$121.9 million with a gearing of
approximately 14%
1
. *RHT may increase
its borrowings by S$294.5 million before
reaching its 35% limit, leaving room for
future growth opportunities.
Post FY2015, RHT secured an Indian Rupee
denominated loan facility from Axis Bank
Limited of approximately S$48.6 million
4
to finance capital expenditure. If fully drawn
upon, it will bring RHT’s gearing ratio to
about 18%.
REFINANCING RISK
In FY2015, a Medium Term Note
Programme (“MTN Programme”) was
established for RHT. This provided an
additional source of debt funding for RHT,
and will serve as one of the means through
which RHT may refinance the loan which
is expiring in October 2015.
INTEREST RATE RISKS
As at 31 March 2015, RHT’s exposure to
interest rates stems wholly from its bank
loans which are pegged to the Singapore
Swap Offer Rate (SOR). As the majority
of RHT's loans is in Singapore dollars and
the amount is modest, interest rate
movements are not expected to have a
large impact on RHT. We will continue
to monitor the cost of entering into
interest rate swaps to mitigate the interest
rate risks.
CURRENCY RISK
RHT currently has all of its assets and
operations within India, thereby deriving
all its revenue from India. At the same
time, the distributions to unitholders are
paid out in Singapore dollars. As such
there is an element of currency risk
which is faced by unitholders. To provide
some certainty to unitholders, the
Trustee-Manager has adopted a policy of
hedging the anticipated amount of
cashflows coming from India to Singapore.
Distributions are paid out to unitholders
on a semi-annual basis and forward
contracts locking in the currency conversion
rates are entered into one year before
the cashflows are repatriated from India
to Singapore. This mitigates the risk of
any Indian rupee volatility in the period
before income is repatriated to Singapore.
DISTRIBUTION POLICY
It is RHT’s current policy to distribute
at least 90% of its Distributable Income.
For the last three financial years,
RHT had distributed 100% of its
Distributable Income. However, the
Trustee-Manager periodically reviews its
Distribution Policy.
1
defined as Net Debt, being total loans and borrowings less cash and cash equivalents. Gearing is calculated as Net Debt divided by sum of Net Assets and Net Debt.
2
as at 31 March 2015, gross of upfront fees.
3
Interest Coverage Ratio is defined as the ratio between EBITDA divided by Financial Expense.
4
based on an exchange rate of SGD1=INR 47.37 as at 27 May 2015 as used in the SGXNET announcement.
*
The Trustee-Manager has a target gearing limit of 35% without credit rating.
AMPLE DEBT HEADROOM
FOR GROWTH
1
13.6%
35%
60%
Headroom of
S$1,038.1m
Headroom of
S$294.5m
FY15
DEBT HEADROOM (S$M)
GEARING (%)
S$121.9m
DEBT MATURITY
PROFILE
2
WEIGHTED AVERAGE DEBT MATURITY
PROFILE OF 1.4 YEARS
REPAYABLE IN
< 1 YEAR
REPAYABLE IN
> 1 YEAR
72
60
48
36
24
12
0
(S$M)
66.4
61.2
INTEREST COVERAGE
RATIO
3
INTEREST COVERAGE RATIO
FY13
FY14
FY15
36
30
24
18
12
6
0
RATIO
(X)
30.1
27.4
13.5
RELIGARE HEALTH TRUST
8
