NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2025 21 FINANCIAL RISK MANAGEMENT (CONT’D) Capital management (cont’d) The Group seeks to maintain a balance between the higher returns that might be possible with higher level of borrowings and the advantages and security afforded by a sound capital position. The Manager actively monitors the term of each loan facility, the weighted average cost of debt, and variable debt as a proportion of overall debt outstanding. The Manager also monitors the debt covenants on an ongoing basis and ensures there is sufficient cash available to make the payments under the loan agreement. During the year ended 31 December 2023, the Group’s breach of a financial covenant imposed by the Group’s lenders limited the Group’s ability to raise further debt funding. These resulted in the restructuring of existing credit facilities through the Recapitalisation Plan and Master Restructuring Agreement. On 23 December 2025, the MRA Concessions were also effected. Details pertinent to the Group’s capital management are disclosed in Notes 2.3, 4, 6, and 9. Overview of risk management The Group’s activities expose it to market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk in the normal course of its business. The Group’s overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the Group’s financial performance. The Board of Directors of the Manager is responsible for setting the objectives and underlying principles of financial risk management for the Group. This is supported by comprehensive internal processes and procedures which are formalised in the Manager’s organisational and reporting structure, operating manuals and delegation of authority guidelines. Market risk Foreign Currency risk Foreign currency risk arises when transactions are denominated in a currency other than the functional currency of the Group, and such changes will impact the Group’s profit. The Group has transactional currency exposures arising from cash and cash equivalents and trade and other payables that are denominated in a currency other than its functional currency. These transactions are mainly denominated in Singapore Dollars (“SGD”). Where appropriate, based on the prevailing market conditions, the Group may adopt suitable hedging strategies to minimise any foreign exchange risk. The exposures to currency risk of the Group and the Trust are as follows: Group Trust 2025 US$’000 2024 US$’000 2025 US$’000 2024 US$’000 Cash and cash equivalents 889 1,014 825 991 Trade and other payables (1,446) (600) (1,370) (525) Net assets (557) 414 (545) 466 A 5.0% weakening of USD against the following foreign currency at the reporting date would increase the profit or loss by the amounts shown below. This sensitivity analysis assumes that all other variables, in particular, interest rates, remain constant. / 139 / MANULIFE US REIT
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