LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...

Profit forecast and profit projection(XII)TaxesThe Manager has assumed no significant changes in the taxation regulations in Singapore and Indonesiaand others that will have material impact to the Distributable Income in Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009 (see “Taxation”).(XIII)Accounting Standards and PoliciesThe Manager has assumed that there will be no change in applicable accounting standards or otherfinancial reporting requirements that may have a material effect on the total return for Forecast Period2007, Projection Year 2008 and Projection Year 2009.Significant accounting policies adopted by the Manager in the preparation of Forecast Period 2007,Projection Year 2008 and the Projection Year 2009 are set out in “Appendix B—Independent Accountants’Report on the Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date”.(XIV)Forward Exchange RatesThe Trustee, as trustee of LMIR Trust, has entered into a currency hedging arrangement, effective as ofthe Listing Date, to hedge the movements in exchange rates (whether favourable or unfavorable) for aperiod of five years from the Listing Date for the notional amount of the expected Indonesian Rupiah cashflow arising from:(i)(ii)dividends received or receivable from the Singapore SPCs. The income of the Singapore SPCs isderived mainly from interest income earned and dividends from the Indonesian SPCs; andcapital receipts from the redemption of redeemable preference shares in the Target Singapore SPCs.The redemption of the shares is in turn funded from the repayments of the Indonesian Rupiahshareholders’ loans.An affiliate of the Sponsor has guaranteed, on a non-recourse basis to LMIR Trust, all of LMIR Trust’sliabilities and obligations under such hedging arrangement until the Listing Date. The notional amount ofthe expected Indonesian Rupiah cash flow will be hedged at the following forward exchange rates betweenSingapore Dollars and Indonesian Rupiah until the end of Projection Year 2009:Period for which Indonesian Rupiahcash flow is hedgedPayment DateForwardexchange rate(Indonesian Rupiahper S$1.00)Listing Date to1 January 2008 to 31 March 2008 15 May 2008 6,4171 April 2008 to 30 June 2008 15 August 2008 6,5341 July 2008 to 30 September 2008 15 November 2008 6,6471 October 2008 to 31 December 2008 15 February 2009 6,7501 January 2009 to 31 March 2009 15 May 2009 6,8461 April 2009 to 30 June 2009 15 August 2009 6,9481 July 2009 to 30 September 2009 15 November 2009 7,0551 October 2009 to 31 December 2009 15 February 2010 7,169The Manager has assumed that the currency hedging arrangements do not meet the hedge accountingrequirements as stipulated in FRS 39—Financial Instruments: Recognition and Measurement.Consequently, any gain or loss from fair value measurement of the hedging instrument shall berecognised in the Consolidated Statement of Total Return.(XV)Other AssumptionsThe following additional assumptions have been made in preparing the Profit Forecast and ProfitProjection:• There will be no material changes in applicable legislation.• The tax exemption and tax ruling remain valid.107