174
FRASERS HOSPITALITY TRUST ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 20 JUNE 2014 (DATE OF CONSTITUTION) TO 30 SEPTEMBER 2015
18.
DERIVATIVE FINANCIAL INSTRUMENTS
Fair Values
30 Sep 2015
Year of maturity
Contract/
Nominal
Amount
Assets
Liabilities
$’000
$’000
$’000
FHT and FH-REIT Group
Non-hedging instrument
Currency forward (sell)
2015 – 2016 AUD 6,920
126
–
Currency forward (sell)
2015 – 2016
GBP 4,097
–
(296)
Currency forward (sell)
2015 – 2016 JPY 311,844
–
(175)
Currency forward (sell)
2016 MYR 5,200
70
–
Currency forward (buy)
2015
AUD 730
–
(13)
Cross-currency swap
2019 JPY 8,850,130
2,032
–
2,228
(484)
Cash flow hedge
Interest rate swaps
2017 – 2019 SGD 437,743
6,599
–
Total
8,827
(484)
Current
196
(484)
Non-current
8,631
–
Total
8,827
(484)
(a)
Currency forwards (non-hedging instrument)
Forward currency contracts are used by FH-REIT Group to hedge foreign currency risks arising from
the receipts of distributions and interest income from overseas subsidiaries where certainty exists
over the amounts at the time of hedging.
(b)
Interest rate swaps and cross-currency swap are used by FH-REIT Group to hedge its exposure to
interest rate risk associated with movements in interest rates which impact the borrowing costs of
FH-REIT Group.
(i)
Cross-currency swap (non-hedging instrument)
During the current financial period, FH-REIT entered into a cross-currency swap to exchange
the floating-rate Singapore dollar loan of SGD 108.8 million for fixed-rate Japanese Yen loan.
(ii)
Interest rate swaps (cash flow hedge)
FH-REIT entered into interest rate swaps to exchange the floating-rate interest on Singapore
dollar denominated loans into fixed rate loans. These interest rate swaps have been assessed
to be highly effective and no ineffectiveness has been recognised in the Statements of Total
Return.
(c)
As at 30 September 2015, the fixed interest rates of the outstanding interest rate swaps and cross-
currency swap range between 1.080% to 1.695% while the floating interest rates are linked to the
Singapore dollar SOR as applicable to FH-REIT Group’s borrowings.
