180
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
26.
FINANCIAL RISK MANAGEMENT (CONT’D)
The Audit, Risk and Compliance Committee of the Manager oversees how management monitors compliance
with the Stapled Group’s risk management policies and procedures and reviews the adequacy of the risk
management framework in relation to the risks faced by the Stapled Group. The Audit, Risk and Compliance
Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and adhoc
reviews of risk management controls and procedures, the results of which are reported to the Audit, Risk and
Compliance Committee. The Audit, Risk and Compliance Committee then reports to the Board of Directors
on any inadequacies, deficiencies or matters of concern of which the Audit, Risk and Compliance Committee
becomes aware or that it suspects, arising from its review of the Stapled Group’s risk management policies and
procedures.
(a)
Foreign currency risk
The entities within the Stapled Group normally conduct their business in their respective functional
currencies.
The Stapled Group’s foreign currency risk mainly relates to its AUD, Sterling Pounds (“GBP”), MYR and
JPY denominated investments, distribution income and interest income from its foreign subsidiaries. The
REIT Manager monitors the Stapled Group’s foreign currency exposures on an ongoing basis and limits
its exposure to fluctuations in foreign currency exchange rates by using derivative financial instruments
or other suitable financial products.
It is the Managers’ policy to hedge the Stapled Group’s anticipated foreign currency exposure in respect
of distribution income, net of anticipated payments required in the same currency, from its foreign
subsidiaries at least six months forward by using foreign currency forward exchange contracts.
Investments in overseas assets are hedged naturally to the extent that borrowings are taken up in their
respective foreign currency. The net position of the foreign exchange risks of these investments in
overseas assets are not hedged as such investments are long term in nature.
The Stapled Group’s exposures to foreign currencies are as follows:
Singapore
Dollar
Australian
Dollar
Sterling
Pound
Malaysian
Ringgit
Japanese
Yen
At 30 Sep 2015
SGD’000 SGD’000 SGD’000 SGD’000 SGD’000
FHT and FH-REIT Group
Financial assets
Cash and cash equivalents
91
2
1,206
–
–
Derivative financial instruments
–
126
–
70
2,032
91
128
1,206
70
2,032
Financial liabilities
Derivative financial instruments
(13)
–
(296)
–
(175)
(13)
–
(296)
–
(175)
Net currency exposure
78
128
910
70
1,857
As at 30 September 2015, the Stapled Group had outstanding foreign currency contracts with notional
amount of approximately SGD 21,796,000.
