186
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
27.
FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D)
(d)
Level 3 fair value measurements (cont’d)
(ii)
Movement in Level 3 assets measured at fair value
The movements of Level 3 assets, which comprise investment properties, have been disclosed in
Note 12.
(iii)
Valuation policies and procedures
The significant non-financial assets of the Stapled Group categorised within Level 3 of the fair
value hierarchy are investment properties. Generally, the fair values of investment properties are
determined annually by independent professional valuers.
The independent professional valuers are experts who possess the relevant credentials and
knowledge on the subject of property valuation, valuation methodologies and FRS 113 fair value
measurement guidance to perform the valuation. For valuations performed by the independent
professional valuers, the appropriateness of the valuation methodologies and assumptions
adopted are reviewed along with the appropriateness and reliability of the inputs (including those
developed internally by the Stapled Group) used in the valuations.
In selecting the appropriate valuation models and inputs to be adopted for each valuation that
uses significant non-observable inputs, the independent professional valuers are required to
recalibrate the valuation models and inputs to actual market transactions (which may include
transactions entered into by the Stapled Group with third parties as appropriate) that are relevant
to the valuation if such information are reasonably available. For valuations that are sensitive to
the unobservable inputs used, the independent professional valuers are required, to the extent
practicable, to use a minimum of two valuation approaches to allow for cross-checks.
Significant changes in fair value measurements from period to period are evaluated for
reasonableness. Key drivers of the changes are identified and assessed for reasonableness against
relevant information from independent sources, or internal sources if necessary and appropriate.
In accordance with the Stapled Group’s reporting policies, the valuation process and the results
of the independent valuations and directors’ valuation are reviewed at least once a year by the
Board Executive Committee and the Audit, Risk and Compliance Committee before the results are
presented to the Board of Directors for approval.
(e)
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year (including
trade and other receivables, cash and cash equivalents, security deposits and trade and other payables)
are assumed to approximate their fair values due to their short term nature.
The carrying amount of non-current variable-rate-interest-bearing borrowings approximate their fair
values as they are floating rate instruments that are re-priced to market interest rate on or near the
reporting date.
(f)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are not reasonable approximation of fair value
Rental deposits payable (non-current)
No disclosure of fair value is made for rental deposits payable as it is not practicable to determine their
fair values with sufficient reliability since the balances have no fixed terms of repayment. The Stapled
Group does not anticipate that the carrying amounts recorded at the end of the financial year would be
significantly different from the values that would eventually be received or settled.
