FRASERS HOSPITALITY TRUST ANNUAL REPORT 2015
205
NOTES TO THE FINANCIAL STATEMENTS
30 SEPTEMBER 2015
9.
FINANCIAL RISK MANAGEMENT
The Company is exposed to financial risks arising from its operations and the use of financial instruments. The
key financial risks include credit risk and liquidity risk.
The Company has risk management policies and guidelines governing all investments, which set out its overall
business strategies, its tolerance for risk and its general risk management philosophy and has established
processes to monitor and control hedging transactions in a timely and accurate manner. All investment
opportunities are reviewed regularly by the Board of Directors to ensure that the Company’s policy guidelines
are adhered to.
(a)
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counter party
default on its obligations.
At the balance sheet date, the Company’s maximum exposure to credit risk in the event that the
counterparties fail to perform their obligations is represented by the carrying amount of each class of
financial assets recognised in the balance sheet.
As at 30 September 2015, all (2014: 100%) of the Company’s receivables were due from immediate
holding company. The Directors believe that there is no significant credit risk as this company is of good
credit standing.
(b)
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting financial obligations due to
a shortage of funds.
Consequently, the Company is dependent on the immediate holding company to provide funds to meet
its obligations as and when they fall due.
The Company’s financial assets and liabilities at the balance sheet date as presented in the Company’s
balance sheet represent the contractual undiscounted cash flow due within one year.
10.
FAIR VALUE OF ASSETS AND LIABILITIES
Determination of fair value
The Company does not have any assets and liabilities that are carried at fair value at the end of the reporting
period.
Fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying
amounts are reasonable approximation of fair value
Other receivables and payables
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to
their short term nature.
