132 / 152
notes tothe
financial statements
130
STARHILL global reit ANNUAL REPORT FY 2016/17
The Trust’s exposures to various foreign currencies (expressed in Singapore dollar equivalent), which relate primarily to its
financial instruments as at balance sheet date are as follows:
A$
$’000
RM
$’000
RMB
$’000
JPY
$’000
Total
$’000
Trust
2017
Net balance sheet exposure
14,613
–
–
(52,209)
(37,596)
2016
Net balance sheet exposure
1,436
–
–
(67,521)
(66,085)
Income hedging
Approximately 62% (2016: 61%) of the Group’s revenue is derived in Singapore dollars for the year ended 30 June 2017. The
Group has used a combination of local currency denominated loans and short term foreign exchange forward contracts
to partially hedge its overseas net income.
The Group continues to proactively monitor the exchange rates and may use more foreign exchange forward contracts or
other suitable financial derivatives to hedge the impact of exchange rate fluctuations on the distributions to unitholders,
where appropriate.
Capital hedging
In managing the currency risks associated with the capital values of the Group’s overseas assets, borrowings are
denominated in the same currency as the underlying assets to the extent feasible, to provide a natural currency hedge. As
the investments in overseas assets are generally long term in nature, the remaining net positions of the foreign exchange
risk on such investments are not hedged.
Sensitivity analysis
A 10% strengthening of the Singapore dollar against the following currencies at the reporting date would increase/(decrease)
unitholders’ funds by the amounts shown below. This analysis assumes that all other variables, in particular interest rates,
remain constant.
Group
$’000
Trust
$’000
2017
A$
(34,372)
(1,461)
RM
(25,879)
–
RMB
(3,001)
–
JPY
(870)
5,221
Financial derivatives
1,834
1,225
2016
A$
(31,781)
(144)
RM
(27,203)
–
RMB
(4,068)
–
JPY
(644)
6,752
Financial derivatives
1,474
1,474
A 10% weakening of the Singapore dollar against the above currencies would have had the equal but opposite effect on
the above currencies to the amounts shown above, on the basis that all other variables remain constant.