29 FINANCIAL INSTRUMENTS
(continued)
Foreign currency risk
(continued)
A decrease in foreign exchange rates to which the Group has significant exposure at the
reporting date as compared to the functional currencies of the respective entities 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.
Interest rate risk
The Group’s exposure to changes in interest rates relates primarily to interest-earning financial
assets and interest-bearing financial liabilities. Interest rate risk is managed by the Manager on
an ongoing basis with the primary objective of limiting the extent to which net interest expense
could be affected by adverse movements in interest rates. Generally, the interest rate exposure
is managed through the use of interest rate swaps, interest rate caps and/or fixed rate
borrowings.
The Group classifies these interest rate swaps as cash flow hedges.
The details of the interest rate swaps are as follows:
Currency
Notional
contract
amount in
foreign
currency Fixed rate Floating rate
Year of
maturity
Net asset/
(liability)
$’000
%
%
$’000
Interest Rate Swaps
Group
2014
EUR
195,231 0.35 – 2.72
EURIBOR 2015 – 2019
(9,529)
GBP
38,430 0.87 – 1.87
LIBOR 2016 – 2019
(814)
JPY
29,640,000 0.22 – 1.10 LIBOR/TIBOR 2015 – 2021
(3,792)
(14,135)
2013
EUR
56,137
1.11
EURIBOR
2019
149
GBP
32,299 0.96 – 1.87
LIBOR 2016 – 2019
780
929
EUR
139,509 0.35 – 2.72
EURIBOR 2015 – 2016
(9,850)
JPY
21,450,000 0.21 – 0.79 LIBOR/TIBOR 2014 – 2018
(1,437)
(11,287)
(10,358)
Notes to the Financial Statements
Year ended 31 December 2014
180 | Ascott Residence Trust Annual Report 2014
