was found to be effective. Hedge effectiveness
was also assessed prospectively and retrospec-
tively using the cumulative dollar offset method
as at 30 June 2015 as a part of the bi-annual
testing. There was no hedge ineffectiveness in
the year ended to 30 June 2015 (2014: nil).
Instruments used by the Group
Derivatives are only used for economic
hedging purposes and not as trading or
speculative instruments. The Group has the
following derivative financial instruments:
NOTE 10
FINANCIAL RISK MANAGEMENT
(CONTINUED)
Consolidated
Current liabilities
2015
$’000
2014
$’000
Interest rate swap contracts - cash flow hedges
(1,262)
(2,001)
Forward foreign exchange contracts - cash flow hedges
-
(31)
Total current derivative financial instrument liabilities
(1,262)
(2,032)
Non-current liabilities
Interest rate swaps - cash flow hedges
-
(1,086)
Total non-current derivative financial instrument liabilities
-
(1,086)
Total derivative financial instrument liabilities
(1,262)
(3,118)
(iii) Classification of derivatives
Derivatives are classified as hedging instruments and accounted for at fair value in other comprehensive
income and deferred in equity in the hedging reserve. It is reclassified into the income statement when
the hedged interest expense is recognised.
(iv) Sensitivity analysis - interest rate and foreign currency
Interest rate risk
Foreign exchange risk
-0.5%
+0.5%
-10% +10%
At 30 June 2015
Profit
$’000
Equity
$’000
Profit
$’000
Equity
$’000
Equity
$’000
Equity
$’000
Financial assets
Cash and cash equivalents (1,120)
(1,120)
1,120 1,120
-
-
Total increase/
(decrease) in financial
assets
(1,120) (1,120)
1,120 1,120
-
-
30 June 2014
Financial assets
Cash and cash equivalents
(315)
(315)
315
315
-
-
Derivatives cash flow
hedge - foreign exchange
-
-
-
-
(31)
65
Total increase/
(decrease) in financial
assets
(315)
(315)
315
315
(31)
65
This analysis assumes all other variables are constant.
89
