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Notes to the Consolidated Financial Statements
30 June 2013
48 BRADKEN LIMITED ANNUAL REPORT 2013
Notes to the consolidated financial statements
30 June 2013
(continued)
2 Financial risk management (continued)
(c) Market risk (continued)
(ii)
Foreign exchange risk
(iii)
Price risk
(iv)
Summarised sensitivity analysis
2013
Carrying
amount
Profit
Equity Profit
Equity Profit
Equity Profit
Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Cash and cash equivalents
92,489 (924) (924) 924 924 5,735 5,735 (5,735) (5,735)
Accounts receivable
155,353 - - - - 11,552 11,552 (11,552) (11,552)
Receivables under finance leases
5,531 - - - - - - - -
Derivatives - FVTPL
12,897 - - - - 20,078 20,078 5,556 5,556
Financial liabilities
Derivatives - cashflow hedges
(2,310) - 33 - (32) - - - -
Trade payables
(115,931) - - - - (8,290) (8,290) 8,290 8,290
Borrowings
(524,032) 5,240 5,240 (5,240) (5,240) (37,222) (37,222) 37,222 37,222
Total increase/(decrease)
4,316 4,349 (4,316) (4,348) (8,147) (8,147) 33,781 33,781
2012
Carrying
amount
Profit
Equity Profit
Equity Profit
Equity Profit
Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial assets
Cash and cash equivalents
101,892 (1,018) (1,018) 1,018 1,018 4,042 4,042 (4,042) (4,042)
Accounts receivable
202,922 - - - - 12,342 12,342 (12,342) (12,342)
Receivables under finance leases
5,725 - - - - - - - -
Financial liabilities
Derivatives - cashflow hedges
(3,409) - 494 - (494) - - - -
Derivatives - FVTPL
(241) - - - - 546 546 (974) (974)
Trade payables
(158,762) - - - - (9,320) (9,320) 9,320 9,320
Borrowings
(549,971) 5,500 5,500 (5,500) (5,500) (32,850) (32,850) 32,850 32,850
Total increase/(decrease)
4,482 4,976 (4,482) (4,976) (25,240) (25,240) 24,812 24,812
Unrealised gains or losses on outstanding foreign exchange contracts are taken to the Group's income statement on a monthly
basis.
The following table summarises the pre-tax sensitivity of the Group's financial assets and financial liabilities to interest rate risk
and foreign exchange risk. These sensitivities are prior to the offsetting impact of hedging instruments.
The Group is exposed to commodity price risk through the purchase of steel and various alloys.
+10%
Financial risk exposure of the parent entity is limited to the exposure of the Group.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a
currency that is not the entity's functional currency. It is the policy of the Group to enter into forward foreign exchange contracts
to cover all foreign currency exposure other than those effectively covered within the natural hedging pool.
Refer to note 8 and 17 for receivables and payables denominated in foreign currencies.
Refer to note 19 for further details generally of the Group's borrowings.
A sensitivity analysis of interest rate risk on the Group's financial assets and liabilities is provided in the table at note 2(c)(iv).
A sensitivity analysis of foreign exchange risk on the Group's financial assets and liabilities is provided in the table at note
2(c)(iv).
Interest rate risk
Foreign exchange risk
-100 bps
+100 bps
-10%
+10%
Interest rate risk
Foreign exchange risk
-100 bps
+100 bps
-10%
The Group manages its cash flow interest-rate-risk by using floating-to-fixed interest rate swaps and interest rate caps. Such
instruments have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises
long-term borrowings at floating rates and swaps them into fixed rates. Under the interest-rate swaps, the Group agrees with
other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating-rate
interest amounts calculated by reference to the agreed notional principal amounts.
Page 48
Bradken Limited