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BRADKEN LIMITED ANNUAL REPORT 2013 49
Notes to the consolidated financial statements
30 June 2013
(continued)
2 Financial risk management (continued)
(d) Fair value measurements
(a)
(b)
(c )
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The following table presents the group’s assets and liabilities measured and recognised at fair value at 30 June 2013 and 30
June 2012.
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (level 2), and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
AASB 7
Financial Instruments: Disclosures
requires disclosure of fair value measurement by level of the following fair value
measurement hierarchy:
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-
sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial
assets held by the group is the current bid price. These instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The group uses a variety of methods and makes assumptions that are based on market
conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used to
estimate fair value for long-term debt for disclosure purposes. Other techniques, such as estimated discounted cash flows, are
used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward
exchange market rates at the end of the reporting period. In the circumstances where a valuation technique for these
instruments is based on significant unobservable inputs, such instruments are included in level 3.
Total
$'000
Level 3
$'000
Level 2
$'000
Level 1
$'000
2013
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
- 2,310 - 2,310
- 12,897 - 12,897
12,897
2012
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
- 2,310 - 2,310
- 12,897 -
Total liabilities
- 3,650 - 3,650
Liabilities
Derivatives used for hedging
- 3,650 - 3,650
Page 49
Bradken Limited