Air New Zealand 2015 Annual Report Download - page 34

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AIR NEW ZEALAND GROUP
Notes to the Financial Statements (continued)
As at 30 June 2015
32
23. Financial Risk Management (continued)
The effective portion of changes in the fair value of foreign currency hedging instruments which were deferred to the cash flow hedge reserve
(within hedge reserves) during the year are set out below, together with transfers to either earnings or the asset carrying value, as appropriate,
when the underlying hedged item occurs.
2015
NZ$M
2014
NZ$M
Recognised in Statement of Changes in Equity
Hedge reserves
Balance at the beginning of the year
Change in fair value*
Transfers to foreign exchange gains
Transfers to asset carrying value
Taxation on reserve movements
50
174
(89)
(26)
(15)
125
(31)
(41)
(33)
30
Balance at the end of the year
Represented by:
Forecast operating revenue/expense
Forecast sales of non-financial assets
Forecast capital expenditure**
94
131
-
-
50
43
3
26
Tax effect
131
(37)
72
(22)
Balance at the end of the year 94 50
*The change in fair value of the hedging instrument is that used for the purpose of assessing hedge effectiveness. No ineffectiveness arose on
cash flow hedges of foreign currency transactions during the year (30 June 2014: Nil).
**Amounts deferred in the cash flow hedge reserve in respect of future foreign currency capital expenditure relates to purchases of Boeing
787-9 aircraft. These hedges were de-designated in prior years due to delays in the timing of delivery of the aircraft, and a change in the risk
management objective for hedging capital expenditure. The accumulated net gains have been released to the carrying value of the aircraft as the
related payments were made.
The weighted average contract rates of hedge accounted foreign currency derivatives outstanding as at reporting date are set out below:
2015 2014
USD
AUD
EUR
JPY
GBP
0.7896
0.9396
0.6562
89.68
0.4997
0.8374
0.9025
0.6136
84.82
0.5120
NET INVESTMENT HEDGE
Investments designated in a net investment hedge are included within ‘Investments in other entities’ on the Statement of Financial Position.
The hedging instrument is included within ‘Interest-bearing liabilities’.
2015
NZ$M
2014
NZ$M
Hedged amount of United States Dollar investment
Hedged by: United States Dollar interest-bearing liabilities
55
(55)
39
(39)
The effective portion of changes in fair value of both the hedged item and the hedging instrument are recognised in the foreign currency
translation reserve, as set out below.
Foreign currency translation reserve
Balance at the beginning of the year
Translation gains/(losses) on hedged investment***
Translation (losses)/gains on hedging instrument***
Translation gains/(losses) on unhedged investments
Transfers upon disposal of subsidiaries to ‘Other expenses’
Taxation on reserve movements
(23)
12
(12)
18
5
3
(17)
(5)
5
(5)
-
(1)
Balance at the end of the year 3 (23)
*** Translation gains/losses are those used for the purpose of assessing hedge effectiveness. No ineffectiveness arose on net investment hedges
during the year (30 June 2014: Nil).