Telstra 2009 Annual Report Download - page 159

Telstra Corporation Limited and controlled entities
144
Notes to the Financial Statements (continued)
(e) Derivative financial instruments (continued)
(i) Gains or losses recognised in the cash flow hedging reserve in
equity on cross currency swap and interest rate swap contracts will be
continuously released to the income statement until the underlying
borrowings are repaid. Gains or losses recognised in the cash flow
hedging reserve on forward exchange contracts will be released to the
income statement when the underlying forecast transaction occurs
and affects profit and loss. However, where the underlying forecast
transaction is a purchase of a non financial asset (for example a fixed
asset) the gain or loss in the cash flow hedging reserve will be
transferred and included in the measurement of the initial cost of the
asset at the date the asset is recognised.
(ii) Derivatives which are classified as held for trading are in economic
relationships but are not in a designated hedge relationship for hedge
accounting purposes. These derivatives include cross currency and
interest rate swaps associated with a long term Euro bond issue not in
a designated hedge relationship and with a number of offshore
borrowings denominated in United States dollars, Euro and British
pounds sterling which were in fair value hedges and were de-
designated from the hedge relationship for hedge accounting
purposes as they did not meet requirements for hedge effectiveness.
Notwithstanding that these held for trading derivatives do not satisfy
the requirements for hedge accounting, it is important to note that
these relationships are in effective economic relationships based on
contractual amounts and cash flows over the life of the transaction.
Also included in held for trading derivatives are forward contracts
hedging trade creditors and other liabilities denominated in a foreign
currency.
17. Capital management, financial assets and financial liabilities (continued)
Table I Telstra Group and Telstra Entity
As at 30 June 2009
Cross currency swaps Interest rate swaps Forward contracts Total Total Total
Asset Liability Asset Liability Asset Liability Asset Liability Net
$m $m $m $m $m $m $m $m $m
Current
Fair value hedge . . . . . . . . . . 112 - 11 - - (1) 123 (1) 122
Cash flow hedge (i) . . . . . . . . ----1(82) 1(82) (81)
Hedge of net investment in
foreign operation . . . . . . . . . -(25) -----(25) (25)
Held for trading (ii) . . . . . . . . ----4(3) 4(3) 1
112 (25) 11 - 5 (86) 128 (111) 17
Non current
Fair value hedge . . . . . . . . . . 190 (152) 114 - - - 304 (152) 152
Cash flow hedge (i) . . . . . . . . 221 (408) 282 (186) - - 503 (594) (91)
Hedge of net investment in
foreign operation . . . . . . . . . 49 (12) ----49 (12) 37
Held for trading (ii) . . . . . . . . 129 (61) 88 - - - 217 (61) 156
589 (633) 484 (186) - - 1,073 (819) 254
701 (658) 495 (186) 5(86) 1,201 (930) 271
Table J Telstra Group and Telstra Entity
As at 30 June 2008
Cross currency swaps Interest rate swaps Forward contracts Total Total Total
Asset Liability Asset Liability Asset Liability Asset Liability Net
$m $m $m $m $m $m $m $m $m
Current
Fair value hedge . . . . . . . . . . - (26) - - - (24) - (50) (50)
Cash flow hedge (i) . . . . . . . . - (20) - - 1 (2) 1 (22) (21)
Hedge of net investment in
foreign operation . . . . . . . . . 53 - - - - - 53 - 53
Held for trading (ii) . . . . . . . . - - - - - (10) - (10) (10)
53 (46) - - 1 (36) 54 (82) (28)
Non current
Fair value hedge . . . . . . . . . . 37 (282) 15 (40) - - 52 (322) (270)
Cash flow hedge (i) . . . . . . . . - (512) 332 (143) - - 332 (655) (323)
Hedge of net investment in
foreign operation . . . . . . . . . 27 - - - - - 27 - 27
Held for trading (ii) . . . . . . . . 33 (112) - (133) - - 33 (245) (212)
97 (906) 347 (316) - - 444 (1,222) (778)
150 (952) 347 (316) 1 (36) 498 (1,304) (806)