Telstra 2010 Annual Report Download - page 143

Telstra Corporation Limited and controlled entities
128
Notes to the Financial Statements (continued)
(c) Net position on a contractual face value basis
The amounts disclosed in Table H represent the net contractual
face values of our financial assets and financial liabilities on a post
hedge basis.
(i) These amounts represent the end hedge position as described
in our hedge relationships in note 18 Table H.
(ii) Includes offshore loans of $288 million (2009: $205 million)
used to hedge our investment in TelstraClear Limited as described
in our hedge relationships in note 18 Table K.
(iii) Includes final pay legs $1,211 million (2009: $1,049 million) as
described in our hedge relationships in note 18 Table J.
(iv) Comprises promissory notes used to hedge our investment in
TelstraClear Limited as described in our hedge relationships in note
18 Table K.
The above table represents our economic residual position after
netting offsetting risks of our derivative and non-derivative
financial instruments in a hedge relationship. Accordingly,
consistent with our policy to swap foreign currency borrowings into
Australian dollars, only our Australian dollar end positions are
included in the table above, except for a small proportion of foreign
currency borrowings/cross currency swaps used to hedge
translation foreign exchange risk associated with our offshore
investments and some cash balances/finance leases held in foreign
currencies by our foreign controlled entities. These foreign currency
amounts are reported in Australian dollars based on the applicable
exchange rate as at 30 June.
Total net debt in Table H agrees to the face value of our financial
instruments included in net debt in Table D. The face values differ
from the statement of financial position carrying amounts. The
carrying amounts reflect a part of our borrowing portfolio at fair
value with the remaining part at amortised cost, whereas the face
values represent the undiscounted contractual liability at maturity
date.
(d) Derivative financial instruments
All our derivatives are in designated hedge relationships which
satisfy the requirements for hedge accounting, except for some
cross currency and interest rate swaps hedging certain offshore
borrowings and some forward foreign currency contracts hedging
trade and other creditors denominated in a foreign currency. These
derivatives are de-designated or not in designated hedge
relationships for hedge accounting purposes and are classified as
held for trading. Refer to note 18 for details on hedging
relationships.
Derivative financial instruments for the Telstra Group as at balance
date are shown in Table I and Table J below. For these derivative
instruments the fair value equates to the carrying amounts in the
statement of financial position which differs from the face values
which are also provided in other tables within this note.
17. Capital management and financial instruments (continued)
Table H Telstra Group
As at 30 June
Face values
2010 2009
Currency $m $m
Interest bearing financial assets included in net debt
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . Floating Australian dollar 1,602 970
Cash and cash equivalents held in foreign currencies . . . . . . . . . . . Floating Various 442 334
Bank deposits with maturity greater than 90 days . . . . . . . . . . . . Floating Foreign 16 16
2,060 1,320
Interest bearing financial liabilities included in net debt
Cross currency & interest rate swap liability (i). . . . . . . . . . . . . . Fixed Australian dollar (6,059) (6,020)
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed Australian dollar (2,016) (1,826)
Borrowings (ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed Foreign (328) (256)
Cross currency & interest rate swap liability (i). . . . . . . . . . . . . . Floating Australian dollar (5,945) (5,467)
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating Australian dollar (1,435) (3,057)
Forward contract liability - net (iii) . . . . . . . . . . . . . . . . . . . Floating Australian dollar (72) (109)
Cross currency & interest rate swap liability . . . . . . . . . . . . . . . Floating Foreign (633) (668)
Borrowings (iv) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating Foreign (206) (287)
(16,694) (17,690)
Net interest bearing debt . . . . . . . . . . . . . . . . . . . . . . . . (14,634) (16,370)
Non-interest bearing cash included in net debt . . . . . . . . . . . . . . Various 77 84
Net debt - based on contractual face values . . . . . . . . . . . . . (14,557) (16,286)