Telstra 2012 Annual Report Download - page 154

Telstra Corporation Limited and controlled entities
124
Notes to the Financial Statements (continued)
(b) Financial instruments (continued)
As shown in Table C, the carrying amount of net debt is lower than
that based on contractual face values. This is primarily due to the
impact of revaluation gains on our debt portfolio as a result of having
locked in lower debt margins on our borrowings as compared to
market rates applicable as at 30 June.
(c) Net position on a contractual face value basis
The amounts disclosed in Table D represent the net contractual
face values of our financial instruments 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 $200 million (2011: $274 million) used
to hedge our investment in TelstraClear Limited as described in
note 18 Table K. The balance also includes $49 million (2011: $32
million) relating to finance leases and $2 million (2011: nil) other
loans.
(iii) Includes final pay legs $638 million (2011: $1,029 million) as
described in note 18 Table J. The balance also includes receive
legs relating to hedges of forecast purchases, trade and other non
interest bearing liabilities of $525 million (2011: $711 million).
(iv) Comprises promissory notes used to hedge our investment in
TelstraClear Limited as described 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, loans from wholly owned controlled entities,
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 D agrees to the face value of our financial
instruments included in net debt in Table C. 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.
17. Capital management and financial instruments (continued)
Table D Telstra Group
As at 30 June
Face value
2012 2011
Currency $m $m
Interest bearing financial assets included in net debt
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . Floating Australian dollar 3,591 2,278
Cash and cash equivalents held in foreign currencies . . . . . . . . . . . Floating Various 338 239
Bank deposits with maturity greater than 90 days. . . . . . . . . . . . . . Floating Foreign -1
3,929 2,518
Interest bearing financial liabilities included in net debt
Cross currency and interest rate swap liability (i) . . . . . . . . . . . . . . Fixed Australian dollar (5,841) (6,169)
Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed Australian dollar (2,549) (2,392)
Borrowings (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed Foreign (251) (229)
Borrowings (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating Foreign -(77)
Cross currency and interest rate swap liability (i) . . . . . . . . . . . . . . Floating Australian dollar (6,950) (5,256)
Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating Australian dollar (1,189) (1,475)
Forward contract liability - net (iii) . . . . . . . . . . . . . . . . . . . . . . Floating Australian dollar (113) (318)
Cross currency swap liability - net . . . . . . . . . . . . . . . . . . . . . . Floating Foreign (233) (383)
Borrowings (iv). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating Foreign (277) (196)
(17,403) (16,495)
Net interest bearing debt . . . . . . . . . . . . . . . . . . . . . . . . . . (13,474) (13,977)
Non-interest bearing cash included in net debt . . . . . . . . . . . . . . . Various 67 149
Net debt - based on contractual face values . . . . . . . . . . . . . . . (13,407) (13,828)
Other interest bearing financial assets . . . . . . . . . . . . . . . . . . . Fixed Australian dollar 627 159
Net interest bearing financial liabilities - based on contractual face values (12,780) (13,669)