Telstra 2013 Annual Report Download - page 139

NOTES TO THE
FINANCIAL STATEMENTS
(CONTINUED)
FINANCIAL STATEMENTS
Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 137
(a) Risk and mitigation (continued)
Liquidity risk (continued)
Financing arrangements
We have limited promissory note facilities in place in the United
States (limit US$4 billion) and unlimited facilities in Europe,
Australia and New Zealand. Under these facilities, in current market
conditions, we would expect to be able to nominally issue between
$4 billion to $5 billion (2012: $4 billion to $5 billion). As at 30 June
2013, we had on issue $125 million (2012: $563 million) under these
facilities. As at 30 June 2013, our subsidiary CSL Limited had a
bank bill acceptance facility of $155 million (2012: $111 million) of
which $84 million was issued (2012: $84 million). These facilities
are not committed or underwritten and we have no guaranteed
access to the funds. Generally, given that we retain suitable ratings,
our facilities are available, subject to market conditions, unless we
default on any terms applicable under the relevant agreements or
become insolvent. During the current and prior years there were no
defaults or breaches on any of our facility agreements.
(b) Hedging strategies
We hold a number of different financial instruments to hedge risks
relating to underlying transactions. Our major exposure to interest
rate risk and foreign currency risk arises from our long term
borrowings. We also have translation currency risk associated with
our offshore investments and transactional currency exposures
such as purchases in foreign currencies.
We designate certain derivatives as either:
• hedges of the fair value of recognised liabilities (fair value
hedges);
• hedges of foreign currency risk associated with recognised
liabilities or highly probable forecast transactions (cash flow
hedges); or
• hedges of a net investment in a foreign operation.
The terms and conditions in relation to our derivative financial
instruments are similar to the terms and conditions of the underlying
hedged items to maximise hedge effectiveness.
Financial instruments de-designated from fair value hedge
relationships or not in a designated hedge relationship
Our financial instruments de-designated from fair value hedge
relationships or not in designated hedge relationships comprise:
• a number of offshore borrowings denominated in United States
dollars, Euros 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;
• an Australian dollar interest rate swap which is not in a
designated hedge relationship for hedge accounting purposes
used to economically hedge changes in fair value attributable to
changes in market interest rates relating to an Australian dollar
private placement bond; and
• some forward foreign currency contracts that are not in a
designated hedge relationship for hedge accounting purposes,
used to economically hedge fair value movements for changes
in foreign exchange rates associated with trade creditors and
other liabilities denominated in a foreign currency.
All our financial liabilities de-designated or not in designated hedge
relationships are in effective economic relationships based on
contractual face value amounts and cash flows over the life of the
transaction.
All other hedge relationships met hedge effectiveness requirements
for hedge accounting purposes at the reporting date.
Refer to section (c) for details on our hedge relationships based on
contractual face value amounts and cash flows. Refer to note 7 for
the impact on finance costs relating to borrowings de-designated or
not in hedge relationships.
18. FINANCIAL RISK MANAGEMENT (CONTINUED)
Table F Telstra Group
As at 30 June
2013 2012
$m $m
We have access to the following lines of credit:
Credit standby arrangements
Unsecured committed cash standby facilities which are subject to annual review. . . . . . . . . . . . . . . . . 662 759
Amount of credit unused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662 759