Telstra 2015 Annual Report Download - page 133

Telstra Corporation Limited and controlled entities 131
Notes to the Financial Statements (continued)
NOTE 18. FINANCIAL RISK MANAGEMENT (continued)
_Telstra Financial Report 2015
18.2 Hedging strategies (continued)
(f) Hedge effectiveness
Refer to note 17 Table B for a detailed breakdown of the carrying
amounts and face values of designated financial instruments.
The adoption of AASB 9 (2013) has resulted in less ineffectiveness
being recognised as certain costs of hedging may now be excluded
from designated hedge relationships. We have utilised the option
to exclude foreign currency basis spreads from our designated fair
value and cash flow hedge relationships, refer to note 2.1(a) for
further details.
Table H shows the ineffectiveness relating to financial
instruments in designated fair value hedges that are included in
net debt.
The cash flow hedge reserve is adjusted to the lower of (in absolute
amounts) the cumulative gain or loss on the hedging instrument
and the cumulative change in fair value of the hedged item. This
adjustment did not result in any material ineffectiveness.
For hedge gains or losses transferred to and from the cash flow
hedging reserve refer to the statement of comprehensive income.
For cash flow hedges of highly probable forecast transactions
settled in a foreign currency and hedges of net investments in
foreign operations, the change in value of the hedged item was not
materially different to the change in value of the hedging
instruments with no resulting material ineffectiveness.
18.3 Hedge relationships
The following tables give context to our hedge transactions and
shows our economic residual risk position as a result of the
hedges executed. It should be noted that the economic residual
position in each of the tables will not be equal to the carrying
values.
Table I describes each of our hedge relationships which use cross
currency and interest rate swaps. The post hedge position
represents our net final currency and fixed/float positions.
(a) Borrowings due to mature within 12 months are classified as
floating.
Table H Telstra Group
Year ended 30 June
2015 2014
(Gain)/
loss
(Gain)/
loss
$m $m
Re-measurement of hedged item used to
measure ineffectiveness 184 331
Change in value of hedging instruments (178) (203)
Net loss before tax 6 128
Net loss after tax 490
Table I Telstra Group
As at 30 June 2015 As at 30 June 2014
Pre hedge
exposure
Post hedge
position:
(pay) float
Post hedge
position:
(pay) fixed
Pre hedge
exposure
Post hedge
position:
(pay) float
Post hedge
position:
(pay) fixed
Local
currency Australian dollar
Local
currency Australian dollar
m $m $m m $m $m
In hedge relationships
Offshore borrowings - fixed
Swiss francs (225) (252) - (225) (251) -
Euros (5,325) (3,059) (4,447) (5,825) (3,841) (4,447)
Hong Kong dollar (330) (50) - (330) (50) -
Japanese yen (10,000) (62) (60) (37,000) (108) (444)
United States dollar (2,000) - (2,263) (1,150) (203) (955)
New Zealand dollar (100) - (79) (100) - (79)
Australian dollar (50) (50) - (50) (50) -
Offshore borrowings - floating (a)
Euros (500) (781) - (500) (858) -
British pounds sterling ---(200) (584) -
New Zealand dollar ---(155) (123) -
United States dollar (150) (203) - ---
Japanese yen (27,000) (430) - (10,000) (127) -
Domestic borrowings - fixed
Australian dollar (950) (950) - (950) (950) -
Domestic borrowings - floating
Australian dollar (275) - (275) (275) - (275)
(5,837) (7,124) (7,145) (6,200)