NOTES TO THE FINANCIAL STATEMENTS CONTINUED
The Group Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
NOTE 27 — RESERVES AND RETAINED
EARNINGS (CONTINUED)
Retained earnings
Balance at the beginning of the year
Transfer from asset realisation reserve
Transfer from general reserve
Profit attributable to members of the Parent Entity
Dividends paid during year
349,776
—
(2)
82,195
(32,988)
232,382
81,750
735
59,441
(24,532)
103,846
—
—
14,133
(32,988)
93,293
22,288
474
12,323
(24,532)
Balance at the end of the year 398,981 349,776 84,991 103,846
NOTE 28 — ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
The Group is exposed to interest rate, foreign currency and credit risks arising
from the normal course of the Group’s businesses.
Derivative financial instruments are used to hedge exposures to fluctuations
in foreign currency exchange rates and interest rates.
Interest rate risk
The Group manages interest rate risk in accordance with a Board approved policy
covering the types of instruments, range of
protection and duration of instruments. The financial instruments cover interest
rate swaps, forward rate agreements and interest
rate options. Maturities of these instruments are up to a maximum of five years.
Interest rate swaps and forward rate agreements
allow the Group to raise long term borrowings including long term finance leases,
at floating rates and swap them into fixed rates.
The approved range of interest rate cover is based on the projected debt levels
for each currency and reduced for each future
year. The Group currently hedges interest bearing debt in A$, €
and NZ$ with cover at 30 June 2007 extending to December 2010
in A$, June 2010 in €
and March 2011 in NZ$. At 30 June 2007, the Group had 56% (2006: 66%) of debt
hedged at an average
effective rate of 5.50% per annum (2006: 5.30% per annum).
The consolidated entity classifies interest rate swaps as cash flow hedges and states them at fair value.
The net fair value of swaps at 30 June 2007 was $2,066,000 (2006: $1,152,000)
comprising assets of $2,066,000 (2006:
$1,152,000) and liabilities of $nil (2006: $nil).
A$ €
NZ$ Total
Financial arrangements
30 June 2007
Total debt (A$’000)
Percentage hedged
Average rate (per annum)
149,354
50%
5.73%
23,162
70%
2.88%
18,462
84%
7.13%
190,978
56%
5.50%
30 June 2006
Total debt (A$’000)
Percentage hedged
Average rate (per annum)
153,263
65%
5.82%
38,858
67%
3.03%
7,402
78%
6.60%
199,523
66%
5.30%
NOTE 28 — ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)
The Group’s exposure to interest rate risk and the effective weighted average
interest rate by maturity periods are set out in the
table below:
Fixed interest rate
Floating
interest 1 year Between Between Between Between Over
rate or less 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 5 years Total
Note $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
30 June 2007
Interest earning financial assets
Cash and cash equivalents 9,423 — — — — — — 9,423
Security deposits in respect of long term
operating leases 20 5,490 — — — — — — 5,490
14,913 — — — — — — 14,913
Weighted average interest rate (% pa) 4.90% — — — — — — —
Interest bearing financial liabilities
Bank loans 22 136,891 — — — — — — 136,891
Finance lease liabilities 22 17,887 — — — — — — 17,887
Loans from associates 22 35,253 — — — — — — 35,253
Loans from other companies 22 — 947 — — — — — 947
Interest rate swaps
(notional principal amounts) *(105,570) 37,794 **37,085 **24,103 **26,589 —
— —
84,461 38,741 37,085 24,103 26,589 — — 190,978
Weighted average interest rate (% pa) 6.67% 5.16% 5.90% 5.66% 6.19% — — —
* Forward start swaps have not been included in the floating interest rate
aggregate figures.
** Includes forward start swaps.
Fixed interest rate
Floating
interest 1 year Between Between Between Between Over
rate or less 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 5 years Total
Note $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
30 June 2006
Interest earning financial assets
Cash and cash equivalents 13,536 — — — — — — 13,536
Security deposits in respect of long term
operating leases 20 5,972 — — — — — — 5,972
19,508 — — — — — — 19,508
Weighted average interest rate (% pa) 4.54 — — — — — — —
Interest bearing financial liabilities
Bank loans 22 152,606 — — — — — — 152,606
Finance lease liabilities 22 22,656 — — — — — — 22,656
Loans from associates 22 23,263 — — — — — — 23,263
Loans from other companies 22 — 998 — — — — — 998
Interest rate swaps
(notional principal amounts) *(130,958) 47,790 **35,224 **34,505 17,123 — —
—
67,567 48,788 35,224 34,505 17,123 — — 199,523
Weighted average interest rate (% pa) 6.20 5.49 5.36 6.02 5.98 — — —
* Forward start swaps have not been included in the floating interest rate
aggregate figures.
** Includes forward start swaps.
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