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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Annual Report 2016 95
Notes to the consolidated financial statements
30 June 2016
(continued)
20 Derivatives (continued)
Nickel (continued)
Notional amounts (USD)
Weighted average
AUD:USD exchange rate
Fair value
2016
$'000
2015
$'000
2016
2015
2016
$'000
2015
$'000
Sell USD forward
0 - 3 months
-
12,534
-
0.8482
-
(1,533)
Total
-
12,534
-
0.8482
-
(1,533)
Copper
There were no copper commodity contracts held by the Group at 30 June 2016. The tables below detail the outstanding
copper commodity contracts denominated in USD, and the foreign exchange contracts which match the terms of the
commodity contracts, held by the Group at 30 June 2015. These contracts were used to reduce the exposure to a future
decrease in the AUD market value of copper sales.
The following table details the copper contracts outstanding at the reporting date:
Tonnes of metal
Weighted average price
(USD/metric tonne)
Fair value
2016
2015
2016
2015
2016
$'000
2015
$'000
0 - 3 months
-
550
-
6,261
-
355
Total
-
550
-
6,261
-
355
The following table details the forward foreign currency contracts outstanding at the reporting date:
Notional amounts (USD)
Weighted average
AUD:USD exchange rate
Fair value
2016
$'000
2015
$'000
2016
2015
2016
$'000
2015
$'000
Sell USD forward
0 - 3 months
-
3,444
-
0.7825
-
(89)
Total
-
3,444
-
0.7825
-
(89)
(b) Change in accounting policy
The Group has early adopted the new accounting standard AASB 9
Financial Instruments
with effect from 1 July 2015.
As explained in note 31, the adoption of the standard has affected the accounting treatment of the fair value of certain
derivative assets and liabilities. The adoption of the standard had no impact on the net assets of the Group, however
resulted in the restatement of balances at 1 July 2015 with a reduction in accumulated losses of $1,036,000 and a
corresponding debit in the hedging reserve of $1,036,000.
(c) Recognition and measurement
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being
hedged. The Group designates certain derivatives as either:
• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges); or
• hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable
forecast transactions (cash flow hedges).
The Group documents, at the inception of the hedging transaction, the relationship between hedging instruments and
hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The
Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that
are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or
cash flows of hedged items.
Independence Group NL
67