99 / 128
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Annual Report 2016 97
Notes to the consolidated financial statements
30 June 2016
(continued)
21 Financial risk management (continued)
(a) Risk exposures and responses (continued)
(i)
Foreign currency risk (continued)
2016
$'000
2015
$'000
Financial assets
Cash and cash equivalents
14,773
16,971
Trade and other receivables
19,969
15,506
Derivative financial instruments
-
4,981
34,742
37,458
Financial liabilities
Derivative financial instruments
-
1,622
-
1,622
Net financial assets
34,742
35,836
The cash balance above only represents the cash held in the USD bank accounts at the reporting date and converted
into AUD at the 30 June 2016 AUD:USD exchange rate of $0.7426 (2015: $0.7680). The remainder of the cash balance
of $31,491,000 (2015: $104,325,000) was held in AUD and therefore not exposed to foreign currency risk.
The trade and other receivables amounts represent the USD denominated trade debtors. All other trade and other
receivables were denominated in AUD at the reporting date.
The following table summarises the Group’s sensitivity of financial instruments held at 30 June 2016 to movements in
the AUD:USD exchange rate, with all other variables held constant.
Impact on post-tax profit
Sensitivity of financial instruments to foreign currency movements
2016
$'000
2015
$'000
Increase/decrease in foreign exchange rate
Increase 5.0%
(884)
(110)
Decrease 5.0%
988
132
(ii)
Commodity price risk
The Group’s sales revenues are generated from the sale of nickel, copper, zinc, silver and gold. Accordingly, the
Group’s revenues, derivatives and trade receivables are exposed to commodity price risk fluctuations, primarily nickel,
copper, zinc, silver and gold.
Nickel
Nickel ore sales have an average price finalisation period of three months until the sale is finalised with the customer.
It is the Board’s policy to hedge between 0% and 70% of total nickel production tonnes.
Copper and zinc
Copper and zinc concentrate sales have an average price finalisation period of up to four months from shipment date.
It is the Board’s policy to hedge between 0% and 70% of total copper and zinc production tonnes.
Gold
It is the Board’s policy to hedge between 0% and 70% of forecast gold production from the Company’s 30% interest in
the Tropicana Gold Mine.
Diesel fuel
It is the Board's policy to hedge up to 75% of forecast diesel fuel usage. Diesel fuel price comprises a number of
components, including Singapore gasoil and various other costs such as shipping and insurance. The total of all costs
represent the wholesale or Terminal Gate Price (TGP) of diesel. The Group only hedges the Singapore gasoil
component of the diesel TGP, which represents approximately 40% of the total diesel price.
Independence Group NL
69