INDEPENDENCE GROUP NL ANNUAL REPORT 2017

Notes to the consolidated financial statements 30 June 2017 (continued) 19 Dividends paid and proposed (continued) (d) Recognition and measurement Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. A provision for dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or before the reporting date. Risk This section of the notes includes information on the Group's exposure to various risks and shows how these could affect the Group's financial position and performance. 20 Derivatives Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedging criteria, they are classified as ‘held for trading’ for accounting purposes below. The Group has the following derivative financial instruments: 2017 $'000 2016 $'000 Current assets Foreign currency contracts - cash flow hedges 657 - Diesel hedging contracts - cash flow hedges - 784 657 784 Non-current assets Diesel hedging contracts - cash flow hedges - 799 - 799 Current liabilities Commodity hedging contracts - cash flow hedges 910 2,487 Diesel hedging contracts - cash flow hedges 55 - 965 2,487 Non-current liabilities Diesel hedging contracts - cash flow hedges 251 - 251 - (a) Instruments used by the Group Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates, commodity prices and diesel prices. The derivative financial instruments are classified as held for trading and accounted for at fair value through profit or loss unless they are designated as cash flow hedges. The Group's accounting policy for its cash flow hedges is set out below. The fair value of the derivative instruments at the reporting date is reflected in current and non-current assets and liabilities in the balance sheet and is calculated by comparing the contracted rate to the market rates for derivatives with the same length of maturity. Refer to note 21 and below for details of the foreign currency, commodity prices and diesel fuel risk being mitigated by the Group’s derivative instruments as at 30 June 2017 and 30 June 2016. Diesel The Group held various diesel fuel hedging contracts at 30 June 2017 and 30 June 2016 to reduce the exposure to future increases in the price of the Singapore gasoil component of diesel fuel. Independence Group NL 66 96 — IGO ANNUAL REPORT 2017 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017