117 / 164
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Annual Report 2015 117
Notes to the consolidated financial statements
30 June 2015
4 Financial risk management (continued)
(a) Risk exposures and responses (continued)
Impact on post-tax profit
Impact on other components of
equity
Sensitivity of financial instruments to
foreign currency movements
2015
$'000
2014
$'000
2015
$'000
2014
$'000
Financial assets
Cash and cash equivalents
Increase 18.0% (2014: 3.0%)
(1,812)
(365)
-
-
Decrease 18.0% (2014: 3.0%)
2,608
388
-
-
Trade receivables
Increase 1.5% (2014: 1.5%)
(120)
(176)
-
-
Decrease 1.5% (2014: 1.5%)
140
222
-
-
Derivative financial instruments
Increase 5.0% (2014: 5.0%)
(166)
361
-
1,444
Decrease 5.0% (2014: 5.0%)
183
(399)
-
(1,596)
833
31
-
(152)
Financial liabilities
Derivative financial instruments
Increase 5.0% (2014: 5.0%)
693
50
-
163
Decrease 5.0% (2014: 5.0%)
(766)
(55)
-
(180)
(73)
(5)
-
(17)
Net sensitivity to foreign currency
movements
760
26
-
(169)
(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 50% of total nickel production tonnes. All of the hedges qualify as
“highly probable” forecast transactions for hedge accounting purposes.
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 50% of total copper and zinc production tonnes.
Gold
It is the Board’s policy to hedge between 0% and 50% of forecast gold production from the Company’s 30% interest in
the Tropicana Gold Mine.
The markets for nickel, copper, zinc, silver and gold are freely traded and can be volatile. As a relatively small producer,
the Group has no ability to influence commodity prices. The Group mitigates this risk through derivative instruments,
including, but not limited to, quotational period pricing, forward contracts and collar arrangements.
At the reporting date, the carrying value of the financial instruments exposed to commodity price movements were as
follows:
Independence Group NL
53