140 / 164
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
140 Independence Group NL
Notes to the consolidated financial statements
30 June 2015
25 Derivative financial instruments (continued)
(i)
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 and commodity 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
in note 2(l).
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 4 and below for details of the foreign currency and commodity prices risk being mitigated by the Group’s
derivative instruments as at 30 June 2015 and 30 June 2014.
Nickel
At 30 June 2015, the Group held various nickel commodity contracts denominated in US dollars ("USD"). Foreign
exchange contracts are also held which match the terms of the commodity contracts. These contracts are used to
reduce the exposure to a future decrease in the Australian dollar ("AUD") market value of nickel sales.
The outstanding nickel contracts held by the Group at 30 June 2015 are as follows:
Tonnes of metal
Weighted average price
(USD/metric tonne)
Fair value
2015
2014
2015
2014
2015
$'000
2014
$'000
0 - 6 months
750
1,200
16,711
16,816
4,626
(2,838)
6 - 12 months
-
1,200
-
16,401
-
(3,368)
Total
750
2,400
16,711
16,608
4,626
(6,206)
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
2015
$'000
2014
$'000
2015
2014
2015
$'000
2014
$'000
Sell USD forward
0 - 3 months
12,534
10,174
0.8482
0.9368
(1,533)
29
3 - 6 months
-
10,005
-
0.9212
-
140
6 - 12 months
-
19,681
-
0.9036
-
493
Total
12,534
39,860
0.8482
0.9163
(1,533)
662
Copper
At 30 June 2015, the Group held various copper commodity contracts denominated in USD. Foreign exchange
contracts are also held which match the terms of the commodity contracts. These contracts are used to reduce the
exposure to a future decrease in the AUD market value of copper sales.
The outstanding copper contracts held by the Group at 30 June 2015 are as follows:
Tonnes of metal
Weighted average price
(USD/metric tonne)
Fair value
2015
2014
2015
2014
2015
$'000
2014
$'000
0 - 3 months
550
1,200
6,261
6,889
355
(175)
3 - 6 months
-
550
-
7,178
-
96
6 - 12 months
-
950
-
7,303
-
313
Total
550
2,700
6,261
7,093
355
234
Independence Group NL
76