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20. Derivatives and hedge accounting continued
2020 $M
2019 $M
AMOUNT AFTER APPLYING RIGHTS OF OFFSET
AMOUNT AFTER APPLYING RIGHTS OF OFFSET
DERIVATIVES POSITION AS PER BALANCE SHEET
DERIVATIVES POSITION AS PER BALANCE SHEET
UNDER ISDA AGREEMENTS
UNDER ISDA AGREEMENTS
220.4
152.1
Derivative assets Derivative liabilities
109.3
60.0
(104.9)
(36.6)
(83.1)
(33.8)
Net amount
115.5
115.5
26.2
26.2
Rights to offset
Vector enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master agreements. The ISDA agreements do not meet the criteria for offsetting in the balance sheet for accounting purposes. This is because Vector does not have any currently legally enforceable right to offset recognised amounts. Under the ISDA agreements the right to offset is enforceable only on the occurrence of future events such as a default on the bank loans or other credit events. The potential net impact of this offsetting is disclosed in column ‘amount after applying rights of offset under ISDA agreements’. Vector does not hold and is not required to post collateral against its derivative positions.
20.1 Effects of hedge accounting on the financial position and performance The tables below demonstrate the impact of hedged items and the hedging instruments designated in hedging relationships:
HEDGING (GAIN) OR LOSS RECOGNISED IN CASH FLOW HEDGE RESERVE $M
HEDGE INEFFECTIVE NESS RECOGNISED IN PROFIT OR LOSS $M
CHANGE IN FAIR VALUE USED FOR MEASURING INEFFECTIVE NESS $M
(GAIN) OR LOSS RECOGNISED IN COST OF HEDGING $M
CARRYING AMOUNT ASSETS/ (LIABILITIES) $M
WEIGHTED AVERAGE RATE $M
FACE VALUE $M
Cash flow hedges 2020
Interest risk Hedged item: NZD floating rate exposure on borrowings
(1,280.0)
(106.2)
Hedging instrument: Interest rate swaps
(1,780.0)
3.4% (104.5)
(104.5)
104.5
–
–
Interest and exchange risk Hedged item: USD f ixed rate exposure on borrowings Hedging instrument: Cross currency swaps
(797.1)
(810.5)
(31.8)
(797.1)
(26.1)
1.4
– –
(2.3)
Total
THE INTERPLAY OF TODAY AND TOMORROW
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