― 76
20. Derivatives and hedge accounting continued 20.2 Fair value changes on financial instruments
2020 $M
2019 $M
Recognised in profit or loss Fair value movement on hedging instruments
140.3
54.7
(143.7)
Fair value movement on hedged items
(57.2)
Total gains/(losses)
(3.4)
(2.5)
20.3 Reconciliation of changes in hedge reserves
CASHFLOW HEDGE RESERVE $M
COST OF HEDGING $M
Hedge reserves 2020
TOTAL $M
Opening balance
56.4 58.4
4.7 1.0
61.1 59.4
Hedging gains or losses recognised in OCI
(31.2)
–
(31.2)
Transferred to prof it or loss
Recognised as basis adjustment to non–financial assets
0.4
–
0.4
(7.7)
(0.3)
(8.0)
Deferred tax on change in reserves
Closing balance
76.3
5.4
81.7
CASHFLOW HEDGE RESERVE $M
COST OF HEDGING $M
Hedge reserves 2019
TOTAL $M
Opening balance
39.3 52.2
0.8 5.4
40.1 57.6
Hedging gains or losses recognised in OCI
Transferred to prof it or loss
(28.4)
–
(28.4)
Deferred tax on change in reserves
(6.7)
(1.5)
(8.2)
Closing balance
56.4
4.7
61.1
21. Financial risk management Risk management framework Vector has a comprehensive treasury policy, approved by the Board, to manage f inancial risks arising from business activity. The policy outlines the objectives and approach that the group
applies to manage: — Interest rate risk; — Credit risk; — Liquidity risk; — Foreign exchange risk; and — Funding risk. For each risk type, any position outside the policy limits requires the prior approval of the Board. Each risk is monitored on a regular basis and reported to the board.
THE INTERPLAY OF TODAY AND TOMORROW
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