Business performance
Directors' Report
Financial statements
Assurance statements
Security holder information
Introduction
Stakeholders Sustainability Governance and risk
Contents
Section B: Notes to the Group financial statements for the year ended 30 June 2026
B14 Financial risk management and derivative financial instruments Financial risk management
The Group’s activities expose it to financial risks, including market risk (currency and interest rate), credit risk and funding and liquidity risks. These risks arise in the normal course of business and the financial risk management function is carried out centrally under policies approved by the Board. The Group’s financial risk management policies allow derivative transactions to be undertaken for the purpose of managing financial risks and do not permit speculative trading. Risk exposures are continuously monitored which include updates of cash flow models, review of market conditions and ongoing communication within the Group. An appropriate risk management approach is implemented within the approved policy and frameworks. When assessing financial risk, the Group considers current net exposures and existing hedges. Derivative financial instruments The Group uses derivative financial instruments in the normal course of business to hedge exposures to fluctuations in interest rates and foreign exchange rates. In addition, Financial Power Purchase Agreements (PPAs) are used to manage a portion of the Group's exposure to electricity prices. The table below outlines the Group's derivative financial instruments which are measured at fair value on a recurring basis.
2026
2025
$M
$M
Current Non-current
Current Non-current
Assets Interest rate swap contracts
—
274 511
3
124
149
Cross-currency interest rate swap contracts
152
1,227
1 5
— 11
Forward exchange contracts Power purchase agreements
—
— 13
8
155
796
Total derivative financial assets
163
1,364
Liabilities Interest rate swap contracts
— —
9
— —
24 40
Cross-currency interest rate swap contracts
354
1
Forward exchange contracts
31 —
1 4 5
8
—
Swap option contracts
— 72
Total derivative financial liabilities
1
394
Derivative financial instruments accounting policy Initial recognition and subsequent measurement
Derivative financial instruments are initially recognised at fair value on the date a derivative financial instrument contract is entered into and are subsequently remeasured at fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative financial instrument is designated as a hedging instrument, and if so, the nature of the item being hedged. A derivative financial instrument with a positive fair value is recognised as a derivative financial asset whereas a derivative financial instrument with a negative fair value is recognised as a derivative financial liability. Classification Derivative financial instruments are classified as non-current assets or liabilities, except for those that mature in less than 12 months from the reporting date, which are classified as current. Right to set off Derivative financial instruments are recorded on a net basis in the consolidated balance sheet where there is a legally enforceable right to set off the derivative financial assets and the derivative financial liabilities and the Group intends to settle on a net basis. Currently, there is no right or basis to present any derivative financial assets or derivative financial liabilities on a net basis, and as such no derivative financial assets or derivative financial liabilities have been presented on a net basis in the Group's balance sheet at the reporting date. Derecognition Derivative financial assets are derecognised when the rights to receive cash flows from the derivative financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership of the derivative financial asset. Derivative financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expired.
149
Made with FlippingBook Digital Publishing Software