Corporate Report for the year ended 30 June 2022
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Section D: Notes to the THT and TIL financial statements for the year ended 30 June 2022
Section D: Notes to the THT and TIL financial statements for the year ended 30 June 2022
D11 Derivatives and financial risk management (continued) Interest rate risk Interest rate swap contracts in TIL do not qualify for hedge accounting. The effects of the interest rate related hedging instruments on THT’s financial position and performance are as follows: THT
2022
2021
$M
$M
Interest rate swaps Carrying amount Notional amount 1
262
(51)
2,903
2,947
Hedge ratio
1:1
1:1
Increase/(decrease) in fair value of outstanding hedging instruments
352
(108)
(Decrease)/increase in value of hedged item used to determine hedge effectiveness since inception
(357)
112
Weighted average hedged rate for the year
100%
100%
1. The notional amounts above include $407 million (2021: $407 million) of forward starting swaps which are hedging the same underlying interest rate exposures and therefore not included in the net exposure to interest rate risk table. Maturity profile—notional value of interest rate swaps are as follows: THT
Total notional amount
2022
Less than 12 months
$M Interest rate swaps
1-5 years Over 5 years
408
868
1,627 1.9%
2,903
Average fixed interest rate 1
2.2%
1.5%
NA²
2021 $M Interest rate swaps
166
1,566 1.4%
1,215 1.8%
2,947
Average fixed interest rate 1
2.3%
NA²
1. Based on average fixed rate of interest rate swap contracts, which does not include any margins that may be applicable on the hedged debt instrument. Effectiveness of hedging relationships designated are as follows: THT
Hedge ineffectiveness losses/(gains) recognised in profit and loss
Amount reclassified from other comprehensive income to profit and loss
Hedge gains recognised in other comprehensive income
Line item in profit and loss that includes hedge ineffectiveness Net finance costs
Line item in profit and loss for reclassification Net finance costs
2022
$M Interest rate risk
(313)
—
—
2021 $M Interest rate risk
(104)
—
Net finance costs
—
Net finance costs
THT and TIL are not materially impacted by movements in interest rates. As at the reporting date, THT and TIL had the following variable rate borrowings and interest rate swap contracts outstanding:
THT 2022
TIL
2021
2022
2021
$M 116
$M 116
$M 307
$M 560
Cash and cash equivalents Floating rate borrowings
(2,528)
(2,546)
(390)
(385)
Interest rate swaps (notional principal amount)
2,495
2,539
408 325
393 568
Net exposure to interest rate risk
83
109
207 207
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