19. Derivatives and hedge accounting CONTINUED 19.2 Reconciliation of changes in hedge reserves
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
(28.4)
– –
(28.4)
Transferred to profit or loss
–
–
Recognised as basis adjustment to non-financial assets
(6.7)
(1.5)
(8.2)
Deferred tax on change in reserves
Closing balance
56.4
4.7
61.1
CASHFLOW HEDGE RESERVE $M
COST OF HEDGING $M
Hedge reserves 2018
TOTAL $M
Opening balance
47.2 33.2
1.8
49.0 31.8
Hedging gains or losses recognised in OCI
(1.4)
Transferred to profit or loss
(44.4)
– –
(44.4)
Recognised as basis adjustment to non-financial assets
0.2 3.1
0.2 3.5
Deferred tax on change in reserves
0.4 0.8
Closing balance
39.3
40.1
20. Financial risk management Policies
Fair value measurement hierarchy Financial instruments measured at fair value are classified according to the following levels: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; or Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices); or Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Risk management framework Vector has a comprehensive treasury policy, approved by the Board, to manage financial 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.
85 ―
Made with FlippingBook HTML5