Financial statements
Section D: Notes to the THT and TIL financial statements for the year ended 30 June 2024
Section D: Notes to the THT and TIL financial statements for the year ended 30 June 2024
D11
Financial risk management and derivatives (continued)
Market risk (continued) Interest rate risk Exposure Exposures to interest rate risk after hedging at the end of the reporting period are as follows: THT
2024
2023 $M $M
Floating interest rate borrowings
2,779
3,014
Less floating interest rate borrowings converted to fixed interest rates using interest rate swaps (notional principal amount
(2,013)
(2,672)
Floating interest rate exposure 1
766
342
Fixed interest rate debt Less than 1 year
200
200
1-5 years
4,189 2,745
3,850 3,469
Over 5 years
Capitalised borrowing costs
(26)
(24)
Total borrowings
7,874
7,837
1 Exposure to floating rate borrowings is partially offset by cash and cash equivalent balances held at variable rates. An analysis by maturities of THT’s borrowings is provided in the liquidity risk section below. Hedging instruments Derivative instruments designated as hedging instruments of interest rate risk and the effects of the hedge accounting relationship are as follows: THT 2024 2023 $M $M Interest rate swaps hedging cash flow interest rate risk Carrying amount 207 259 Notional amount 2,013 2,448 Hedge ratio 1:1 1:1 Change in fair value of outstanding hedging instruments since 1 July 139 87 Change in value of hedged item used to determine hedge effectiveness (142) (89) Weighted average hedged interest rate for the year 1 1.9% 1.8%
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 instruments. Sensitivity
Sensitivity analysis on the impacts to profit after tax from movements in benchmark interest rates on floating rate instruments after hedging is as follows. A sensitivity range of plus and minus 100 basis points has been selected as a reasonably possible shift in interest rates. This is not a forecast or prediction of future market conditions. Movement in post-tax profit THT TIL 2024 2023 2024 2023 $M $M $M $M Interest rates +100bps (5) (2) 2 2 Interest rates –100bps 5 2 (2) (2)
204 205
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