FLE122 Annual Report 2018

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(f) Sensitivity Analysis The numbers in the sensitivity analysis for foreign currency risk, interest rate risk and commodity price risk have not been adjusted for tax and are based only on the Group's financial instruments held at balance date and assume that all other variables remain constant, except for the change in the chosen risk variable. (i) Foreign currency risk It is estimated a 10% weakening of the New Zealand dollar against the major foreign currencies the Group is exposed to on the net assets of its foreign operations would result in an increase to equity of approximately $219 million (June 2017: $190 million) and no material impact on earnings. (ii) Interest rate risk It is estimated a 100 basis point increase in interest rates would result in an increase in the Group's interest costs in a year by approximately $8.3 million on the Group's debt portfolio exposed to floating rates at balance date (June 2017: $11.9 million). (iii) Commodity price risk It is estimated a 10% increase in the New Zealand electricity spot price at balance date would not materially impact the Group's earnings or equity position. (g) Fair Values The estimated fair value measurements for financial assets and liabilities compared to their carrying values in the balance sheet, are as follows:

June 2018

June 2017

Carrying Value NZ$M

Carrying Value NZ$M

Fair Value NZ$M

Fair Value NZ$M

Fletcher Building Group Financial assets Cash and liquid deposits

Classification

665

665

Amortised cost Amortised cost

219

219

1,453

1,453

Debtors

1,536

1,536

Forward exchange contracts – fair value through profit or loss Forward exchange contracts – cash flow hedge

3 3 1

3 3 1

Fair value

5 2 3

5 2 3

Fair value – hedging instruments

Cross currency interest rate swaps – cash flow hedge Fair value – hedging instruments Cross currency interest rate swaps – fair value hedge Fair value – hedging instruments

81

81

79

79

4

4

Interest rate swaps – fair value hedge Electricity price swaps – cash flow hedge

Fair value – hedging instruments Fair value – hedging instruments

9 1

9 1

Total financial assets

2,210

2,210

1,854

1,854

Financial liabilities Creditors and accruals

1,114

1,114

Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost

1,259

1,259

97

97

Bank loans

389

389

1,181

1,238

Private placements

1,262

1,322

94

94

Other loans Capital notes

121 400

121 411

566

584

Forward exchange contracts – fair value through profit or loss Forward exchange contracts – cash flow hedge

4

4

Fair value

5 2 4

5 2 4

Fair value – hedging instruments

Cross currency interest rate swaps – cash flow hedge Fair value – hedging instruments Cross currency interest rate swaps – fair value hedge Fair value – hedging instruments

18

18

38

38

4

4

Interest rate swaps – cash flow hedge

Fair value – hedging instruments

6

6

Total financial liabilities

3,078

3,153

3,486

3,557

Total financial instruments

(868)

(943)

(1,632)

(1,703)

83 Fletcher Building Limited Annual Report 2018

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