2004-05 Annual Report - Australia Post

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
33. FINANCIAL INSTRUMENTS (CONT.)
Interest rate swaps/forward interest rate agreements
FOR THE YEAR ENDED 30 JUNE 2005
All interest swap contracts and forward interest rate agreements are entered into on the basis of known
borrowing obligations. As these contracts are utilised to hedge against the impact of movements in market
interest rates, any gains or losses on the contracts are accounted for on the same basis as the underlying
borrowing exposures being hedged. Accordingly, hedge gains and losses on these contracts are deferred and
brought to account when the offsetting gains and losses arising on related borrowings are recognised. The
following gains and losses arising from interest rate swaps and forward interest rate agreements were deferred:
2005
1 year or less
$m
Maturing in
Over 1–5 years
$m
More than 5 years
$m
Realised gains/(losses) deferred 0.2 0.4 0.0
Unrealised gains/(losses) deferred 0.0 3.8 0.0
Net gain/(loss) 0.2 4.2 0.0
2004
Realised gains/(losses) deferred (1.7) (6.5) 0.0
Unrealised gains/(losses) deferred (0.9) 7.6 0.0
Net gain/(loss) (2.6) 1.1 0.0
(b) Credit risk exposures
The credit risk on financial assets of the corporation which have been recognised in the Statement of Financial
Position is generally the carrying amount, net of any provisions for doubtful debts. The financial assets recognised
in the Statement of Financial Position exclude amounts receivable arising from unrealised gains on derivative
financial instruments.
For financial instruments, including derivatives, credit risk also arises from the potential failure of counterparties to
meet their obligations under the respective contracts at maturity. Counterparties are entities of at least “investment
grade” as rated by Standard & Poor’s (Australia). A material exposure may arise from financial instruments and the
corporation may become exposed to loss in the event that counterparties fail to deliver the contracted amount.
The corporation does not have a significant exposure to any individual counterparty. At balance date the following
amounts are receivable:
AUD equivalents
Foreign exchange contracts 0.4 3.8
Commodity swap contracts 3.0 0.5
Interest rate swap contracts 24.0 28.5
2005
$m
2004
$m
27.4 32.8
Australia Post Annual Report 2004/05 Financial and Statutory Reports Notes to and forming part of the financial statements
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