Financial Report 2009 - Leighton Holdings

Notes continued
for the year ended 30 June 2009
34. FINANCIAL INSTRUMENTS CONTINUED
Sensitivity Analysis - Consolidated
Listed investments
Change in value of listed investments (other than associates) in relation to a 5% change in the value of the ASX 200 index:
$1,894 (2008: $14,646).
Unlisted Investments
Change in value of unlisted investments due to a movement in discount rates of 5%: $2,950 (2008: $2,406). Change in value
of unlisted investments due to a 5% movement in revenue forecasts: $5,122 (2008: $6,822).
The Company has no listed or unlisted investments other than controlled entities.
d) Foreign Currency Risk
Foreign currency risk is the risk that the value of a financial commitment, a recognised asset or liability will fluctuate due to
changes in foreign currency rates. The Group’s foreign currency risk arises primarily from net investments in foreign
operations. The Group uses non-derivative financial instruments, such as borrowings in the foreign currencies, to hedge its
investments in foreign operations. Foreign currency gains and losses arising from translation of net investments in foreign
operations are recognised in the Foreign Currency Translation Reserve until realised.
Members of the Group are exposed to foreign currency risk on project receipts and expenditure on plant and equipment
denominated in currencies other than their functional currency. Where this foreign currency risk is considered to be significant,
members of the Group enter into forward exchange contracts to hedge their foreign currency risk. These hedges are classified
as cash flow hedges and measured at fair value.
Cash Flow Hedges
The Group’s cash flow hedges protect against foreign exchange rate fluctuations on highly probable forecast transactions
using foreign exchange forward contracts. As at reporting date the fair value of these outstanding designated derivatives
recognised in equity is $10,902 (2008: $5,021). It is expected that the current hedged forecast transactions will occur during
the financial year ending 2010 and will affect the income statement in the same period. There are no gains or losses
recognised in the income statement during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currency the Group is exposed to is the United States dollar (USD) or currencies pegged to the
USD. The Group's exposure to foreign currency risk at balance date was: Assets USD2,351,021 (2008: USD1,659,054);
liabilities USD1,607,521 (2008: USD852,748).
Sensitivity analysis
A movement in the Australian dollar (AUD) against the United States dollar at reporting date would have increased
(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular
interest rates, remain constant. The analysis is performed on the same basis for 2008.
Equity
Income Statement
2009
$’000
2009
$’000
2008
$’000
2008
$’000
30 June
USD +5% (52,715) (33,999) (10,957) (14,822)
USD -5% 58,264 37,578 12,110 16,382
Leighton Holdings Limited FINANCIAL REPORT 2009 49