annual report 2011–12 - Parliament of New South Wales - NSW ...

Department of Transport
Notes to the financial statements
for the year ended 30 June 2012
32 FINANCIAL INSTRUMENTS (cont'd)
(d)
Market risk
Market risk relates to fluctuations in the fair value of future cash flows of financial instruments because of changes in
market prices. This applies to the reporting entity’s foreign exchange, interest rate and commodity price hedging
instruments.
Sensitivity analysis on market risk is based on a reasonably possible price variability taking into account the
economic environment in which the reporting entity’s operates and the time frame for assessment, that is, until the
end of the next reporting period. The sensitivity analysis is based on financial instruments held at the balance date.
The analysis assumes that all other variables remain constant.
The effect on profit and equity due to a reasonably possible change in risk variable is outlined in the information
provided below, for interest rate risk and other price risk including currency movements. A reasonably possible
change in risk variable has been determined after taking into account the economic environment in which the
reporting entity operates and the time frame for the assessment (i.e. until the end of the next annual reporting period).
The sensitivity analysis is based on risk exposures in existence at the balance date. The analysis is performed on the
same basis for 2010 and assumes that all other variables remain constant.
The reporting entity is exposed to market risks in respective of
(i)
Interest rate risk
Exposure to interest rate risk arises primarily through the reporting entity’s interest bearing liabilities. This risk is
minimised by undertaking mainly fixed rate borrowings, primarily with NSW Treasury Corporation (NSW TCorp).
The reporting entity’s s exposure to interest rate risk is set out in the table below.
Impact of 1% Decrease Impact of 1% Increase
Profit Equity Profit Equity
Consolidated
Carrying
Amount $'000 $'000 $'000 $'000
2012
Financial assets:
Cash and cash equivalents 837,466 (6,661) (6,661) 6,661 6,661
Receivables 486,720 - - - -
Other financial assets 145,013 - - - -
Financial assets at fair value 48,922 (477) (477) 477 477
Financial liabilities:
Payables (1,850,302) - - - -
Borrowings (2,827,798) 17,789 17,789 (17,789) (17,789)
Financial liabilities at fair value (16,166) - - - -
Net financial liabilities (3,176,145) 10,651 10,651 (10,651) (10,651)
2011
Financial assets:
Cash and cash equivalents 1,106,128 (11,323) (11,323) 11,323 11,323
Receivables 222,784 - - - -
Other financial assets 122,005 - - - -
Financial assets at fair value 4,735 - - - -
Financial liabilities:
Payables (1,441,860) - - - -
Borrowings (2,989,135) 7,058 7,058 (7,058) (7,058)
Financial liabilities at fair value (16,598) - - - -
Net financial liabilities (2,991,941) (4,265) (4,265) 4,265 4,265
126
Transport for NSW Annual Report 2011–12