AWB Limited - 2004 Annual Report

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2004 31. FINANCIAL INSTRUMENTS (continued) (b) Foreign exchange risk (continued) Consolidated Currency options: 2004 2003 2004 2003 Weighted average strike rate $'000 $'000 Not later than one year Buy Australian dollar Call, US dollar Put 0.7207 0.6560 3,161,616 2,725,635 Buy Australian dollar Put, US dollar Call 0.6813 0.6033 (367,541) (357,344) Sell Australian dollar Call, US dollar Put 0.7326 0.6663 (710,380) (676,897) Sell Australian dollar Put, US Dollar Call 0.6723 0.6205 2,949,813 2,550,149 Buy euro Call, US dollar Put – 1.0278 – 113,935 Buy euro dollar Put, US dollar Call – 1.0850 – (34,396) Sell euro dollar Call, US dollar Put – 1.1403 – (77,675) Total 5,033,508 4,243,407 (c) Commodity price risk The consolidated entity enters into commodity futures contracts and options in accordance with board approved limits for the following purposes: – to hedge (or hedge a proportion) of commodity selling prices on anticipated specific future sales and purchases of agricultural products. Major sales and purchases being hedged include wheat, sorghum and canola; and – for trading purposes. At year end, the consolidated entity has the following commodity futures: Consolidated 2004 2003 2004 2003 Commodity futures AUD per tonne tonnes tonnes Not later than one year Buy futures – USD 178.35 186.30 819,281 612,894 Buy futures – CAD 337.77 398.05 2,500 29,300 Sell futures – USD 171.14 222.76 (904,352) (796,871) Sell futures – CAD 337.77 397.26 (89,700) (34,580) Later than one year but not later than two years Buy futures – CAD 354.04 – 4,300 – Sell futures – CAD 354.04 – (17,500) – Total (185,471) (189,257) Consolidated 2004 2003 2004 2003 delta (i) delta (i) Commodity options AUD per tonne tonnes tonnes Not later than one year Buy Call option 191.10 209.54 48,828 607,189 Sell Call option 184.15 201.78 (44,159) (339,024) Buy Put option 166.55 175.28 (364,343) (297,011) Sell Put option 170.60 182.67 529,044 424,991 Total 169,370 396,145 (i) Delta ia a measure of an option’s sensitivity to changes in the price of an underlying asset. 94
31. FINANCIAL INSTRUMENTS (continued) (c) Commodity price risk (continued) The net deferred costs and gains and losses on commodity hedges of anticipated sales and purchases recognised in the statement of financial position and the timing of their anticipated recognition as part of sales and purchases are: Consolidated Net deferred gains/(losses) 2004 2003 $'000 $'000 Not later than one year 3,256 1,567 Later than one year but not later than two years 84 – 3,340 1,567 The consolidated entity enters into commodity transactions with external counterparties on behalf of AWB (International) Limited. These transactions are then passed on to AWB (International) Limited via a commodity contract. At year end, the consolidated entity has the following commodity futures and options on behalf of AWB (International) Limited: Consolidated 2004 2003 2004 2003 Commodity futures AUD per tonne tonnes tonnes Not later than one year Buy futures 170.56 196.04 892,806 526,349 Sell futures 170.46 195.24 (2,325,840) (693,180) Total (1,433,034) (166,831) Commodity options Not later than one year Buy Call option 177.23 201.31 670,999 1,339,685 Sell Call option 188.97 202.14 (411,635) (221,943) Buy Put option 186.95 180.56 (851,846) (1,087,669) Sell Put option 167.55 184.17 234,734 1,100,188 Total (357,748) 1,130,261 (d) Freight Consolidated Forward freight agreements 2004 2003 2004 2003 Weighted average rate per day days days Buy USD Freight Not later than one year (31,228) (14,613) 3,465 2,619 Later than one year but not later than two years (30,251) (14,050) 276 853 Later than two years but not later than three years – (12,950) – 122 Sell USD Freight Not later than one year 31,586 17,149 3,288 1,798 Later than one year but not later than two years 21,581 – 276 – Later than two years but not later than three years – 16,683 – 366 The marked to market value of forward freight agreements is recognised in the statement of financial performance. (e) Credit risk exposure Credit risk reports the loss that would be recognised if counterparties failed to perform as contracted. Recognised financial instruments The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the statement of financial position, is the carrying amount net of any provision for doubtful debts or counterparty risk. The consolidated entity minimises concentration of credit risk by undertaking transactions with a large number of customers and obtaining credit insurance for certain customers. 95
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Annual Report 2004
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Who We Are AWB Limited (AWB) is Aus
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Finance AWB harvest finance book pe
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Five Year Summary 2004 2003 2002 20
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Chairman’s and Managing Director
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To continue building its capability
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Pool Management Services Highlights
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AWB National Pool participants. AWB
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Landmark Highlights Integrated Land
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the integration, Landmark has reloc
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Finance and Risk Management Highlig
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Finance Limited, a wholly owned, ba
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Grain Acquisition and Trading Highl
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through the AWB Geneva office, both
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Supply Chain & Other Investments Hi
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The Five Star Feed Mill, located on
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Our People AWB employs over 2,700 p
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More than 70% of AWB’s employees
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Our Social Commitment Together with
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Social service providers While not
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7. Richard Fuller General Manager,
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Independence All of the current 11
Page 45 and 46: Services Agreement Committee The Se
Page 47 and 48: its observance provides the foundat
Page 49 and 50: Promotion Committee and Founding Ch
Page 51 and 52: 1. Brendan Stewart Chairman, Non-ex
Page 54 and 55: DIRECTORS' REPORT Your directors su
Page 56 and 57: DIRECTORS' REPORT (continued) REMUN
Page 58 and 59: DIRECTORS' REPORT (continued) DIREC
Page 60 and 61: DIRECTORS' REPORT (continued) DIREC
Page 62 and 63: STATEMENT OF FINANCIAL PERFORMANCE
Page 64 and 65: STATEMENT OF CASH FLOWS FOR THE YEA
Page 66 and 67: NOTES TO AND FORMING PART OF THE FI
Page 106 and 107: INDEPENDENT AUDIT REPORT TO THE MEM
Page 108 and 109: SHAREHOLDER COMMUNICATION FINANCIAL
Page 110 and 111: GLOSSARY AWB Basis Pool AWB Basis P
Page 112: Head Office 380 La Trobe Street Mel
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AWB Limited - 2004 Annual Report

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