SEO Version
FORTERRA
ANNUAL REPORT 2013
NOTES TO THE
FINANCIAL STATEMENTS
130
29
FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Interest rate risk (Continued)
The Group entered into an interest rate swap with a notional principal amount of US$135.0
million effective from 26 January 2012 to 27 January 2014. Included in the derivative
financial liabilities at 31 December 2012 was an interest rate swap with a notional principal
amount of US$55.0 million, which matured in 2013. The fair value of these interest rate
swaps was a liability of $85,000 as at 31 December 2013 (2012: $1,240,000). Except for the
foregoing interest rate swaps, the Group’s interest-bearing liabilities are at floating rates
of interest at 31 December 2013.
As at the reporting date, the interest rate profile of the interest-bearing financial
instruments was as follows:
Group
Trust
2013
2012
2013
2012
$’000
$’000
$’000
$’000
Fixed rate instruments
Cash and cash equivalents
40,553
10,623
2,627
–
Debt securities
(79,971)
(76,437)
(79,971)
(76,437)
Interest rate swaps
(170,670)
(232,274)
–
(67,237)
(210,088) (298,088)
(77,344)
(143,674)
Variable rate instruments
Cash and cash equivalents
72,387
39,590
116
49
Interest-bearing borrowings
(748,588)
(859,104)
–
–
Interest rate swaps
170,670 232,274
–
67,237
(505,531) (587,240)
116
67,286
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss, and the Group does not designate derivatives as hedging instruments
under a fair value hedge accounting model. Therefore, a change in interest rates at the
reporting date would not affect the profit or loss.
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