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Whitehaven Coal Limited : Annual Report 2008
Whitehaven Coal Limited - Annual Report 2008 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2008 5. FINANCIAL RISK MANAGEMENT (CONTINUED) In respect of other monetary assets and liabilities denominated in foreign currencies, the consolidated entity ensures that its net exposure is kept to an acceptable level by buying and selling foreign currencies at spot rates when necessary to address short-term imbalances. The consolidated entity classifies its forward exchange contracts hedging forecasted transactions as cash flow hedges and measures them at fair value. The fair value of forward exchange contracts used as hedges at 30 June 2008 was $46,776,000, comprising assets that were recognised as fair value derivatives. The fair value of foreign currency options held at 30 June 2007 was $14,072,000, comprising assets that were recognised as fair value derivatives. Interest rate risk The consolidated entity’s borrowings comprise both variable and fixed rate instruments. The variable rate borrowings expose the consolidated entity to a risk of changes in cash flows due to the changes in interest rates. The Company does not hold interest bearing liabilities. Details of the variable and fixed rate borrowings are included in note 28. Capital management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The consolidated entity defines capital as total shareholders’ equity. The Board of Directors monitors the capital structure on a regular basis including the level of dividends paid to ordinary shareholders. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. There were no changes in the consolidated entity’s approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 6. SEGMENT REPORTING Business and geographical segments The consolidated entity operates within the coal industry in Australia. Revenue is derived from the sale of coal and hire of plant to customers in Asia and Australia. Sales revenue by geographical location of customer In thousands of AUD Asia Australia 2008 249,239 7,231 256,462 2007 101,774 4,427 106,201 57
Annual Report 2009