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Whitehaven Coal Limited : Annual Report 2012
Whitehaven Coal Limited -- Annual Report 2012 111 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2012 17. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) Instruments used by the consolidated entity Derivative financial instruments are used by the consolidated entity in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates. Forward currency contracts -- cash flow hedges The consolidated entity undertakes sales in US dollars, and has made specific capital purchases in Euros. In order to protect against exchange rate movements and reduce the foreign exchange rate related volatility of the consolidated entity's revenue and purchase streams, the consolidated entity enters into forward exchange contracts to sell US dollars and buy Euros in the future at stipulated exchange rates. Forward exchange contracts are entered for future sales undertaken in US dollars, and future purchases undertaken in Euros. The contracts are timed to mature when funds for coal sales are forecast to be received, and when amounts for capital purchases are forecast to be paid. At 30 June 2012, the forward exchange contracts are designated as cash flow hedges and are expected to impact profit and loss in the periods specified below. Forward exchange contracts In thousands of AUD (except exchange rates) Fair value 2012 Average exchange rates 2012 Fair value 2011 Average exchange rates 2011 Sell US dollars Less than 6 months 4,637 0.9694 39,572 0.8614 6 months to 1 year 1,637 0.9694 16,426 0.9349 6,274 0.9694 55,998 0.8945 Buy Euros Less than 6 months (2,053) 0.5443 (7,208) 0.5707 (2,053) 0.5443 (7,208) 0.5707 The ineffectiveness recognised in financial expenses in the income statement for the current year was $549,000 (see Note 12). The cumulative effective portion of $3,735,000 is reflected in other comprehensive income. The recycling of amounts from the hedge reserve to the income statement for future sales of $53,436,000, and to the balance sheet for future purchases of $5,681,000, has been recognised in revenue and property, plant and equipment respectively. 18. INVESTMENTS Consolidated In thousands of AUD 2012 2011 Current investments Investment in unlisted preference shares 6,899 14,866 Non-current investments Investment in unlisted shares 1,210 1,210 Investment in listed shares 4,418 -- 5,628 1,210 During the year the Group disposed of $8.0m in preference shares. In the prior year the Group acquired a total of $37.3m in preference shares ($14.8m) and shareholder loan notes ($22.5m) as part of the funding requirement of the NCIG Stage 2AA expansion. The shareholder loan notes were all disposed of during the prior year as NCIG secured funding from other investors. As part of one of these disposals the Company issued a put option giving the acquirer the right, subject to certain criteria being met, to sell back the shareholder loan notes. The likelihood of the put option being exercised is considered remote.
Annual Report 2011
Annual Report 2013