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## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

For the year ended 30 June 2014 

## 30 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) 

## (e) Derivative financial instruments (continued) 

(i) Forward currency contracts – cash flow hedges 

Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that are attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecast transaction which could affect profit or loss. Where a hedge meets the strict criteria for hedge accounting, the effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profit or loss. The Group has the following foreign currency contracts designated as cash flow hedges at 30 June 2014 and 30 June 2013: 

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## (ii) Interest rate swaps – cash flow hedges 

In order to protect against rising interest rates, the Group has entered into interest rate swap contracts under which it has a right to receive interest at variable rates and to pay interest at fixed rates. At reporting date, the principal amounts and period of expiry of the interest rate swap contracts were as follows: 

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## (iii) Interest rate swaps – held for trading 

Amounts relating to interest rate swap contracts that have not been designated as hedges are recognised in profit or loss and disclosed as held for trading. At reporting date, the principal amounts and period of expiry of the interest rate swap contracts classified as held for trading were as follows: 

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## (iv) Interest rate collars – held for trading 

All of the Group’s Interest rate collars (floors and caps) are considered to be ineffective and are therefore classified as held for trading, with all amounts being recognised in profit or loss. At reporting date, the principal amounts and period of expiry of the interest rate collars were as follows: 

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The Group’s interest rate swaps generally require settlement of net interest receivable or payable, and the settlement dates generally coincide with the dates on which interest is payable on the underlying debt. The swaps are measured at fair value and, in respect of derivatives which are classified as effective, all gains and losses attributable to the hedged risk are taken directly to equity and re-classified into profit or loss when the interest expense is recognised. 

